B. Sales Function Considerations
“The Death and Rebirth of the Salesperson”
This discussion focuses on the process of and changes in this important area of marketing. We
also consider the role and value of effective sales force policy and strategy in the overall
marketing process for the organization. It is useful to update the examples so that students will
be able to identify readily with this concept based on their general knowledge of the companies
and products involved in the lecture/discussion.
The discussion begins by considering past sales force strategy variables. This leads into a
discussion of the implications for the introduction of new strategies for the future, given the
substantial technological and other changes sales professionals and firms will encounter in the
medium and long run environment.
Teaching Objectives
To stimulate students to think about the critical sales force and policy issues.
To recognize some of the directional variables in sales force policy.
Discussion
INTRODUCTION—IS THE CUSTOMER YOUR PARTNER?
Today’s customers want solutions, and companies are remaking their sales forces to satisfy
them. Nevertheless, total quality goals and sales quotas still clash. This is the primary theme
related to the new enlightened sales force of the future. In the past, sales people would brag
that their primary purpose in life was to push metal (IBM) or slam boxes (Xerox). Today, the
sales force gauges success as much by customer satisfaction as the units sold. The former is
generally a much more rigorous yardstick than the latter. As companies today are finding that if
you anticipate what your customers need and then deliver it beyond their expectations, order
flow takes care of itself.
As more managers awake to the challenge, old stereotypes are fading faster than Willy
Loman’s smile and shoeshine. Forget the mythical lone-wolf salesman; today’s trend-setting
salespeople tend to work in teams. The traditional sample case is more likely to hold
spreadsheets than widgets. Today’s best salespeople see themselves as problem solvers, not
vendors. They gauge success not just by sales volume but also by customer satisfaction. They
do not “sell”; they “partner” with the customer.
Companies that dismiss the new, more collaborative sales methods as a fad are likely to slip
behind. Today’s demanding buyers are running out of patience with mere product pushers,
whether at the new-car showroom, on the floor of a department store, or in the corporate
conference room. They will tell you that do not want to deal with anyone selling anything
unless they can tell the firm exactly how it will help their business.
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DEVELOPING A NEW ATTITUDE IN SELLING
If ever there was a business that cried out for a new way of selling, it is that of moving cars
from the showroom floor to the driveways of America. The familiar but widely despised old
approach is known among automotive historians as the Hull-Dobbs method, named after
Memphis dealers Horace Hull and James Dobbs, who reputedly created it following World War
II. In the old Hull-Dobbs drill, customers exist to be manipulated, first by the salesman, who
negotiates the ostensibly final price, then by the sales manager and finance manager, who each
in succession try to bump you to a higher price.
Car buyers are fed up. A recent survey by J.D. Power & Associates found that only 35 percent
felt well treated by their dealers, down from 40 percent a decade ago. In 1983, 26 percent of
buyers rated the integrity of their dealers excellent or very good; by 2001, that figure had
dropped to under 20 percent. “People feel beaten up by the process,” says the owner of 13
import and domestic franchises in the suburbs of Washington, D.C. “You think you got a good
deal until you walk out the door. The salesmen are inside doing high fives, and the customer is
lying out on the street.”
This is where Saturn came into the car game a few years back and presented its original,
no-argument, guaranteed lowest price sticker system. The price you pay for a Saturn is the one
on the sticker (between $9,995 and $18,675, depending on model and features). However, that
is only part of the package. Buy a Saturn and you buy the company’s commitment to your
satisfaction. Their contact with and to the customer may appear corny, but consistently Saturn
has scored high in the J.D. Power customer satisfaction study, just behind or above Lexus and
Infiniti, vehicles that cost up to five times as much. Maybe it is corny, but it works. The
philosophy of “new economy” car dealers, following the Saturn model, is to exceed customer
expectations.
Saturn reformed their sales methods to exploit an obvious market opportunity; the same is true
for the reformed IBM sales force, which is only half the size it was in 1990. Those who
survived are part of a new operation that is a cross between a consulting business and a
conventional sales operation. Big Blue now encourages buyers to shop for salesmen before
they shop for products.
Consultants obviously need a more sophisticated set of skills than metal pushers, and in their
new role, as purveyors of solutions rather than products, IBM’s sales teams do not always
recommend Big Blue’s merchandise. About a third of the equipment IBM installs are made by
DEC and other competitors.
One aspect of managing a sales team has not changed much: How you motivate
flesh-and-blood salespeople. It remains the same idiosyncratic bleed of financial incentive,
inspiration, and cajolery. As the sales pros will say: “There is nothing magical about sales. You
want to be truthful and present a credible story so people will want to do business with you
now and in the future. To sell effectively, you need to present the facts, list your supporting
arguments, and learn all the nonverbal cues your customer gives while you’re making your
presentation.”
