Sales Leadership During and After the Crisis

Note: This article originally appeared in Top Sales Magazine May 2020 issue pages 28-29. You can find digital access to this article here.

Even in good times, life in a sales organization is filled with short­ term deadlines and pressures: sales per quarter, sales per rep, did she or didn’t she meet quota. As a sales manager once said to me, “In this job, if you don’t survive the short term, you don’t need to worry about the long term.”

So, it’s not surprising that, in the current crisis, sales managers daily receive advice about the short term: “3 Steps to Survive the Downturn . . . 4 Ways to Embrace Your Customer . . . 5 Ways to Do Online Events,” and so on. These suggestions are relevant: survival is at stake for many businesses. But eventually the pandemic will abate, and you must live with the resource decisions you make now.

Sales managers’ responsibilities extend beyond keeping the lights on. Their leadership makes a difference across the business because, for better or worse, selling activities always affect core drivers of enterprise value. The current frightening hiatus from business-­as-­usual is an example. In thinking about how to restart business, sales managers—whatever else they do—should pay attention to the following:

Cash and Selling Cycles. The crisis has demonstrated, painfully, the importance of cash. As the song in the musical Oliver puts it: “Money in the bank, that’s what counts / Money in the bank in large amounts.” The selling cycle is usually the biggest driver of cash out and cash in. Accounts payable accrue during selling, and accounts receivable are mainly determined by what’s sold at what price and how fast.

In surviving and recovering from a crisis, increasing close rates, the efficiency of a sales model and its segment focus are vital activities. Consider: what’s the impact on your company from shortening selling cycles and accelerating time­-to-­cash by 1 week, 2 weeks, or more? Who are the customers and segments where that is more likely? If you don’t know, now is the time to find out. It’s also the time to work on better customer on-boarding and training practices that can accelerate time­-to­-productivity for your sales team and company after the crisis.

Scope and Customer Selection. “Scope” is the strategy term for the choices companies make about where to play. Every firm is always making it easier or harder for different types of customers to do business with it. In practice, scope is not determined by senior executives sitting in a room and discussing the market: that’s brainstorming. Scope is determined by the daily call patterns of the sales organization: where that time, effort, and selling expenses are or are not allocated.

No company sells to a market. It sells to specific customers. In crisis situations, you can’t do everything and must set priorities. Make sure that key customers are aware of supply disruptions or other problems. Don’t assume that, in a pandemic, “everyone knows”: they are absorbed with their own business issues. Big accounts drive a disproportionate amount of revenue at most firms (the 80:20 rule), and reliance on large customers has grown. Publicly traded U.S. companies must disclose any customers that account for more than 10% of their revenues. A recent study found that, in many industries, these buyers were 20 – 25% of sales by 2015, up from less than 10% two decades earlier. In other words, even before the pandemic, there was a big change in the customer portfolio of many companies. 

Your salespeople must send consistent messages to customers, not ad hoc responses. Don’t leave this aspect of crisis management to emails about your “commitment” to customers, or telling reps to “stay focused and take care of customers.” That’s an invitation for fragmented responses, multiple promises, and longer­-term costs to the brand and strategy. Managers must manage. In an extended disruption, it may even be in your long-­term interest to find Data and Process: To do the above, you need good customer data: the profitability of different accounts, your cost­-to-­serve customer A versus customer B, who at accounts are the buyers and influencers with whom we must stay connected, and so on. My experience on Boards is that visioning discussions are fun, and quarterly financial results are tracked closely. But the customer information required to survive and then restart the business after a downturn is often lacking. One reason is that in many firms that data is effectively the “property” of the individual rep, not the company, making it difficult to set segment and customer priorities.

Use the current time to get this data and establish a process for keeping that front­-line information flowing and timely. A key process is performance reviews, because much of the relevant information is at the account level. When sales managers do sloppy reviews, they perpetuate a culture of under-performance and inhibit the flow of this information. Then, during and after a crisis, “customer focus” remains a slogan, not organizational reality.

Let me be clear: my message here is not a version of “chin­-up: every crisis is an opportunity.” Maybe, maybe not. My message is that because customer acquisition and retention are the lifeblood of a company, sales managers establish foundational conditions for a business. When much of the world economy is shut for weeks and possibly months, cascading bankruptcies and high debt loads mean a tightening of purchasing decisions, cap­-ex and other expenditures in most markets. Your sales efforts will need to be more focused and productive after the crisis. Stay healthy and start now.                               

Frank Cespedes teaches at Harvard Business School and is the author most recently of Aligning Strategy and Sales (Harvard Business Review Press).

