Without sales no company can survive, so why is the Sales Professional so precarious an occupation? By rethinking sales management, is it possible to improve performance and create truly sustainable and resilient organizations?
High turnover of sales staff
According to the US department of labor statistics (2018), salespeople are among the shortest tenured workers in the professional ranks with an average of just over 3.2 years in their current jobs, compared to almost 6.5 years for management employees. The online business intelligence company “Gong.io” said that in 2017 the average tenure of a VP of Sales was 19 months (down from 22 months) and that less than 50% of sales people met their targets in 2016, with the trend continuing downwards.
Voltaire said “every now and then you have to shoot an admiral to encourage the rest.” But although the knee-jerk reaction to fire someone when expectations are not met is a wake-up call, it is also covering up deeper problems that no end of talented sales people will ever be able to solve.
Customers require many reasons to make a purchase, but only one not to. Poor service, reliability issues, late delivery, unfulfilled performance are just some of the issues that prevent sales and end up negatively impacting sales and the salesperson.
In traditional organizations, decisions about products, plans, sales strategy and sales quotas are made at the top and flow down through the hierarchy of command to the sales staff out on the street. Each month sales reports flow back up the chain and it’s either thumbs up, or down depending on what happened out in the real world. It’s akin going over the top in World War I trench warfare. The soldiers didn’t make the plans, often didn’t know what the plans were, but had a very high chance of being shot trying to carry them out. The military now regard that approach as cruel and futile, but the principles linger in the civilian world.
To satisfy the customer, the supplier has to keep their promises and deliver what its customers want; but that doesn’t always happen, why?
The culprits are familiar:
- failure to understand customer needs
- understand customer needs, but fail to communicate them
- understand and communicate customer needs, but ignore them
- customer needs changed but no one realized
- any combination of the above
Traditional corporate hierarchies are like silos which prevent lateral communication and input from below. They are designed to preserve the chain of command, predictability and maintain control. But because of the variables and uncertainties that impact sales, you cannot just command and expect that it will always be done, it’s much more complex than that.
Within the traditional framework, the Sales Team is not a team at all, just a group of people that all report to the same person. In fact, sales people often think of themselves as lone wolves, focused on their commissions. That might be fun or exhilarating at times, but it often ends prematurely when customer sales slow down or dry up completely.
Also, in many organizations sales people are viewed negatively by their colleagues, who do not value their skills, secretly envy their perceived freedom and blame them for either over-selling or not selling enough. It creates a tension and an unhealthy, uncooperative attitude which is damaging to everyone.
Due to the immense change that has taken place in technology, culture and society, the traditional hierarchical organization is no longer effective and actually works against the best interests of almost everyone involved. There is also evidence that the majority of executives and leaders are also unprepared for what’s next.
“Executives around the world are out of touch with what it will take to win, and to lead, in the digital economy. Digitalization, upstart competitors, the need for breakneck speed and agility, and an increasingly diverse and demanding workforce require more from leaders than what most can offer.”*
* D. Ready, C. Cohen, D. Kiron, and B. Pring, “The New Leadership Playbook for the Digital Age,” MIT Sloan Management Review, January 2020.
Management Guru, Dave Snowden, says that complex work is characterized by situations where only partial or fragmented knowledge is available, requiring people to experiment, or as he says “Probe, Sense and Respond.” By any definition Sales is complex because markets, customers, competitors, prices and technology are constantly shifting positions.
The growth of Agile and Scrum for complex technical work demonstrates the acceptance of non hierarchical and team based organizational models for creating today’s modern technology, but the same logic is rarely applied to the commercial process. So if we accept that Sales is a complex issue and acknowledge the need to improve and sustain results over the long term, a new approach is needed.
Companies claim to be customer-centric, but to wear that mantle, organizations must constantly learn about customer needs, desires and pains and be able to act on that information. With all the will in the world, hierarchical organizations have neither the mindset nor the tools to work like that, as W. Edwards Deming said: “In the hierarchy the boss is the customer, who takes care of the real customer then?”. But within the context of the Agile Customer Team, discussed later in this article, the cross functional Customer Team has the organizational framework, skills, resources and above all the mandate to connect deeply with the customer and create a common understanding within its own organization of what needs to be done to satisfy the customers and develop a long term relationship with them.
Agile Lean Leadership (ALL)
As previously noted, Agile has been applied very successfully to software development projects for sometime. However, while Agile Lean Leadership (ALL) shares some DNA with Agile and Lean, it provides a greatly expanded model which can be applied to almost any kind of organization, doing any kind of work.
