The Machine: A Radical Approach to the Design of the Sales Function

by Justin Roff-Marsh

And they’ve seen massive performance improvements! They’ve seen improvements in the internal operation of sales: • Field salespeople are spending 100 percent of their time in the field, performing four business-development meetings a day, five days a week. • Skilled inside sales teams are generating high volumes of sales activity at shockingly low costs. • Customer commitments are consistently met, administrative work is always done on time, and sales orders appear more frequently and more predictably.

Marketing works closely with sales to ensure that salespeople are maintained at full utilization—and marketing has recruited the assistance of engineering (and senior management) to ensure that offers are truly compelling.

the assumption that sales should be the sole responsibility of autonomous agents.

The majority of a salesperson’s day is dedicated to customer service and administrative activities, to solution design and proposal generation, and to prospecting and fulfillment-related tasks.

Typically, when you add salespeople to an established team, costs go up immediately (easy to predict, right?). But sales don’t. In fact, in most cases, sales never increase to the level required to justify those additional costs.

The reason is that salespeople do not generate the majority of their sales opportunities. Most sales opportunities spring into existence in spite of (not because of) salespeople’s prospecting activities. In most organizations, existing customers are by far the greatest source of sales opportunities.

When we employ salespeople, we advise them that they will be held accountable for outcomes, not activities. We pay them commissions (in part or in full) rather than fixed salaries. And we encourage them, in most cases, to manage their territories, their accounts, and their sales opportunities as if they were, well, their own.

Salespeople spend so little time selling because they have so many responsibilities competing for their limited time, because each salesperson is a self-contained sales function.

The answer is the division of labor. The division of labor enabled manufacturing to transition from a cottage industry to the modern manufacturing plant. And the division of labor has had the same catalytic effect on project environments (think construction, aerospace, finance, and even marketing). The modern sales environment resembles manufacturing as it used to look more than a century ago.

This metaphor is apt because, under this new approach, sales becomes the consequence of a number of interrelated processes—rather than the output of a person.

Another reason JSG has only one field salesperson is the company discovered that a surprising percentage of sales opportunities (particularly repeat purchases) could be handled by a small (but highly efficient) inside sales team. This team finds and pursues simple opportunities, and, from time to time, it stumbles across opportunities that are significant enough to be escalated to David and Jennifer.

David frees Jennifer of the requirement to do anything other than face-to-face business-development meetings. In addition to appointment scheduling, David performs all of the clerical tasks associated with the management of sales opportunities: data entry, reporting, literature fulfillment, expense tracking, and calendar management.

David routes nonadministrative tasks to other specialist resources within JSG. Customer support issues and requests for quotes are routed to customer service representatives. And requirement discovery and solution design become the responsibility of project leaders.

Solution design is always a collaborative process. Clients have their say, of course: They want Rolls Royce solutions on Toyota budgets. Phillip represents both engineering and production: He must ensure that whatever is specified can be delivered on time and within budget. And it’s Jennifer who uses a mixture of hustle and artful diplomacy to close the gap between the two parties.

Represents both Engineering and Production. Makes things on time and on budget.

Matthew’s biggest sales challenge is maintaining the support capacity required to keep up with the sales team’s unrelenting flow of orders.

Sales of expensive products and services are highly dependent on personal relationships.

Salespeople should be encouraged to operate autonomously—to view their territory almost as if it’s their own business.

Customers require—and benefit from—a single point of contact with their suppliers.

Sales improvement is all about improving conversion (plugging the leaky funnel).

Sea Change 2: From Make to Stock to Engineer to Order

Today, an increasing number of products (as well as almost all services) are actually designed (engineered) as they are being sold. In an engineer-to-order environment, tight integration between sales, engineering, and production is critical. The degree of integration determines both the likelihood of the sale being won and the quality of the product delivered.

In most cases, the salesperson’s initial transaction signals the acquisition of a new account. All of the subsequent transactions (assuming the same product or service type) are repeat purchases. The first transaction—because it signals the acquisition of an annuity—is many times more valuable than any of the subsequent ones.

So, for the balance of this book, I will use the word sale to refer only to the acquisition of a new account (or the sale of a new product or service line to an existing one). I will refer to repeat transactions as just transactions.

Almost without exception, salespeople recognize that production performance is the primary influence. In other words, the number-one thing an organization must do to retain its customers is deliver on time, in full, without errors.

The lessons from manufacturing can be generalized into four fundamental principles: 1. Scheduling should be centralized. 2. Workflows should be standardized. 3. Resources should be specialized. 4. Management should be formalized.

In such an environment, how do workers synchronize their rates of work? The short answer is that, without special intervention, they simply don’t.

Therefore, if we are entertaining the idea of applying division of labor to sales, we must first acknowledge that the very first activity for which the salesperson relinquishes responsibility will be scheduling.