Sales Methodologies and Selling

Sales methodologies play an important role. A common approach in a sales force allows for consistency, dissemination of best practices, acceleration of learning, and it helps the firm to scale because management then has common metrics to monitor and evaluate.

Hence, the allure to sales leaders of methodologies that purport to provide “the playbook . . . predictable revenue . . . and a repeatable cadence.”

However, it’s rare that the same methodology is relevant across buying-selling situations. Over time, most salespeople must deal with new products, new competitors, substitutes, and changing buyers and influencers at their customers. At any point in time, moreover, most salespeople have multiple accounts and face a changing array of customers and tasks. One buyer is primarily concerned with innovative product features while another is most concerned with just-in-time delivery. The “out” vendor typically faces different tasks than the seller of the existing solution at that account.

Developing and maintaining a relevant selling approach is a process, not a one-and-done event determined by a particular methodology. It’s crucial that reps adapt to different buying situations. If not, then (as is often said about academics) a methodology leads your people to “learn more and more about less and less.” It’s your responsibility to evaluate the fit of a methodology with the required tasks and to change the approach when needed. The following are useful distinctions to keep in mind in analyzing sales tasks and keeping selling up-to-date in your business:

Differences within an industry. Probably the most common response I get when I ask managers where they sell is a broad vertical-market answer like “health care” or “financial services.” This is too abstract for determining sales tasks. Sellers of medical equipment must be especially good at managing and closing complex deals that involve price negotiations and custom applications. Meanwhile, in biotech, salespeople must be knowledgeable about the research and results of clinical trials. A methodology which is indifferent to these differences will have limited impact.

In financial services, a brokerage firm like Edward Jones relies on local networking and relationship-building skills in selling a relatively simple set of products to its buy and hold customers; Vanguard Sales methodologies play an important role. A common approach in a salesforce allows for consistency, dissemination of best practices, acceleration of learning, and it helps the firm to scale because management then has common metrics to monitor and evaluate. Frank V. Cespedes relies on a self-service model for selling its no-load index funds; and Goldman Sachs sells a broad array of everchanging complex financial instruments primarily to institutional accounts. A meaningful sales methodology in any one of these industry sectors has much less meaning in the others.

Differences within a category. Sales tasks also differ within the same category. Companies that sell software-as-a-service (SaaS) are a good example. Consider a SaaS service like collaboration software or file sharing. These applications are typically not mission-critical for customers and are sold at relatively low monthly subscription prices. Buyers can gather much presale information via an online search. Here, inside sales organizations—“dialing for dollars”—are paramount. Sellers can conduct online demo’s and provide a proposal to prospects with a few clicks on the website. Key sales tasks include activities such as upsells (getting the customer to purchase a premium version of the product) and selling more seats. A SaaS platform service such as CRM, on the other hand, requires sophisticated integration for multiyear contracts. This is a complex initial sale with a longer selling cycle that is harder to do online or by phone. Selling often involves the vendor’s engineers and key tasks focus on increasing product applicability and price with new functionality sold to different decision-makers, while minimizing customer churn.

Differences when target buyers change. Because sales tasks are ultimately determined by buying processes, using “product” as a determinant of selling approach is dangerous. An example is when companies move from SMB to Enterprise customer segments. ScriptLogic sold diagnostic tools to system administrators in the IT departments of small and midsized companies (SMB). It built a growing business with a land-and-expand selling approach and a “Point, Click, Done” value proposition where the administrator could expense the purchase on the company credit card. But this approach was not effective in selling to enterprise accounts. Why? Selling the same products to enterprise customers meant a change in sales tasks and channel requirements. The same software sold to SMB accounts on a straightforward ROI basis must be integrated into the Enterprise customer’s IT systems and go-to-market model. In SMB, the owner of the business is often the buyer and decision-maker: point, click, done! But in Enterprise accounts, the decisionmaking the process is more dispersed and operating budgets that are set over 12
years are hard to reset for any vendor.

Among other things, these differences in usage and purchase criteria shift the basis of the seller’s credibility: from knowledge of the software and best practices in standalone inside sales processes to knowledge of that Enterprise customer’s business model and how the software fits into extant customer-acquisition activities.

This means a different way of demonstrating ROI, the ability to shepherd a project—not only a product— through the buying process, and salespeople who can work with systems-integration partners on presale applications development and postsale integration and service issues at those customers.

Training firms that develop and deliver sales methodologies have an incentive to apply their particular method everywhere. But buyer beware.

