UK: Selling IT to salesmen.

UK: Selling IT to salesmen. - As more and more sales teams are downsized, will IT prove the salvation of those that remain - or will it do away with them too?

by Malcolm Wheatley.
Last Updated: 31 Aug 2010

As more and more sales teams are downsized, will IT prove the salvation of those that remain - or will it do away with them too?

Last January, Encyclopaedia Britannica disbanded its entire sales force. A 15-month programme of redundancies had seen the sales force plummet from 225 to zero. The managers of a once well-rewarded, commission-only sales force had concluded that the revenues brought in no longer justified the costs of maintaining it. While axing a sales force in its entirety is rare, less drastic pruning is by no means unusual. Yet the curious thing about most such downsizing operations is the message that it sends out concerning management's ability to harness the sales function effectively.

Other things being equal, businesses wishing to increase their profitability have two choices open to them: reduce costs, or increase sales. The former option usually wins out, as countless unfortunate recipients of P45s can testify.

Instead, managers are often tempted to aim for a higher conversion rate through the use of more technology to support those sales staff that survive the axe. This is the logic behind some of the sales force automation systems that have come to market in recent years. One of the last areas of business activity to be computerised, the aim has been to unburden salespeople from some of the administrative chores that clog up their working day.

Freed from form-filling minutiae, they have more time to make sales calls - and thus increase sales.

At least, that's the theory. In practice, notes Robert Bryant, a senior manager in Price Waterhouse's sales and marketing consulting practice, such systems have not always been an unalloyed blessing. Salespeople don't simply want to be more efficient: they want to be more effective - especially when the size of their pay packet or indeed their job is on the line.

'There's a huge difference between making salespeople more genuinely productive through the use of information technology, and simply creating more time for them to make still more ineffective sales calls,' he argues. 'Automating a call routine or a diary simply moves the problem elsewhere.'

Indeed, it may move the problem to the personnel department. It is far from unknown, he points out, for companies to experience high levels of staff turnover through inappropriately targeted systems. Salespeople resent the time (often their own) that has to be spent filling in forms to record what they've been doing with their working day - and rightly suspect that greater automation of such functions simply provides their superiors with another stick with which to beat them.

Simply doling out laptop computers, stresses Bryant, is also 'doomed to failure unless the salesforce can see what's in it for them'. Sales support systems, he insists, need genuinely to help the selling process itself, not just record how salespeople spend their time. Systems should provide the salesperson with up-to-the-minute information on products, competitor activity, account status and outstanding issues. For the company, the systems must provide a channel for salespeople to keep it abreast of what is happening on the ground.

It's a point that strikes home with Geoff Markham, director of agency sales at AXA Sun Life. Gone are the days when sales agents had to telephone a branch office to get an insurance illustration to put in front of a prospective client. In the early 1990s, agents were equipped with desktop computers holding product information, and could run off their own illustrations at will. But even that is a far cry from the ideal: two-way electronic communication between agents and the company on products and prospects, competitor information and fiscal changes, along with the automatic generation of the legally-mandated 'fact-find' document that records the salesperson's understanding of the client's financial position.

Trials of an in-house-developed system to do precisely that were delayed by the recent merger between AXA Equity & Law and Sun Life that brought the new organisation into being. That, though, isn't the issue, stresses Markham. A full-scale roll-out, he says, will really be contingent upon convincing the sales force that further computerisation 'will help them to clinch more deals and sell more product'. The experience of a sister company in the US was positive in this respect - and the trials, claims Markham, 'did show that the system generated both more sales and a higher level of premium-per-sale'.

And that has certainly been the experience at the Economist Group. Over the last three years, group database director Simone Wieser has led a project to develop a marketing database at the Economist Intelligence Unit and make it available both to the group's field sales force as well as its direct marketing operations. A unified picture of the customer base is critical, she emphasises - as is its maintenance.

Field sales staff download applicable portions of the database before making sales visits, update it following each customer visit, and then upload the revised information to bring the central database up to date.

The company therefore has a timely picture of 'not just who its customers are, but what they are buying - and the information is the same whether you're looking at it in New York or Hong Kong'. Thanks to the marketing data base, she adds, 'response rates have gone up dramatically, which has had a direct impact on the bottom line'.