Second, the coxswain maximizes the speed of the boat by causing all of the oarsmen to row at the same speed as the slowest oarsman. Therefore, to maximize the speed of the boat, all but one of the oarsmen must row slower than their maximum capability.

Interestingly, you can see evidence of this if you look at customer relationship management (CRM) implementations in sales environments. Almost every mid- to large-sized organization has invested tens (or, more commonly, hundreds) of thousands of dollars in this technology in recent years in anticipation of increased sales performance. Few, however, can point to any performance improvement that can be attributed to the CRM.

Consequently, the CRM adds overhead (the additional data entry associated with enforcing standards) without generating any performance uplift.

The routing is the path that work will follow through the plant, taking into account both the activities that will be performed and the resources that will perform them. The general rule in manufacturing is that for production of the same product, the same routing should be followed.

Specialization causes a significant increase in workers’ productivity for two reasons: First, when a worker performs activities of just one type, they become very good at performing those activities. Second, switching between materially different activities imposes a significant overhead on a worker. The elimination of this switching (multitasking) increases that worker’s effective capacity.

When it comes to dividing activities, it tends to make sense to make divisions along three axes: 1. Location. You should split field and inside activities—meaning that people work inside or outside but never a mix. 2. Work type. You should split activities that are different enough to impose a switching cost. For example, creative activities do not mix well with more transactional ones. 3. Cadence. You should split long and short lead-time activities. For example, in a technology environment, you should not mix true development work with break-fix tasks.

It’s interesting to note that the very first manager was a scheduler (as per our coxswain example). However, as environments grow, so do the responsibilities of management. Today, it’s more likely that the manager of a function delegates scheduling to a technical specialist and focuses on the internal performance of their function—as well as its integration with the rest of the organization.

we will definitely need to convince our sales managers to adopt a more formal approach to management.

The BDC should operate in close proximity to the business functions with which sales must integrate.

your salespeople with the opportunity to take the lead and help the customer buy more effectively.

promotion (i.e., the origination of sales opportunities), 2. administration (i.e., critical supporting activities), 3. sales (i.e., meaningful selling conversations), 4. technical (i.e., requirement discovery and solution design), and 5. semitechnical (i.e., quoting, order processing, and issue management).

Typically, the batch origination of sales opportunities requires the ability to procure and manipulate contact lists, the ability to produce hard-hitting promotional campaigns, the resources to broadcast personalized email (or snail mail), and perhaps even the ability to promote and coordinate events.

Salespeople lack these capabilities, so it makes sense—at least notionally—to allocate responsibility for opportunity origination to the marketing department. Within the marketing department, the origination of sales opportunities is referred to as promotion (one of the four Ps of marketing).

The project leader takes responsibility for requirement discovery and for solution design (in many cases, these will occur in the form of a formal solution-design workshop).

First, salespeople must avoid taking ownership of customer service cases in the first instance. This is easier than it sounds. For example, if a customer asks a question about an incorrect order, the salesperson might use their cell phone to initiate a three-way conference call between the customer, a CSR, and themselves.

You’ll need a supervisor to oversee the internal team and a more senior person to manage the overall sales environment (including field operators).

First, field sales is incredibly expensive relative to inside sales. An inside salesperson can comfortably have thirty meaningful selling interactions (including email) a day, whereas a field salesperson will work hard to average four meetings.

We have the inside salespeople, who perform nothing other than what we call meaningful selling interactions. These interactions include phone conversations, email communication, and even instant messaging. Of course, inside salespeople do not generate quotes or enter orders; these tasks are routed to customer service.

We also have a campaign coordinator, who is responsible for generating all of the outbound sales opportunities that keep the inside sales team members so busy. The campaign coordinator ensures that inside salespeople always have calls to perform and avoids inside salespeople’s searching for sales opportunities within the customer relationship management application (CRM).

By exploit the potential of inside sales, I mean that you should keep adding inside salespeople until the contribution margin you expect your next salesperson to generate approaches their total cost. With the phrase traditional salespeople, I’m hinting that it might be possible to use a special breed of salesperson to further exploit the capability of inside sales.

A field specialist is a person who supports inside sales by performing discrete field activities. These activities are likely to be technical or semitechnical in nature. Their typical activities would include on-site requirement discovery and product demonstrations.

In short, start with customer service and add additional components only when you are sure you have fully exploited the existing ones.

Let me start by stressing who these inside salespeople are NOT. Your inside sales team members are not telemarketers (in the traditional sense of the word). They are true salespeople—equivalent in every sense to the type of person you would otherwise have in the field. They are knowledgeable, ambitious, and engaging. And they are paid roughly what they would expect to earn if they were field salespeople. And, importantly, your inside sales team members are not second-class salespeople relative to your field specialists. Your inside sales team, if your organization is typical, is your primary sales team, and it’s vital that this is reflected in your cultural norms.