Mort Lachman wrote for comics. He said that you can write for someone else only if you can “turn him on in your head. . . . You have to hear their voice and their inflections as you type; and hear the difference between how [each person] would say it.” Lachman advised that “if they sound all alike to you, be a plumber. You’ll make more money.” The same goes for selling: if all customers sound alike to you and your sales methodology, do something else; you’ll make more money.

Frank Cespedes teaches at Harvard Business School and is the author of Aligning Strategy and Sales, and is writing a new book on what is (and is not) changing in selling and the implications.


Why ‘Tell Them Something They Don’t Know’ Is Bad Advice in B2B Sales


by: Frank V. Cespedes and Tracy DeCicco

This article was originally published in Harvard Business Review on August 19th, 2019

Few people in sales would dispute the importance of bringing insights to customer conversations. One might call this the Jane Austen rule of selling: a seller in possession of a desired prospect must be in want of a relevant insight. Or as one executive says to sellers who call on him: “Your job isn’t to ask me what keeps me up at night. It’s to tell me what should be.”

Over the years, we’ve observed many salespeople who successfully make developing and delivering meaningful insights a core part of their approach. Their experience and our research indicate that, at a minimum, you need to do more than “tell people something they don’t know.” That approach can lead you to develop irrelevant factoids. Instead, we suggest crafting a strategy based on whom you’re talking to and where you are in the sales cycle.

Who Are You Talking To?

In general, as one salesperson told us, “the higher you go up the chain, the more industry insights matter.” If you’re talking to a C-Suite or Line-of-Business executive, insights are crucial; if you’re meeting with a mid-level IT Director, you’ll probably want to spend more time on product functionality and ask more questions.

Choosing the wrong approach can have negative consequences. This is supported by data by, which recorded and analyzed sales meetings from thousands of deals made on web conferencing platforms. At meetings with an SVP-level buyer or higher, the data indicate a strong negative correlation between asking discovery questions and closing deals. Once you’ve asked a few questions, every additional question with a busy senior buyer decreases the odds of success. On average, successful meetings here involved about 4 questions while unsuccessful meetings averaged 8. For meetings at lower levels, however, successful sales calls averaged 11 to 14 questions. When developing your strategy, keep in mind that lower-level managers are gatekeepers; their job is to vet vendors and their products. Senior-level managers, on the other hand, focus on business issues, which makes them more receptive to insights.

Here’s an example. Eric sells data-analytic tools for an IT firm. He called on a large U.S. retailer shortly after a winter storm had shut down its largest distribution center, which represented about 25% of inventory shipped to its stores. In conversations with Eric, lower-level managers framed the issue as a logistics problem, so Eric explained to them how his firm’s tools could provide data to help optimize flows and reduce delivery costs while the distribution center was being repaired.

But at subsequent meetings with more senior executives, Eric went beyond logistics costs and framed the issues and solution differently. Since the chain was also in the early stages of implementing an omni-channel bricks-and-clicks strategy, Eric brought examples illustrating how markdowns and out-of-stocks have a bigger impact on margins than logistics costs; why it’s important to make pricing and other elements of the in-store and online customer experience as seamless as possible; and how other stores have utilized data-analytic tools to do this. Senior executives approved the sale and at a scope wider than a purchase for logistics software.

Where Are You in the Sales Cycle?

In an early meeting with a senior buyer or influencer, it’s typically important to demonstrate that you can articulate how your product relates to key trends, opportunities, challenges, or evolving best practices in that market. You can do this by indicating who you know (people and companies using your product to drive business value and financial benefits) or what you know (your firm’s viewpoint about industry trends and the so-what implications), or both.

“Senior executives,” a senior partner in the consulting practice at a Big 4 firm notes, “are typically impressed when informed about the reality in their market, how it applies to their strategic goals, and how we can help execute required initiatives in their company with their people.” If she were selling to a retailer, she told us, she’d look beyond the common-held belief that retail is in a massive decline.

For example, U.S. spending in retail stores has increased every year since 2009; an average of 48 million square feet of retail space has been built (not shuttered) annually since 2010; chains operating more than 50 locations opened about 4,000 more stores than they closed in 2017; and analysis suggests that the biggest cause of mall closings has been newer shopping centers in that area, not ecommerce.

Industry examples can be useful, too. Since adopting products and services usually requires customers to make changes to a wider usage system, they’re usually hesitant to buy. Here, examples can provide what researchers call “social proof”: the fact that people are more likely to act when they know others have. As one salesperson emphasizes, “Start with something that demonstrates you understand how people make decisions in that sector. At this stage, it’s typically not competitors you should worry about; it’s the status-quo because 60% of all buying ‘decisions’ are to postpone a decision. So in initial meetings, I look for an industry issue or example they need to know about to make a decision.”

