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Posted by Scott Santucci on August 1, 2009
Most companies are acutely focused on their sales organizations, wanting to apply more structure, discipline, and measurement in order to maximize productivity, predictability, and transparency. A phrase often used to encapsulate this endeavor is “art to science.”
Having gone to a technical school (Virginia Tech), been swimmer in college (it’s all about objective measures — time), a father who worked for NASA (Apollo project) and has a masters in physics, a mother who develops teaching curriculums, chosen an industry dominated by engineering, and a profession (sales and marketing) about results — I’ve been surrounded by math and science my whole life.
Thus, I propose that “is sales an art or a science” is the wrong question.
The real question we should be asking is — "which science applies to sales?"
Think about it.
Here are few disciplines of science (let’s avoid the debate about which are really sciences for those of you who are true believers in your field) — you tell me which apply:
- Macro economics
- Micro economics
- Complex systems (emerging field)
- Study of networks (emerging field, related to complex systems)
- Financial modeling (no, not those credit default guys — more what if analysis)
- Behavioral sciences
- Engineering (industrial and mechanical)
- Organizational research
- Industrial engineering
The point is that all apply somewhat, but not perfectly. Here are a few short examples (hey this is a blog entry — I know I've left out some examples and details — let’s stay focused on the bigger picture):
- Depending on the complexity of the offering — sales people will need to be able to build consensus across a departments, so some working knowledge of organizational behavior is helpful.
- Sales is emotional — so understanding personal risk factors and personal motivations is a big part of selling.
- Sales also involves micro-economics — how budgets work, how to make a case to get someone to part with money, etc are all very different than macro-level messages commonly supplied by marketing.
- Sales people are becoming accountants too — Not only do sales people have to make a business case to a group of individuals, but must also make a financial case as well (like internal rate of return, etc). In addition, having structure and discipline to manage and communicate their pipeline to management is, in practice, an accounting function because of how those reports are used as they roll up to finance and management.
At the other end of the spectrum, there’s executive leadership. They are dealing with big numbers and large portfolios. To produce profitable growth targets across the enterprise — different sciences apply. (Macro view)
- Macro-level economics like: market share and trends provide the boundaries management uses to understand where aggregate revenue will come from.
- Systems theory applies because revenue, costs, and margins are the sum of many parts working together — not controlled as separate cogs.
- Sociology is important to understand the culture and the mood of customers so the corporate message resonates.
- Financial modeling is important to design the right compensation structures and performance metrics that should work to produce the desired metrics communicated to investors.
Regardless of the field of science, there is always a micro and macro yin and yang.
Micro view of a discipline (yin)
Macro view of a discipline (yang)
Macro economics (Federal Reserve Board)
Micro economics (your budget)
Sociology (behavior of groups)
Psychology (individual behavior)
Theory of relativity (big objects)
Quantum mechanics (very small objects)
Mass communications (to many)
Interpersonal communications (one on one)
So, what’s the point?
The science we need to develop for sales is dependent upon the altitude you are looking at it.
If “sales” means your aggregate performance of all of your sales people, then you need to take a more systems view. If “sales” means the performance of individuals, then we need to take a more “day-in-the-life” view.
There are two ways to look at this — tops down. . .
Use the macro-level sciences to focus on trends and mass communications activities to drive aggregate revenues. Coca-Cola comes to mind here. They don’t have a sales force out actively trying to persuade people they are thirsty, and then presenting an ROI to those individuals about the benefits of buying a Coke to quench their thirst.
and, bottoms up.
However, with B2B businesses, the world is different. Markets don’t really behave the same way they do in B2C — “markets” are collections of individual, significant purchases — which means, that the lens to look at optimizing sales for B2B needs to be bottoms up, rather than tops down.
When you look at the world from that perspective — you see things completely differently.
If you studied the individual demands on your sales force, how much time is spent dealing with internal minutia versus face time with clients, and how little information they have to communicate the micro-level value propositions with specific buyers, you’d quickly find many systemic problems to address that will result in huge performance yields.
Pick something simple to focus on — like “close rate”.
For starters, it’s very likely your company doesn’t have a standard definition to track this. For example does an opportunity in stage one that drops out count against your close rate calculation or not? Some would argue it should (like me), others would say we can’t really measure it so we only focus on proposal to contract conversation rates. The problem here obviously is that you can’t manage what you don’t measure and you mange to the things you measure. If you are only measuring things late in the sales cycle, you are missing out on all of the things in early stages of the sales process which play a much bigger role in winning a deal.
Once you investigate that issue thoroughly — examine how much of the activities required to improve the close rate are on the backs of sales people and how many resources you have that could help with those goals are not because those resources are misaligned. (We call this random acts of sales support.)
This is why our research agenda at Forrester is focused around the idea of “Engineering Valuable Sales Conversations” — it blends the objectives of senior management to produce a more productive sales platform, while focusing the efforts on the micro-level issue which is optimizing the interpersonal communications between your employees and their specific people that make up your customer base.
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Contributed by Benjamin Ensor on Fri, 11/25/2011 - 15:13
Banks and other credit issuers
8% (10 votes)
Credit card networks like Visa and MasterCard
18% (22 votes)
Mobile operator consortia
3% (4 votes)
13% (16 votes)
11% (13 votes)
4% (5 votes)
A combination of the above
41% (51 votes)
Another firm not on this list
2% (2 votes)
Total votes: 123