Based on many years spent providing professional consulting services and following extensive research, Agile Lean House and partners created the Agile-Lean Leadership model to focus on value creation and help organizations build resilient and sustainable operations that have the best interests of all stakeholders at heart.
Instead of the traditional, top-down hierarchical management model, ALL centers on self organizing, cross-functional teams which are linked together in the overall value stream of the operation. They stress transparency and foster an environment in which it is safe to experiment and develop new ideas. The model is highly efficient and devolves much of the decision making to the teams which have the knowledge and the skills to make them.
ALL organizations are resilient and better equipped to deal with turbulence and change in the marketplace. They are able to sustain consistent performance over the long run and provide value for all of their stakeholders.
For more information about Agile Lean House and Agile Lean Leadership see: https://agileleanhouse.com/birdseye
Applying ALL to Sales
Agile Lean Leadership can be used for any organizational function, but the discussion below considers its application in the all important sales operation.
It addresses the possibility that poor sales results may not always be just because of a poor sales person and that in the interests of serving the customer it is necessary to look at all the elements that go into making a successful sales operation.
In fact one of our heroes, W. Edwards Deming said that 95% of problems and issues we deal with in organizations have their origin in the system and only 5% comes from the people not living up to expectations. It is the leadership that can change the system.
The role of incentives
Commissions are a double-edged sword; wonderful when they are rolling in and a source of great anxiety when they are not. Moreover, the pursuit of commission as the main incentive is also dangerous. While no one likes their integrity to be questioned, the truth is that when money and career longevity are at stake, liberties are often taken with the truth. Customers can be misled to create the perception of a competitive advantage and sales forecasts and pipelines can be exaggerated to artificially maintain an optimistic outlook.
Customers end up being disappointed when the truth dawns, which may destroy any hope of repeat business. And misleading one’s own colleagues can be equally destructive, perhaps causing the company to ramp up inventory or take on projects that it can only afford if the sales forecasts turn to reality.
So while there may be excellent reasons to offer employees incentives to work hard and contribute, commissions in the traditional sense can do more harm than good over the long term. It is also an anomaly that only sales people get commissions. It takes many different disciplines to create, deliver and support a product so why aren’t groups offered motivators?
In Agile Lean Leadership we discuss the balance between Intrinsic and Extrinsic motivations, for example the interplay of job satisfaction and financial rewards. Numerous studies show that in the interest of creating sustainable organizations, intrinsic motivations are far more powerful and effective than money alone, leading to the conclusion that an alternative to commissioned sales is required.
A recent Gallup Poll suggested that around 68% of employees are disconnected from the corporate aims and the main thrust of the business. That’s a lot of people for whom work is perfunctory and a drudge, but moreover it is a massive waste of valuable experience and input.
The word “committee” may have its own negative connotations, but we know that teams are better at solving problems than individuals because they bring different perspectives to the issue. By investing in cross-functional, self-organizing teams, companies get the benefit of every team member’s input, while allowing team members the satisfaction of knowing that they made a contribution. Companies may still want to offer team-based bonuses, but that should be the icing on the cake, not the cake itself.
Traditional sales tactics and attitudes
It is often heard that the sales people should sell what they have rather than what they would like and there is logic in that concept – you can’t sell what you don’t have and probably every sales person wishes they had something that a competitor has that they don’t.
But, to build a sustainable and resilient organization, things will have to change occasionally. The aim of an Agile organization is to create an information loop that acquires input about customer needs, feeds it to the organization which has a mandate to act upon it in the interests of better serving the customer. Meaning that over time the supplier gets ever closer to the customer by developing products and services that consistently match, or better, exceed customer expectations. It’s not rocket science as they say, but it requires a “listening” organization that is transparent, inclusive and committed.
Another common misunderstanding is that if you dog the customer enough, they will ultimately succumb and place an order. While persistence is a virtue, it can easily be overdone, coming across as desperation and causing irritation to the customer. And, if for some reason the customer suddenly becomes unresponsive, there may be far more serious reasons; budget was cancelled, better offer from a competitor etc.
The traditional way of conducting sales and motivating sales people is largely obsolete. Customers have extensive access to information that let’s them compare and contrast and technology moves so fast, it’s hard for suppliers to keep up sometimes. So building a solid relationship with the customer base on trust and demonstrating a commitment to create value for them over the long haul is a better approach that helps sustain both customer and supplier.
Symptoms, causes and remedy
High turnover and poor sales figures are the symptoms, but the causes are failure to understand customer needs and translate them into actions which result in the timely delivery of products that meet customer needs.