At later stages, senior leaders have different needs. As the senior partner in the Big Four accounting firm said, “The selling difference then is typically how we can uniquely frame and implement a solution for their organization.” Why? Senior buyers often need to justify a significant purchase to others in their organization, and they typically do so by addressing a market challenge or opportunity. Moreover, in many service, software, and professional services categories, ROI is inherently “experiential value”— that is, the buyer doesn’t really know the nature or magnitude of the value until they experience it in post-sale usage. At this stage, they want to know how you’ll follow through at the implementation stage. In fact, a classic study found that across industries the top criterion senior executives use to judge the salespeople they meet is the salesperson’s ability to marshal the selling firm’s resources.

Providing insights is indeed a foundation and difference maker in many buyer-seller interactions. But, as always in sales, influence is bestowed by the buyer as well as earned by the seller.

How B2B Companies Can Win Back Customers They’ve Lost

by: Frank V. Cespedes and Leon Poblete

This article was originally published in Harvard Business Review on June 3rd, 2019

Most research and training in sales focuses on acquiring customers, but, as ecosystems become increasingly dynamic and discontinuous, it’s also important to focus on winning back customers you’ve lost.

Reacquisition is especially important for B2B companies. Because of current trends— increase in the number and size of mergers, the variety of choice in global markets, and uncertainty about trade wars—customers are constantly re-evaluating their relationship with suppliers and making changes. Losing these customers is increasingly costly. As recently as 2014, for example, “the average publicly traded manufacturing firm received over 25% of its revenue from large buyers, up from 10% in the early 1980s.”

The process for reacquiring a customer requires a different approach than acquiring new ones. For one   thing, your previous customers will have prior experience, knowledge, and long-held assumptions about   your people and capabilities. Conversely, you have a basis for judging if that customer is worth  pursuing.

In our study of 26 broken customer-supplier relationships, we found that companies that had  successfully won back a customer followed a similar pattern. They identified the reasons for the initial dissolution, applied the right cost-benefit analysis, conducted an honest conversation with the customer, and accommodated their specific requirements.

To illustrate the process, we’ll use two companies, which we’ve disguised: Brex Tech and RILF. In 2009, Brex Tech, who supplied RILF with electronic components for its optical devices, lost RILF as a customer, but managed to win them back in 2012. Here’s how they did it.

Reasons for dissolution. The first step in the reacquisition process is to identify the reason why the relationship ended. Some buyer-supplier relationships have contractual end-points (e.g., projects scheduled for a specified period). Others may simply fade away due to a lack of attention. Pricing pressures, alteration of product specifications, or changes in ownership are also factors.

Your analysis needs to include who or what was responsible for the decision. It also needs to be ruthlessly descriptive, not prescriptive, focusing on what happened, not what should have happened.

In Brex Tech’s case, it had restructured, increased its prices, and laid-off key staff members. The CEO at RILF noted that “When their prices were raised by roughly 30%, we informed them about our concerns   but they kept the increased price.” What started as a pricing issue then led to disputes and loss of trust between executives from both firms, which in turn generated more problems, and RILF lost interest in continuing to work with Brex Tech.

Cost-benefit analysis. All customers are not equal and not all relationships are worth re-establishing. Therefore, before you re-connect with a previous customer, weigh the costs of winning them back against    the benefits.

Brex Tech did this in a few ways. After gleaning information from its previous transactions with RILF, including revenues, margins, and investments, Brex Tech’s CEO said that “RILF had accounted for more than 15% of turnover and we now had idle equipment in our plant that had been customized to manufacture products for RILF.”

Next, Brex Tech looked at both the economic and organizational requirements for re-establishing mutual  trust and reliability. Brex Tech had a few things going in its favor. Since manufacturing and delivering high-quality products on time had never been an issue in their past relationship with RILF, Brex Tech managers believed they had a good case to make to RILF. After the break up and as part of its   restructuring, moreover, Brex Tech was eventually able to increase factory productivity, which allowed it    to decrease its prices without compromising quality or delivery times. The production head at Brex Tech noted: “We knew RILF was interested in three parameters: delivery reliability, quality, and price. If we   could excel within these parameters, we could re-establish the relationship and make them switch  back.”

Brex Tech knew it could offer RILF price reductions, better technical assistance than its current supplier   in the relevant product categories, order-size flexibility, and other areas where the customer could   quantify the benefits of a reactivated relationship.

Interactive dialogue. Though your business case may look good on paper, people are the ultimate deciders.

