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Are Your Salespeople Market-Makers or Market-Servers?

Written by Mike Marks on Monday, 16 January 2017. Posted in Distribution

Is your field sales team filled with market-makers or market-servers?

Most distributors would answer that question with “market-makers.” But they would be wrong.

In research we conducted for HARDI, the distributor association that serves the heating, air-conditioning, and refrigeration industries, we found that a salesperson’s ability to disrupt the current supplier of a product is low. (The results are available on Amazon or at hardinet.org/hardi-foundation.) What we found was that end-users year-on-year purchased 89% of their products from the same sources they had in the previous year. Just 2% was switched out due to a hard-charging sales rep coming in and selling a better solution.

The remaining 9% was due to a supplier failure. We termed this a Critical Selling Event, or CSE. Read more about this research in this IRCG blog post. A CSE is outside of the control or influence of a sales rep.

The punchline: Our expensive aging generalist sales reps are actually winning by taking care of customers so they never experience a CSE. Or they capture new business when a competitor makes a mistake, and they are there to save the day.

This has implications for the role of field sales today, which has largely been relationship-based. Consider where a field sales rep spends his time. Many times we believe that joint sales calls and promotions with suppliers should be a priority despite the fact that such an effort doesn’t move the needle much on an annual basis relative to other efforts.

The economics of the industry’s relationship-based approach to selling are changing rapidly due to four forces of change:

  • An ongoing race to the bottom on pricing.
  • An improvement in supply-chain efficiency, reducing the need for heroic recoveries.
  • Continued industry consolidation at every level of the supply chain.
  • The Internet’s becoming a primary source of product and application information for the customer. (Watch the video below for more on this.)

These forces aren’t going away. The role of the field sales rep must evolve, and distributors must develop new roles that recognize what research says is really happening out there in the market.

Given this, what role can and should field sales role play for your organization? Join me at the upcoming Sales GPS executive workshop in Austin on March 1-2 and come away with a road map for your own organization to leverage e-commerce, CRM and analytics to lead your team forward. Learn more and register at salesgps2017.com.

Watch this video to learn more about the impact of the Internet on the field sales role:

 

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.

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