Ask the sales director of many blue-chip corporations and stories such as these emerge. The allure and attractiveness of a sales force that is both more effective as well as more efficient are obvious. But must companies develop such sales support systems in-house, based on their own needs, requirements and industry norms? Or are generic solutions possible? If so, what is it that such systems must do? And can sales support systems be linked to the enterprise planning and management systems that lie at the heart of a business' overall administrative functions?

A host of US companies, including giants such as Charles Schwab, Digital, Montgomery Securities and Sybase reckon to have found the answers to these questions in the sales support computer software marketed by a four-year-old US start-up known as Siebel Systems, which is judged by Forester Research, a firm of industry analysts, to be 'the fastest-growing client/server software company in history'. Although certainly not the only player in a global market that is estimated to be growing at 54% per year, the company's meteoric growth has rewarded it with a 70% share of this, largely at the expense of competitors still wedded to making salespeople more efficient rather than more effective.

Founder and chief executive Tom Siebel learned the distinction between efficiency and effectiveness very early in his career. Joining Oracle Corporation in 1984 with masters degrees in computer science and business administration, he became its top worldwide salesperson the following year. By 1989 - and still the top salesperson - he was no longer selling, but running the company's direct marketing division, gaining first-hand experience of the problems of managing a sales force grappling with inadequate information systems. By 1993, he had left Oracle to found Siebel Systems, and begun working on a solution - not to mention a book, Virtual Selling, which details his own insights into how the selling process works, and what could be done to make it more effective.

Siebel's approach is distinctive. The company is firmly focused on only the very largest potential customers - 'the Times 500', says UK general manager Phil Robinson - targeting not the IT department but customer sales and marketing directors. The solutions are not a quick fix - the average transaction size is a hefty £606,000, and customers must also reckon on the sort of implementation assistance that they have become accustomed to with, say, companies like Systems, Applications, Products in Data Processing (SAP).

Assistance with implementation is vital. 'You can't just plug it in and use it,' stresses Hans Niedermann, head of global trade marketing and distribution at British American Tobacco. 'You have to make it reflect how you work.' The result, he says, has been to replace a shotgun approach to marketing and selling with a sniper's rifle. Salespeople armed with laptops are able to fine-tune the mix of pricing, promotion and merchandising materials to the precise demographic profile of every outlet that they visit - around the globe. 'We're no longer wasting money targeting the wrong outlets and the wrong people with inappropriate messages,' he says. This has boosted salespeople's productivity - 'they're making perhaps two extra calls per day' reckons Niedermann - and better information-sharing up and down the sales management hierarchy has helped the company speak to large corporate customers such as supermarket chains with a single coherent voice. 'The system has paid for itself many times over,' beams a satisfied Niedermann.

Another enthusiastic customer is Compaq Computer Corporation in the US, which famously eschews directly selling to customers on the Dell or Gateway model in favour of dealer networks and face-to-face salespeople. In the fight back against its direct-sales competitors, the company's UK operation chose Siebel software for its recently established Scottish call centre. The call centre manager Adam Denton, responds to the caller's requests for information while simultaneously subtly capturing all the information necessary for a local dealer to field the enquiry and take it forward. The enquiry can then be advanced by the local dealer, who has the full knowledge of every conversation and information exchange that has taken place to that point.

This is IT in its truest sense, not to just process data but simply to make as much information as possible available to as many parties as possible in the most effective way possible - giving salespeople every resource that they need to be able to concentrate on selling, rather than on information gathering or searching for leads. But is this really the way it will work out for sales staff?

Observers such as Chris Mathias, chairman of Conduit, a management consultancy, see the call centre as merely the thin edge of a wedge that will ultimately see salespeople more or less dispensed with. Futuristic, maybe, but there's little doubting the direct-selling revolution that has taken place over the last 20 years. Thanks to Yellow Pages, direct mail and the like, the traditional door-to-door salesman or agency has virtually vanished in areas such as insurance. In truth, spectacular advances in technology mean that no sales person really knows whether today's IT support will be tomorrow's friend or foe.

When the only tool that you have is a hammer, every problem can begin to look like a nail. The growth of companies like Siebel Systems has been spectacular - but are the company and its customers hammering away at selling to a target audience which is already in terminal decline? Time will tell.

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