When Brex Tech re-initiated contact with RILF in 2012, the key players were different at both firms. This led to a time-consuming process. A Brex Tech executive noted, “The discussions with RILF started at the operational level, then meetings with middle management to move on with the process, and finally— because of the strategic importance of the products involved—with top management.” Similarly, a sales manager recalled, “We went through a period in which we met at least weekly with the customer.

Management representatives were present but also engineers and technicians of the two companies.”

Knowing who does what, where, how and at what levels—the necessary rules of engagement–is imperative for successful reacquisition. For example, Brex Tech had discussions with employees that had been involved with RILF and with personnel not familiar with the account. While top management at both companies had been unable to reach an agreement, production personnel at both firms shared positive relations and unique know-how about products that RILF required. This was a key to reacquiring the account and underscores a repeated finding in management research and practice: people do business with people.

Accommodate specific requirements. When you are a supplier, the status-quo bias works in your favor. But when you seek to reacquire a customer, you must offer a better deal than the current supplier to motivate change.

RILF made it clear that Brex Tech would need to modify elements of its production processes, administrative routines, and IT systems—and provide special product designs while lowering price. But   the information collected during the reactivation process also allowed Brex Tech to adjust and optimize    its activities in these areas.

The resulting agreement justified the effort. Brex Tech’s sales and net profit from the re-established relationship with RILF were soon higher than in 2009. As Brex Tech’s CEO noted, “the fact that RILF purchases higher volumes compared to the past indicates the mutual value.” Moreover, the reacquisition helped to initiate positive word-of-mouth among other buyers in this market. Brex Tech gained two new customers as RILF recommended them to other companies. For RILF, meanwhile, more flexible and customized orders with Brex Tech increased its ability to sell and service in new segments.

In personal interactions, we often fear that others will judge us harshly and irrevocably if we make a  mistake in pursuing a goal. But research indicates that, in many circumstances, correcting a past mistake generates a more positive impression (if the mistake is not repeated) than never making a mistake in the  first place. The same is true in account relations.

Micromanagers in the Making? Why Salespeople Struggle to Lead

Published at Harvard Business School, Working Knowledge in April 2019

When salespeople become managers, they often do a horrible job. Four key steps can help them—and all soon-to-be managers—make the shift, says Frank V. Cespedes.

This sad scenario plays out at many firms: Top-performing salespeople get promoted to become sales managers, but don’t actually know how to manage. The result is a disaster—productivity takes a dive, disgruntled salespeople start heading for the door, and the new managers themselves burn out.

Why are so many salespeople so terrible at managing?

It’s because even after they put on their manager hats, they continue to suffer from the “super salesperson syndrome,” unable to disconnect from the thrill of selling. They hover over their salespeople and micromanage every deal to make sure it closes, says Harvard Business School’s Frank V. Cespedes, the MBA Class of 1973 Senior Lecturer of Business Administration.

“Every company has examples of people who persist in their behaviors as salespeople, and as a result they flame out as managers,” says Cespedes, who teaches management strategies at HBS and recently wrote an article called Sales Managers Must Manage for Top Sales Magazine.

“It’s all about the difference between learning to take care of yourself and learning to take care of others, from being an individual contributor in sales to being a manager who gets things done through other people. That’s a big transition that many people can’t make.”


Source: Harvard Business School Working Knowledge

It’s a problem that can permeate any layer of a business—a star performer is tapped to become a manager, then flops on the next rung of the career ladder. But the sales department is where a company’s promotion mistake can be particularly glaring. Sales is the pounding heart of a company’s cash flow, where the numbers coming in that day, week, or quarter often dictate the direction of the entire operation.

The answer to this problem is not as simple as deciding that salespeople shouldn’t ever manage, Cespedes cautions. Quite the contrary; sales managers make important decisions that affect salespeople’s lives—doling out territories and quotas—and it’s hard to gain the staff’s respect if managers have never walked in their shoes.

“The common advice you hear is that companies shouldn’t make salespeople sales managers, but I don’t think that’s good advice,” Cespedes says. “Sales managers determine how much money salespeople make and how well they eat. It’s difficult, if not impossible, to develop the relevant credibility to make those decisions if they haven’t demonstrated they can sell.

“At the same time, companies shouldn’t simply be saying, ‘You’re a great salesperson, and I’m sure you can manage.’ I do think sales managers must learn how to manage.”

Setting up sales-to-management success

Cespedes outlines four key steps toward setting sales managers up for success—strategies that could be applied in a variety of business departments.

1. Managers must assume a new professional identity. It’s crucial for managers to acknowledge they are shedding one professional identity to take on a new role with more of a focus on their teams than themselves.