The Agile-Lean Leadership remedy is the “Agile Customer Team” (ACT). It is a structure of distinct roles, a cross-functional Team and due process proven to work in the classic Agile disciplines and in areas of high complexity, which will be summarized below.
Agile Customer Team (ACT)
ACT’s aim is to create long-term sustainable businesses, by focusing all organizational energy on the pursuit of highly satisfied customers. The elements that go into making that happen include a constantly refreshing feedback/feedforward loop which starts with the customer and flows through all the team members.
How Agile Customer Teams helps
- Customer needs become the corporate obsession
- Repeat business, long-term customer relationships are the aim
- Sales is a corporate-wide responsibility
- Transparency and realism replaces ignorance and over-optimism
- Cross-functional Agile Customer Teams
- Mandate team accountability
- Engage with the customer
- Create solutions based on collective input and consensus
- Provide feedback and feedforward with the aim of constant improvement
- Provide for personal development for team members
Cross-functional ACT example
Cross-functional teams feature people with different and often more than one skill; it is highly desirable to have multi-skilled team members to make planning easier and improve resilience. The actual skills are domain specific, but often include some of the following:
- Sales. Being able to engage in sales, close deals, negotiate, demonstrate solutions etc.
- Marketing. Generally providing customers with relevant information, that keeps the customers’ attention, so that the team will be on the radar, when a purchase becomes realistic.
- Support. Being able to demonstrate products and solutions in detail and also deliver post sales support.
- Financial. Being able to invoice customers, work with late payments etc. Often working together with a team in the Center, that deals with heavy lifting of accounting.
- Operations. Preparing all sorts of practical details with respect to fulfilling the customer’s request, including logistics. Often working with a team in the Center, that does the heavy lifting for example of shipping.
- Development or customization. Being able to build to specification or adapt existing products to the actual customer’s needs.
- Assistance. Being able to go out to the Customer or work with him online to implement a product or to deliver a service.
- Training. Deliver training to customers.
The ACT Structure
Rejecting traditional command and control management doesn’t mean that ACT has no structure, on the contrary. Based on a set of guiding values and principles, it provides a framework with a declared mission and assigned roles, the combination of which is designed to deliver the team goals. It mandates transparency and by extension accountability; however, it also provides the psychological safety that allows all team members to contribute without fear and gives the team the power to develop solutions based upon experiment when necessary.
Artifacts and Events
To provide clarity with the greater organization, ACT’s maintain a number of documents or artifacts which describe them, their aims and their interorganizational relationships. The team also participates in regular events or meetings designed to keep everyone up to speed, to review and to consider improvements. In the true spirit of Agile events are deliberately short and time-boxed because while you are in a meeting you are not doing your job.
This article is titled “Death of the Salesman” and while it infers that the traditional sales role is dead, or at least dying, that by no means implies that the function is less important; in fact, the reverse is true. Sales is the lifeblood of every organization and therefore of vital importance. But due to the rapidly changing landscape and the increasingly complex nature of products and customers, many sales organizations are failing to meet demands.
Poor performing sales teams and high turnover of sales people is a symptom of a problem not the cause; applying outdated methods to new circumstances is doomed to fail. The Agile Customer Team (ACT) approach provides a strategy for long-term customer retention and sustainability, not just by serving the customer, but by focusing on customer needs and creating a cohesive organization that works together to understand and satisfy them.
As the saying goes “many hands make light work” but in today’s knowledge-based economy, many brains and different skill sets are required to make businesses successful. The key is for those brains and skills not to work alone in separate silos, but together in cross-functional teams with common goals and common values, it doesn’t work to impose rules and regulations.
The use of Agile Lean approaches outside of technology development is still an emerging practice, but those that have tried it have achieved great success by engaging more closely with their customers and having internal structures that work together to serve the customer. It’s not the death of the salesman, but the birth of the Agile Customer Team.
How can Agile Lean House help?
ALH has more than 15 years’ experience helping companies get more from their efforts through the adoption of Agile-Lean principles and patterns of work. It has a rich vein of resources to put at its customers’ disposal, including:
- Agile Lean Leadership coaching and mentoring services
- On-line and in-person training courses
- On-line training courses tailored for specific customer use
- Regular educational webinars
- Software and analog tools for managing Agile-Lean workflows
For more information on Agile Lean Leadership or Agile Customer Teams, or to discuss how they might be implemented in your organization please contact: Paul Norton: firstname.lastname@example.org