Video chats and elaborate online presentations instead of customer visits. This is what B2B sales of capital and consumer goods look like in the face of the COVID-19 crisis. "Take advantage of this period of reorientation to put your sales force to the test," recommends Prof. Dr. Dr. h.c. Sönke Albers, sharing valuable tips for 2021.
Tip 1: Measuring Success: “Working Smart” Instead of “Working Hard”
How can success in the sales field force be measured? As a rule, "working hard" usually is calculated. For example, how many visits to customers were completed? Were sales targets achieved? In this case, however, too little attention is paid to the diagnostic value of such key figures. As a company, I want to know how the sales force can do better when the sales expectations are not met. This is where "working smart" comes into play. Is the revenue per visit right? How many visits do we need for an order? I advocate complex data collection and analysis here.
Tip 2: Promote Intrinsic Motivation
Traditionally, compensation in the field sales force is very much based on success, i.e., proportional to the fulfillment of targets. This means that only extrinsic motivation (through rewards) is taken into account. On the basis of more recent findings, however, a rethink is necessary here. This is because payment according to success can destroy the so-called intrinsic motivation in connection with work perceived as being fulfilling. In essence, this means companies should be reducing the share of performance-related pay in favor of the fixed share, which increases intrinsic motivation.
Tip 3: Size of the Sales Force: This Formula Brings Clarity.
When looking for the right size of sales force, the following applies: do not work by trial and error, but systematically. The number of employees is an important cost factor and should be reflected in sales. So if I spend 1% more on the sales force, what is the increase in sales? This value is what is known as leverage —sales managers should measure and know it. My research has shown that the sales force may cost as much as the contribution margin multiplied by the leverage. Contribution margin is the sales price minus variable costs (e.g., materials, production).
Example: If I spend 1% more on the sales force, my sales increase by 30% (= leverage effect 0.3). Often in the industrial sector, the share of variable costs in the sales price is 60% (contribution margin=1-60%=40%): leverage effect (0.3) x contribution margin (40%) = cost of sales force (12%). In this case, the recommendation would be to spend around 12% of sales on field sales.
Tip 4: Social Media: Get Involved!
Many potential customers are active with company and private profiles in social media such as LinkedIn, Facebook, Instagram, or even Tiktok. Employees in the field sales force, on the other hand, are for the most part still sitting passively on the observation post. My tip: Get involved. If this is a new frontier for you, it may be worthwhile to call in digital experts to develop a strategy.
Recently, the American Marketing Association (AMA) awarded Prof. Albers the "Lifetime Achievement Award 2020" in the field of sales management. This is the highest award in the field of sales management and personal selling. In the current ranking of WirtschaftsWoche, Prof. Albers is ranked 13th out of more than 3,000 professors listed in the lifetime achievement category.
- 10 Marketing Budgeting Facts (11/23/2020, Marketing-Börse, German only).
- Fischer, Marc, Sönke Albers, Nils Wagner and Monika Frie (2011): Practice Prize Winner— Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities, 30 (4): 568-585. (free access)