Harvard Business School Professor On The Future Of Sales People In A Digital World
The job of a sales person has been transformed in the past several decades as consumer habits change and the e-commerce boom continues to take hold. This doesn’t mean the need for talented sales people has diminished, however, and now more than ever businesses are struggling to hire, train and retain the right people who can evolve along with the changing nature of sales.
What does the future of sales look like? What do companies need to succeed? One person working to answer those questions is Frank Cespedes, senior lecturer in the Entrepreneurial Management unit at Harvard Business School. Cespedes has written several books on sales, marketing and strategy and his latest book, Sales Management That Works: How to Sell in a World That Never Stops Changing, seeks to address the concerns of how to thrive in a modern sales environment.
Cespedes was the guest on this week’s Walker Webcast, where Walker & Dunlop CEO Willy Walker asked him why, with more than 80,000 books available on Amazon about sales, he decided to write another one.
“Sales is an area where people feel most comfortable making huge generalizations, often unsupported by data beyond what we refer to in academia as N equals one,” Cespedes said.
He said that “N equals one” refers to people saying that because a certain tactic worked for them, it must work for everyone. After 30 years in the business world and conducting research, he said he wanted to write a book that can break down what research can and can’t tell you about sales. He added that he wanted to write about the digital transformation that is happening in the ways that people buy and sell goods.
Part of that digital transformation, Cespedes said, has led the country to a point where most people have the wrong impression of online sales versus brick-and-mortar. He said that the Department of Commerce has a very liberal definition of “e-commerce,” one that includes things like items purchased online but picked up in the store.
“But if you look at their data and ask what percentage of total U.S. retail sales were e-commerce just before the pandemic hit, the number is about 11.2%,” Cespedes said. “When I ask executives, I typically get estimates from 30 to 60%. In other words, they're not a little bit off, they’re orders of magnitude off.”
He added that even during the height of the pandemic, when so many stores were closed in Q2 2020, the percentage of e-commerce sales rose by only 5% and has been declining every quarter since. This doesn’t mean people aren’t utilizing the internet to help them make purchases, he said, but rather they are using an omnichannel system where they are cycling on and offline constantly during their buying process.
One example he gave was car shopping. Cespedes said that even though 96% of sales are still happening in dealerships, people spend an average of 12 to 13 hours researching cars online before heading to the dealer to buy one. This way, they are armed with information about price comparisons that they previously relied on the sales person for.
“The days of most sales people essentially being organic walking, talking versions of product and price literature are disappearing,” Cespedes said. “And this is also true for financial services, real estate services and more.”
One thing this means for sales people, he said, is that they need to be transparent. Comparative pricing information for almost everything is available to buyers online, so if sales people aren’t being transparent, people will know.
Walker brought up that the majority of sales people are incentivized to sell as much as they can without being concerned about margins, while Cespedes puts an emphasis on value-based pricing. Walker asked how companies can train and retain sales people who are so used to the former but now need to focus on the latter.
Cespedes said when sales people are just focused on the volume of sales, they are being told “there’s no such thing as a bad sale,” which disconnects them from the overall sales strategy. While change is always difficult, he said, the vast majority of sales people would understand a new strategy within a matter of weeks and most of the good ones will adapt accordingly.
Walker asked Cespedes about what companies should look for in a sales person. He said that companies can’t rely on interviews, since the way someone performs in an interview and how they will do their sales job is not correlated. This is why companies need to augment interviews to include processes that will give you a look into how employees will behave, including internship-type scenarios. He recognized that in today’s market, many companies will not do that because they fear they will lose qualified candidates. But he had a message for them.
“With someone you hire in business that doesn’t work out over the next six, nine or 12 months — you can use whatever euphemism you want — but you’re probably going to let that person go,” he said. “Why not be upfront about that in some kind of internship hiring scenario? And, by the way, you can put compensation in the hiring process that actually gives you an advantage in this scenario, establish a social contract, and show transparency.”
He added that to find the right sales person, companies need to understand where their buyers are in their journey in whatever market segment they are hiring this person for, and what they expect their business development people to do to exert influence when and where it counts in that buying journey.
On Feb. 2, Walker will host athlete and record-breaking marathoner Keira D'Amato. Register here.
This article was produced in collaboration between Studio B and Walker & Dunlop. Bisnow news staff was not involved in the production of this content.
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