Are sales forces really getting smaller? It depends…

Are sales forces really getting smaller? It depends…

When I speak to groups regarding sales-force effectiveness and pay, I am often asked about changes that we have observed with sales forces over the last 30 years.

Questions asked often touch upon the following issues:

  • Are sales forces smaller today than in the past?
  • Has the job of the average sales representative changed in the last three decades? If so, will that trend continue?
  • Are there some parts of selling or the sales force that will never change?

The answer to all of the above questions is both, “yes” and “no.” Let me explain by focusing upon three trends we have observed with sales-force growth and employment over the last several years.


Trend #1: The role of the inside-sales group has drastically changed

In past years, a sales representative was most often defined as someone out in the field calling upon (and traveling between) current and potential customers in their territory. This was the classic direct sales channel. The sales force was generally supported (directly or loosely) by an order desk and a dedicated customer service group—they were often called “inside sales.” The thought was that if we kept sales reps away from the order book and the warehouse expeditors, they would not be distracted by administration and be able to make more sales calls. And, more sales calls must mean more sales. This model was employed for decades and seemed to work.

With the advent of internet commerce and ordering, it was no longer necessary for the inside sales group to exist (at least on the order-book side). Consequently, inside-sales positions were eliminated in situations where ordering could now be done directly by the customer—with fewer hands touching the order and fewer chances for error. Also, as the supply chain has become increasingly more transparent to the customer, fewer phone calls are required to find out what happened to “my last order?”

We believe this trend will continue as more-complicated sales processes and the delivery of product advice and support are simplified by expert-systems that allow the customer to place more and more complicated orders, without intervention by a company order taker. This trend has generally reduced the size of the sale force—largely through inside seller attrition.


Trend#2: What has happened to the “traditional” territory field sales force?

This field sales job has generally evolved from the product expert operating at the customer’s location—small or large—to a product and business expert consulting with both current customers and prospects of strategic importance. Consequently, some sales forces now physically call upon 50-70% less customers today than they did 10 years ago—in the same territory and geographic area. The sales forces’ call list (portfolio) now consists of customers or prospects with significant growth prospects. Smaller customers (those whose collective sales have historically accounted for less that 10% of the entire customer base) get little, if any, attention. Today, many smaller customers have been cut loose and directed to use web-based services and support tools (in the absence of inside-sales [or any sales] support).

So, how have today’s sales forces filled the 50%+ of their freed up by the absence smaller-customer sales calls? On paper there is a newly-found focus upon prospective or new customers in the sales force’s day-to-day activity.

Increasingly, companies are asking the sales force to spend the time they used to spend with small accounts calling upon new prospects [Cold calling: Holy rejection, Batman!].

One would expect that there would be a direct replacement of sales calls from former small-accounts to cold calls on future high-potential prospects. In reality experience says that seldom happens, hence, annual company-wide sales calls required and made have likely fallen—in aggregate. Consequently, the sales force is either being allowed to be less productive or is now smaller. Note that this “downsizing” may have been allowed to occur—leaving scores of possible productive sales calls sitting on the table. In the 1980’s getting a field sales rep to call upon prospective customers was like pulling teeth—and it still is.


Trend#3
: Where is the demand for talented sales professionals growing?

There are two areas where we actually see growth and stability in the sales force.

  • Major-account executive (or national accounts manager) ranks continue to grow as companies increasingly focus upon major and strategic account sales channels. This area of focus and expertise barely existed in 1985, but today it is often the driving force of company sales growth and investment. And as major-account strategies expand, so too will the roles and number of major-account specialists. I had a large client who created a major-accounts group a decade ago—in parallel with their field sales force. Within 3 years, the sales volume attributable to the major-accounts group was nearly 50% of all company sales, in addition to continuing growth from the field-sales channel.
  • There continues to be no better or cost-effective way to reach out to small business or individuals than by picking up the phone and calling them. Whether the subject of the sale is continuing education, financial services or business services, telemarketing continues to be a steady and safe niche as a sales channel. We are sure that in this economy telemarketing has continued to grow and is adding new positions (and businesses). Some would say that this growth is simply a repositioning of former inside sellers to telephone sellers. But, experience tells us that these two jobs require very different and distinct skill sets and personalities. Inside sellers almost never become successful (outbound) telephone sellers. Today’s ranks of telephone sellers are the successful major-account and sales representatives of the future as they build selling and relationship skills—the hard way.

During three decades, we have seen the traditional field sales-force practices of the past quietly evolve by the virtual elimination of inside sellers (as order writers) and the refocusing of the territory sales force to larger and more strategic accounts and prospects. These trends have generally reduced the number of sales positions required to call upon and service the same universe of accounts.

Countering these trends to smaller sales groups is the growth in major-account positions as companies redefine sales channels and priorities, and the apparent growth of tele-sales channels and jobs to better manage the cost of business development (cold calling) and account relationships.

In summary, we believe sales forces have generally gotten smaller on average in the last 30 years primarily through better management and increased productivity.  But, pockets of growth do (and will always) exist. Interestingly, some of this downsizing could (should) have been foreseen and avoided.

What does this all mean to the sales executive of today and how will it impact decisions that they will make tomorrow? We think three evergreen truths are clear.

  1. If technological trends in areas of order taking and customer service have not yet impacted your business, it is because you just have not looked. Your competitor is counting on you being surprised by the obvious.
  2. If your sales force continues to waste their time on the wrong accounts (defined in any way you please), your cost of selling will be double what it should be and you are asking for mediocre performance. As we have asked our readers many times before: Do you know where your sales force is today?
  3. If over 15% of your sales calls are not on new and prospective accounts you are losing (or are about to lose) market share—whether you know it or not. Sales calls on new accounts are the life blood of any business.

Either effectively use your sales resources or you will eventually lose them to a budget analyst. Do not wait for these trends to overtake you. Get out ahead of them and beat your competitors.

Are there other trends in the market you believe must also be addressed? Write and tell me about them at bob@wilkeningco.com.

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