As independent contributors, salespeople aim their attention at their customers and products, worried mostly about how to do their own job well. In becoming managers, they must pivot toward clarifying to their staff what the job requires, helping them build skills, and ultimately trusting them to skillfully handle the work of winning deals on their own.

By letting go of micromanaging every transaction, a manager’s time is freed up to immerse themselves in other duties, like developing a staff they can delegate more responsibility to and making broader contributions to their companies.


Source: Top Sales Magazine, “Sales Managers Must Manage”

“A micromanager’s growth is bounded by what they can personally get involved in,” Cespedes says. “Managing is about leveraging not only what you do, but how you get other people to do things. If you persist in your behavior as an individual contributor, you’re not managing.”

2. Managers must learn how to hire and nurture talent. Companies should provide training and development for management trainees on how to recruit, hire, and nurture top talent. One common hiring misstep: Managers rely too heavily on interviews and vastly overrate their ability to judge whether a person is fit for the job by falling victim to a “cloning bias.”

“They’re interviewing and asking themselves what made them successful as salespeople, and they look to clone who they were six to eight years ago,” he says. “But what made you successful five to 10 years ago may not be what is needed today.”

Organizations should supplement interviews with on-the-ground work by asking candidates to role play, complete a job trial, or do an internship. This gives managers insight into how well they will sell for that particular company. “Selling is a performance art,” Cespedes says. “It’s not about how well you answered questions in an interview. You need to put in place processes that give you more data about the person’s behavioral fit.”

And once on staff, workers benefit from constructive feedback. So companies should train managers to conduct effective performance reviews, especially since many supervisors treat them as an afterthought, Cespedes says.

“They’ll begin to pay attention to someone a few days before the performance review, and then it becomes mainly a compensation discussion about whether the person did or didn’t meet the sales quota,” he says. “Compensation is important, but the research tells us that good coaching and performance reviews actually have a bigger impact on performance, and this is a tangible skill that managers can be taught.”

In working with high-performing salespeople, managers should also look to be talent developers–rather than talent hoarders, who hold back their hardest workers from moving on.

“Many of the best people are ambitious, and if they feel blocked from advancing, they’ll leave to look for respect and status,” Cespedes says. “The best sales leaders are what I call talent magnets; they develop a reputation as someone you want to work for because not only are they good managers who help you get better, but once you work for them, you move on to bigger and better things.”

3. Managers must know their numbers. With the rise of e-commerce, some question whether sales jobs might be declining. That’s not true, Cespedes says, noting that according to US Bureau of Labor Statistics, 12 percent of the workforce is listed as salespeople, a figure that has grown in the 21st century. Plus, the $900 billion that is spent on sales forces by US companies is three times what firms spend on all of their media advertising and 10 times what they spend on online advertising.


Sources: SBI Magazine, “The World’s Largest Sales Forces”; Selling Power, “500 Largest Sales Forces 2018”; Interactive Advertising Bureau, “IAB Internet Advertising Revenue Report 2017.”

The internet has certainly changed the sales landscape, creating a new ability to collect and store an incredible amount of data. And that has made sales management a more complex job, requiring a level of analytical and business acumen that wasn’t needed 20 years ago.

Sales managers who have a shaky grasp on the difference between return on investment capital and accounting profit margins, for example, should be trained in “Finance 101,” Cespedes says.

Besides, the best sales managers are not only adept at bargaining for a chunk of the company’s budget to benefit their own people, but look for ways to increase enterprise value from a holistic company view.

“Finance now has a clearer line of sight on the enormous amounts of money they spend on sales, so they’re now asking questions,” he says. “Sales managers need to have answers to those questions, and that puts new pressure on their financial literacy.”

4. Managers must be sure they want to be managers. Managers are often stretched in various directions, including hiring and reviewing staff members, developing spending forecasts, and reporting to the C-suite. These responsibilities entail a lot of administrative tasks, like filling out employee rating forms and building budget estimates—work that can feel like sheer drudgery.

A person’s pain threshold for this type of busywork is something a company should consider when choosing managers and also something an individual should weigh when deciding whether to accept a management offer. Many companies spend a lot of time and money training their sales managers, but they’re not choosing the right people for the job in the first place.

“The company has a responsibility to clarify these expectations about the job, and many don’t,” Cespedes says. “Salespeople spend their lives bemoaning and developing end-runs around administrative tasks like entering data. So an individual who wants to be a sales manager also has to recognize that those tasks are exactly what they’ll need to do as a manager. And then they’ll need to decide whether to embrace the job at all.”

