The Idea in Brief
Is your company sending conflicting signals to its salespeople about their job priorities? For instance, you may reward sales reps for what they produce (new accounts, repeat business), thus encouraging them to do whatever it takes to please the customer. At the same time, managers may dictate how reps make sales (preferred techniques, expense limits) implying that their real job is to please their manager. When pleasing one side comes at the expense of pleasing the other, sales reps tend to underperform—and your best people may defect.
How to resolve conflicts that may handicap your sales force? Anderson and Onyemah recommend adopting a consistent sales management system. To begin, decide on performance criteria: Bottom-line results or the methods used to achieve results? Provide the right amount of management monitoring: Do you have an inexperienced sales staff that needs coaching, or a seasoned staff that works best when left alone? Align compensation with performance criteria: If you want bottom-line results, use a pay-for-performance system. If you expect sales reps to use particular methods for achieving sales, pay them a fixed salary.
Align your sales management practices with your company’s priorities, and your sales force will deliver their best for their customers and their managers.
The Idea in Practice
How to design a consistent sales management system? The authors suggest these guidelines:
Identify Your Current System
Does your sales management system put the customer or the manager first? This table shows examples of how each type of system works in the extreme.
Identify Inconsistencies
In addition to meddling managers, inconsistencies can take other forms. For example, some managers emphasize the customer as king but don’t clarify how sales results affect individual performance evaluations and rewards. Example:
A West African bank supposedly evaluated sales reps’ performance strictly on the volume of deposits they obtained each month. Each rep had set targets. But many salespeople who missed their targets kept their jobs. Some even got promoted ahead of superior performers. Sensing that evaluations were based on the branch manager’s whims, many high performers left.
Select the Right System
Some situations clearly call for making the customer ormanager king:
Other situations call for making the customer and manager king. Example:
The insurance industry typically uses a “customer is king” system, yet many sales teams are inexperienced because of high turnover. Making the manager king would initially help junior salespeople develop—but reps will start chafing under management’s oversight as they gain experience. Solution? Run two sales forces in parallel—funneling reps from a “manager is king” system into a “customer is king” system as they become more seasoned.
Every one of your salespeople will tell you that the customer is king. Sometimes, they’ll mean it, and that’s usually a good thing. If you press them, your salespeople may even tell you that the district or regional manager is king, and that’s not necessarily a bad thing either. The problems come when your salespeople aren’t quite sure who their boss is. Their confusion could be a sign that your company’s sales force controls—the various policies and practices that define the way you manage your sales team—are in conflict with one another. In researching sales and sales force dynamics over two decades, we’ve found that this misalignment invariably creates problems in sales functions. As salespeople struggle to resolve or work around the conflicts within the system, the consequences mount—first affecting individuals, then spreading to the entire sales force, and eventually hobbling the whole organization. Over time, the sales force begins losing its best people. Turnover rates soar. One European multinational we studied had lost half its salespeople in its home market every year for five years. Even if a company isn’t in such obviously dire straits, it may still be leaving a lot of money on the table.