A Lesson in Role Specialization from Your Doctor’s Office

Written by Mike Marks on Wednesday, 24 January 2018. Posted in Business Strategy, Distribution

Who spends the most time with your existing customers? If your outside sales rep is doing much more than focusing on landing new business – also writing up quotes, providing product information, managing returns and handling supplier issues for existing customers – you're squandering your outside sales reps' time, one of your company's most expensive resources.

If it makes you feel any better, you're not the only distributor wasting money. When working with distribution companies, we usually find that more than 20 percent of accounts assigned to an outside sales rep can be moved to another lower-cost function, such as inside sales, customer service or even an automated or online system.

A market-based sales model that incorporates specialized roles is more efficient and effective. The medical industry figured this out a long time ago. Think back to your last doctor's visit. Did your primary physician set up your appointment, check you in, take your blood pressure, process lab tests, code your bill and mail it to you? Of course not. In the medical industry, there is a different person for every function, with lower-paid workers performing the most menial tasks. This frees up the most expensive workers, the doctors, to perform the organization's most expensive function as cheaply as possible.

Distributors should take a lesson from the healthcare industry. Those who do will reap several benefits. The most obvious is the lower cost to serve alluded to above, but distributors will also be able to provide better customer service and better market coverage. They'll see benefits on the HR side, as well, since no one person will need to be good at everything. It is much easier to hire an engineer as a technical specialist, a computer jock as a marketing analyst and a personable extrovert as an inside sales rep than to find three people who can do all these things.

What should role specialization look like in your company? It will depend on your industry and your customers' needs. In general, the goal is to narrow the role of the field sales rep to one that is focused on new business development and demand creation. This might require you to shift resources to your inside sales team or to create new specialized selling roles, such as customer service representatives or product specialists.

Speaking of inside sales and customer service reps, it's important to note that these terms aren't necessarily synonymous. In a distributor with highly specialized roles, if a quote comes in requiring someone to look up 100 items, a lower-paid customer service rep is the person who needs to be doing this. They can sit in voicemail purgatory with the manufacturer trying to figure out the status of orders, manage returns and do other menial tasks while higher-paid inside sales reps are free to drive and manage customer relationships.

Before shifting your sales resources or creating new specialized roles, ensure they'll be aligned with customer needs by looking at customer geography, market segment, service output, amount of travel required by sales reps, how reps are currently spending their time and so on. For more help determining the ideal roles and structure for your organization, contact us about our consulting services.

About the Author

Mike Marks

Mike Marks

Mike Marks co-founded IRCG in April 1987. He began his consulting practice after working in distribution management for more than 20 years. Over the years, his narrow focus in B2B channel-driven markets has created an extensive number of deep executive relationships within virtually every business vertical in construction, industrial, OEM, agricultural, and healthcare.

Mike has led project teams that improve market access by aligning resources to growth opportunities serving manufacturers, dealers, and distributors. Clients have ranged from small privately owned firms to many of the industry’s market share leaders. Ownership structures have included owner-operators, private equity, ESOPs, and publically traded firms. Mike is proud of the teams work and the confidence clients have shown with additional project work.

He has written extensively, and is frequently quoted on many industry issues. He has substantial board experience on both public and private distribution firms. His contributions to the field include serving multiple terms as a Research Fellow with the National Association of Wholesaler-Distributors, permanent faculty at Purdue University’s University of Industrial Distribution, eight years as Graduate Adjunct Faculty in the Industrial Distribution Program at Texas A & M University, and rendering several precedent-setting expert opinions in contract disputes between manufacturers and distributors.

Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, an $800 million vertically integrated electronics distributor in Stamford, CT. Mike’s path to management in his early career was through increasing responsibilities in sales and sales management. He also completed a tour of duty as a manufacturer’s representative.