About the Author

Dina Gerdeman is senior writer at Harvard Business School Working Knowledge.

Sales Managers Must Manage

published in Top Sales Magazine, February 2019

Probably the most common complaint I’ve heard throughout my career from C-level executives about their sales colleagues concerns the latter’s ability to manage, not sell.

As one senior executive puts it, “I want sales executives: people with one eye on a sales number [and] another eye on serving a market, making customers successful, and representing the company.” The complaint concerns sales managers’ inability or unwillingness to embrace this role and “own the business” as well as the top line.

Nearly every firm has examples of successful salespeople who are poor managers because they persist in their behaviors as reps rather than managers. There are inherent challenges in selecting and developing sales managers. Moreover, multiple factors are making this a bigger, more visible issue with implications for building and sustaining a career as a sales executive.

What Sales Managers (Should) Do. Frontline sales managers hire reps and influence their training, organize and allocate efforts across market opportunities, conduct (we hope!) performance reviews and so reinforce good or bad selling behaviors, and when other functions need something from sales, it’s the managers they contact. In most firms, sales managers are the primary means by which strategy does or doesn’t get executed.

This crucial role gets mixed reviews. Studies find that, in the short term, excellent reps with an average manager outsell average salespeople with an excellent manager. But over time, people working for an average manager tend to decline in performance. Why? Many of the best reps get promoted, retire, or otherwise leave and, as the saying goes in talent management, “First class hires first class, and second class hires third class.” In addition, an excellent rep is excellent within his or her territory while a manager has, for good or ill, more influence across multiple areas and customers. Research also indicates that—across functions, including sales—first­line management is the level from which come the most reports of incompetence, burnout, and turnover. Here, the relevant and abiding aphorism is that “People join companies, but they leave managers.”

Moving from doer to manager is difficult in any circumstances. You move from being selected— typically for outstanding performance in the doer role—to being the new person in the management hierarchy who does not know the ropes. This transition even has a clever academic label: “heap reversal theory.” In sales, you must do this while learning about your people, judging their diverse strengths and weaknesses, performing administrative tasks, and making the numbers. As another executive says, “A good salesperson closes a deal, makes a commission, and moves on to the next deal. A good manager, on the other hand, sees the bigger picture and can judge the best way to use resources.”

What It Takes. You can’t just excel at sales to be a good sales manager. Yet, that’s precisely how most companies select new frontline managers. For this reason, some consultants believe the answer is to change these selection criteria. Proponents of the so-­called “challenger” sale, for instance, assert that “this approach to hiring is the root cause of many organizations’ high manager failure rates.” But choosing salespeople as sales managers is not just habit or an ignorant disregard by operating executives of what is “obvious” to consultants. It reflects organizational and human realities.

A key responsibility of sales managers is to provide opportunity by allocating prospects or territory assignments and establishing quotas. This allocation affects what salespeople do daily, their performance benchmarks, and their pay—how they are evaluated and how well they eat. Organizationally, this requires people who already know the relevant selling activities. Interpersonally, it’s difficult to develop the credibility required for candid performance reviews, necessary customer reallocations, compensation decisions, and other vital sales matters if the new manager has not demonstrated selling ability. The novels of Tolstoy and Joseph Conrad, the trial ­by ­fire memoirs of leaders across fields, conversations in hallways during sales meetings,  and numerous studies of management development all testify to the explicit and implicit testing of new people in these roles—as in other situations where some people must make tough decisions about others.

Selecting salespeople to be sales managers is not stupid. It’s how the selection is made, the criteria used, and what happens before and after the promotion that determines managerial effectiveness. But sales manager is not just a bigger sales job—for the individual and for the company. It occurs at a pivotal point in a career and represents both a reward for past performance and a bet on a person’s potential contribution to the managerial hierarchy. And there’s always a hierarchy, despite casual clothes, bicycles hanging from the ceiling, and the other now­standard signals of company cool.

And Today It Takes More. Years ago, John Miner devised a series of tests to measure “motivation to manage.” A key part, as Miner explained, is a “sense of responsibility in carrying out the numerous routine duties associated with managerial work. The things that have to be done must actually be done. They range from constructing budget estimates [to] filling out employee rating forms and salary change recommendations. . . . To meet these requirements, a manager must at least be willing to face this type of routine.” In other words, the test of a vocation is love of its drudgery.

Meanwhile, other factors are increasing managerial complexity in sales. Data analytics affect what is needed to do the job and keep the job of sales manager in more firms. Similarly, both selling and sales management are increasingly reliant on coordinating a network of connections within the firm and with channel partners. Developing these capabilities is a joint responsibility of the individual manager and the organization.