With one element of sales motivation, how they pay their salespeople, many companies believe
they can improve on tradition. IBM, for example, is following a growing trend to base
compensation partly on customer satisfaction. For some of the new wave salespeople, 45
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lot less.
WE’RE ALL SALESPEOPLE—OFFICIALLY OR UNOFFICIALLY
What does it take to be a truly outstanding salesperson? As is always the case, there are no
simple answers. Moreover, achieving excellence in one type of sales endeavor, say selling
personal insurance undoubtedly requires somewhat different aptitudes and skills than achieving
High-performing salespeople:
Represent the interests of their companies and their clients simultaneously to
achieve two-way advocacy.
Exemplify professionalism in the way they perform the sales job.
Are committed to selling and the sales process because they believe the sales
customer.
I. Background Article
Issue: The Biggest Problem in Sales
Source: Erin Strout, “To Tell the Truth,” Sales & Marketing Management,
July 2002, pp. 40-48.
that promotes deception?
Every fat commission check has a price tag. For Matt Cooper (sales person’s name has been
changed for this case) the cost of earning up to $150,000 per sale was spending every day
lying to his customers. It was the promise of huge bonus checks—not his $40,000 base salary
—that lured him to join the sales force of a large, well-known Internet company two years
careful wording and fudging numbers.” Among various other deceptive tactics, the Internet
Company’s salespeople would book $2 million deals, promising a certain amount of
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and thousands of other dot-coms. The boiler-room culture began to take its toll on Cooper,
especially after he had to begin screening his calls to avoid irate customers. “Some of them
had just spent two million dollars on an online campaign and got completely screwed,” he
says.
Finally Cooper couldn’t take it anymore. “I started selling only what I knew worked, because I
couldn’t lie anymore—so my managers told me to either close more deals or find another
job,” he says. “It was the kind of culture where they broke you down and rebuilt you to be an
animal.”
reveals that 47 percent of managers suspect that their salespeople have lied on sales calls—
only 16.5 percent have never heard one of their reps make an unrealistic promise to a
customer.
But don’t be too quick to blame your salespeople for their deceptive behavior. What drives
customer to “prove” that the banner appeared as promised.
“We might have sold all of our telecommunications inventory, but then another company
would call to say they wanted to spend $50,000 on a campaign,” one rep at a New York
dot-com says. “What would we do? Book it, even though all the space had already been sold.
Internet advertising isn’t the only industry that has sold fictitious products. As California is
painfully aware, Enron and other energy companies allegedly made a fortune by selling
electricity that didn’t exist, rewarding traders for coming up with new schemes, and lying
about how much energy the company had in its supply. As more details emerge about Enron,
years ago, and 36 percent believe there’s been no change at all. What kind of fabrications do
salespeople resort to? The survey shows that 45 percent of managers have heard their reps
lying about promised delivery times, 20 percent have overheard their team members give false
information about the company’s service, and nearly 78 percent of managers have caught a
most profitable salespeople resort to—and experts do not necessarily blame the behavior on
the individual. “There are probably three participants in this—the customer, the salesperson,
and the company,” Zoltners says. “They are all a part of the pressure to make money and the
combination can make a rep succumb to it.”
unethical strategies.
“Where I worked, all of the reps were in this big room, standing up, pitching to clients over
the phone,” Cooper says. “People might hold their phones out so everybody could hear them
closing a big deal. Making a three-percent commission off of a multimillion-dollar deal makes
you willing to lie.”
have to create fair rewards for people.”
Brett Villeneuve, operations manager at Go Daddy Software, in Scottsdale, Arizona, says he
purposely hires reps that are less money-driven and more relationship-oriented. “Quotas, in
general, are usually set too high,” he says. “We increase base pay and make realistic sales
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needs.
Though Villeneuve tries to run a tight ship when it comes to business ethics, he has
experienced a few situations where salespeople have crossed the line. “I just had to fire one of
our better sellers after I received a complaint from a customer,” he says. “In two days I got
four calls that a rep had put charges on clients’ accounts that he wasn’t supposed to. It made
somebody because of it, the message you send internally is really strong.”
That message is key to instilling an ethical standard in the corporate culture. Some managers
do this by giving employees a means of questioning behavior they may observe. According to
the SMM survey 56 percent of respondents have a process in place that enables salespeople to
says.
Though the intranet tool is still new to Go Daddy, executives say the most common type of
anonymous notifications relate to customer treatment by individual salespeople. Other
examples include reporting a coworker’s uncontrollable attitude or anger with a client, and the
failure of another salesperson to follow procedures in place to assure proper customer care.
treated with disrespect.”