Assembling the Sales Team

published in Top Sales Magazine; August, 2018


Assembling the right sales team has always been crucial. As the old saying goes, “You hire your problems.” But recruitment and selection are now even more important. Data and analytical tasks have lengthened productivity ramp-up times in many sales contexts. Each hire then represents a bigger sunk cost for a longer time. As baby boomers retire and as firms seek to grow, putting more “feet on the street”—or in inside sales positions—increases hiring. Most companies look at their best reps and try to hire more like them. But you’ll never have enough stars and, in fact, don’t want stars in all jobs.

In any business, some activities exhibit high performance variability but have little strategic impact. Think about the design of power point presentations. Some people are much better than others in doing this. But how much impact do the slides have versus other sales tasks? Other activities may be important but exhibit little variability across sales reps—because the tasks are standardized, because the firm has reduced variability via support systems, or because the business model limits the range of performance variance. Think about the difference between fashion boutiques where personalized service and advice are integral to the value proposition versus mass-market retailers where low price and availability make selling less complex and variable. Or, more generally, think about transaction versus solution customers in your pipeline and how those sales activities vary.

You want stars in activities that exhibit both high impact and variability. Depending upon your go-to-market model, that may be prospecting or account management, direct sales or managing channel partners, initial sales calls or product demo’s. In activities with low impact and variability, you don’t need stars and shouldn’t overpay, either in money or time. In other words, effective hiring and selection in sales is about building the right portfolio of talent, and this has actionable implications:

Focus on how the salesperson makes a difference. Continually ask, “Where are we spending too much—or too little—time, money and talent across our sales tasks?” For example, the key activities will be affected by your sales structure and account assignments, as well as the necessity (or not) of team selling. Key tasks will change as your markets change. In many subscription-based SaaS businesses, selling activities with high variance and impact early-on are about initial customer acquisition. But over time, key tasks tend to shift toward reducing churn, up-selling, or cross-selling additional services. Allocation of sales talent should change accordingly.

Focus on behaviors in selection.  Managers are excessively confident about their ability to evaluate candidates via interviews. Decades of research across job categories indicate about a .25 correlation between interview assessments and job success. In fact, some studies indicate a negative correlation: the firm would have been better-off picking candidates at random! This danger is especially prevalent in sales, where hiring is often affected by a cloning bias: many sales managers hire in their own image because how that manager happened to achieve their performance is what got him or her promoted and in a position to hire.

The best results occur when you supplement interviews with observation of relevant job behaviors. There are many ways to do this, including intern-type positions, simulations, and other techniques. Further, technology is increasing options via game-like activities, virtual video environments, and online media that allow behavioral (not just personality) assessments by more people in less time.

However, the real constraint in many firms is a lack of assessment skills by front-line sales managers who know (or should know) key sales tasks in their markets. But HR managers typically know more about techniques for assessing behaviors relevant to those tasks. This should be an on-going partnership. Yet, too often, Sales and HR rarely interact beyond the realm of compensation. Sales often views HR as “the soft stuff” and HR ignores sales hiring in its “talent management” initiatives.

Be clear about what you mean by relevant “experience.” Previous selling experience is the most commonly cited criterion in sales hiring. Driving this view is a belief that there is a trade-off between hiring for experience and the time and money you don’t need to spend on training. But experience at another company—within or outside the same industry—is not easily portable. So much of sales success depends upon a firm’s strategy, the customer segments and sales tasks inherent in that strategy, and the internal relationships that reps develop to get those tasks accomplished. When a salesperson moves to another company, she leaves that behind and must recreate it in a different organizational context.

Further, “experience” in sales is inherently multidimensional. It may refer to experience with any (or any combination of) the following:

  • A customer group. For example, a banker or broker hired by a software firm to call on financial-services prospects; or in the health-care industry, companies sell very different products but many sell to hospitals.
  • A technology — an engineer or field-service tech hired to sell the equipment.
  • A company — in many B2B firms, service rep move to sales because internal coordination is a key sales task and they “know the people and how to get things done here.”
  • A geographical market or culture. For instance, someone from that country or ethnic group who knows, and has credibility within, the norms of the customer’s culture.
  • Selling — a retail associate with point-of-sale experience or an inside-sales rep who has demonstrated she can successfully work in that kind of transaction-intensive sales context.

The relevance of each type of experience varies with your firm’s sales tasks, not those of a generic selling methodology. In assembling their team, some sales managers “know it when they see it,” and many don’t. So consider what kind(s) of prior experience is truly relevant and then require the people doing the hiring to clarify what they mean when they see it.