The key driver of a sound sales strategy is that the leaders of the organization exhibit the
values that they want employees to follow, says Steve Walker, president of Walker
Communications, a stakeholder research and measurement firm in Indianapolis. “Most people
want to do the right thing, but when bad situations arise it’s usually when the leadership has
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actually don’t want information that may indicate that there’s a problem. They don’t want to
officially know that their sales force is lying.”
Sometimes it’s the executives themselves who promote deception. Take VeriSign Inc., a
A U.S. court ordered the company to cease the direct-mail campaign in May, saying it was
misleading to consumers. VeriSign would not comment on the litigation, but a spokesperson
said the company is complying with the court order. “The industry is plagued with unethical
marketing and sales tactics,” Leedy says (Go Daddy is a VeriSign competitor).
money.”
Top salespeople with poor ethics are the trickiest creatures for managers to deal with, experts
say. Bill Blades, a sales consultant in Scottsdale, Arizona, has walked away from projects that
involved dishonest salespeople because CEOs hesitated to get rid of them. On one occasion
Blades asked the president of a company to let one top salesperson go, because he consistently
“He’s not allowed to make any client calls while we figure out what value he brings to us,”
Blades says. “He’s missing the national sales meeting, which is embarrassing for him.”
Such discipline isn’t necessarily the norm among sales organizations. The SMM survey shows
that although 87 percent of respondents believe salespeople who are caught lying should be
cowardice.”
Making an example of unethical salespeople is one way of letting the rest of the team know
that lying won’t be tolerated by the company. When somebody is allowed to sell by whatever
means necessary, it sends a message that the behavior is acceptable. Where Go Daddy’s Leedy
used to work—a call center sales environment—the signals were clear to everybody. “You
actions were ever taken,” she says. “To the people who were lower in the company it was an
example of what they needed to do to be recognized.”
Another way to safeguard your team against dishonesty is by making smarter hiring decisions.
“I always talk to a potential hire’s former employers because I find they will say more about a
looking at past behavior.”
Keeping a sales organization honest means keeping close tabs on its performance. “I find that
conducting monthly evaluations is more productive than annual evaluations,” Blades says.
“Get salespeople to tell you how they achieved something or what they think went wrong. You
have to be strong and let reps know from the beginning that you’re a straight shooter.”
YOU’RE GETTING CALLS FROM CUSTOMERS
It’s no surprise that usually the first person to recognize they’re being duped is the customer.
Clients are managers’ best resource when it comes to checking up on salespeople, and if
they’ve experienced bad service they won’t hesitate to speak up. That’s how Brett Villeneuve,
REPEAT BUSINESS IS DOWN
You can only lie to a person once—after that trust is gone. If loyalty is something salespeople
struggle to attain, it probably means that they don’t do much to deserve it. “You only buy from
people that you like,” says Andy Zoltners, a marketing professor at the Kellogg School of
Management. “In relationship selling you can’t lie—if you mess up you’ll never hear from the
client again.”
YOUR SALESPEOPLE ARE MOTIVATED BY FEAR
worried about survival.”
RECOGNITION AND REWARDS ARE SOLELY BASED ON NUMBERS
If the people heralded as sales superstars on your team are the reps closing the most sales, they
probably aren’t the ones giving the best service. Recognizing financial gain over how it’s
achieved isn’t a sound strategy for producing an ethical sales team.
YOU LIE, TOO
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salespeople will adhere to it.”
II. Case
Hewlett Packard—Computer Systems Organization: Selling to
Enterprise Customers
HBS Case: 500-064 TN: 502-071
Teaching Perspectives
products to integrated solutions.
This case introduces several sales force management issues. It traces the evolution of the
HP-CSO’s sales organization through the eyes of the head of its sales organization. HP has
traditionally treated the sales force as a cost center with the product divisions holding profit
challenge faced by firms that would transition away from a technology to a customer focus and
from product sales to solution selling.
Background
In late 1996, the head of worldwide sales for HP-CSO, was reviewing the results of an audit of
regional sales approach.
New recommendations would necessitate another round of drastic changes in the way HP-CSO
manages relationships with its large enterprise customers. Diaz did not want to put the sales
organization through another round of changes unless he was sure they were necessary. The
situation was also more difficult because HP-CSO was having its best years in terms of
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Questions
1. How is selling instruments (HP’s traditional business) different from selling computer
such a structure?
its strengths and weaknesses?
3. Do you agree with the findings of the two audits? What about the consultant’s
approach to managing enterprise customers?
Diaz?
5. Is this the time for HP-CSO to institute more changes?
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