At the recent Sales 2.0
Conference in San Francisco, Selling Power caught up with Andris (Andy)
Zoltners, who was there to present “A Top 10: Insights that Lead to
Sales Success.” In addition to
being one of the founding directors of ZS Associates, Zoltners is a Frederic Esser Nemmers
Distinguished Professor Emeritus of Marketing at the Kellogg School of
Management at Northwestern University. He has personally consulted for more than 200 companies around the world
and taught thousands of executive, MBA, and PhD students about sales force strategy; sales
force size, structure, and deployment; sales force compensation; and total
sales force effectiveness. For
more insight based on ZS Associates’s research and expertise, download the
first chapter of Building
a Winning Sales Management Team, by Zoltners and coauthors Prabhakant
Sinha and Sally E. Lorimer. (Note: This interview has
been edited for style and clarity.)
Selling Power Editors (SP): At the Sales 2.0 Conference, you said
there’s not a sales force in the world that doesn’t have topline revenue
opportunity of at least 5 to 10 percent. How can companies tap into that?
they have to find where the opportunity exists. That’s different in every sales
organization. You have to look at the drivers of success. You have to hire the right
people, train them, and manage performance. You have to size and organize the
sales force, get the right compensation plan in place, and align territories.
The problem for most companies isn’t that opportunity doesn’t exist, it’s that
they’re sometimes reluctant to do the things necessary to take advantage of it.
SP: Like what,
goes back to one of the questions I asked the audience: would you rather have a
stable sales force or an adaptive sales force? With an adaptive sales force, I would
come in and say, “We’re going to change account responsibility.” Will they ask salespeople
to adapt? Are they open?
SP: So you’re
saying the culture has to be open to change.
Zoltners: Yes. But
the other side of this is that management has to make intelligent changes.
Eighty-five percent of sales forces have changed their sales-comp plan in the
last year. What does that tell you? Getting it right can be a struggle.
SP: Why is
Zoltners: Well, [ZS cofounder] Prabha Sinha, Sally Lorimer, and I
wrote a book about this years ago [The
Complete Guide to Sales Force Incentive Compensation: How to Design and
Implement Plans That Work].
But it’s a big book, and some people have told us you need a PhD to read
it. (Laughs.) [Incentive pay] is complicated. But if you want to design and
implement a plan that really works, you need to get this right, and you need to
have alignment among the entire organization. For example, if you have an
aggressive finance team that sets unrealistic numbers, that’s going to reduce
the effectiveness of your comp plan.
mentioned during your presentation that there is no magic number when it comes
to setting quotas at the territory level. Why is that?
Companies may set goals too high, too low, or they don’t allocate the numbers
appropriately across the entire sales force. The secret is that the goal should
not be a single number. A single number is too rigid. There should be a range.
SP: And why is
Flexibility. Think about it at an individual level: if a big account moves from
Milwaukee to Atlanta, then the sales rep in Milwaukee is saying, “My VP of sales
is telling me that 40 percent of my territory just went away, and he still
wants me to make my number.” Meanwhile, the rep in the Atlanta territory gets free
incentive money. If the goal number is meant to give reps something to strive
for, then you’ve just made it meaningless.
SP: ZS Associates has been conducting research since 1983 on sales
leadership. If you had to pick, which group is more important to a strong sales
team, excellent reps or excellent managers?
Zoltners: You really need both, no question. The issue is that we’re
generally more careful at selecting reps than [we are at selecting] managers.
We see more training for reps, more coaching. It’s an issue of scale: if you
have only five new managers, it’s difficult to put together a training course
just for them. But an excellent manager is going to end up hiring excellent
reps. That’s why the link between sales force productivity and the quality of frontline
sales managers is so strong. Because the manager selects, develops, manages,
and leads the team.
SP: What’s the definition of an excellent rep?
Zoltners: They know their products, [and] they have empathy for the
customer. They execute the selling process well. To me, success in selling is
not about the numbers or the hard metrics. It’s about the soft stuff – people.
Revenue comes from people. Some of the best sales forces in the world haven’t
had the best products. And some of the weakest sales forces I’ve seen have had
great products. You might be making your numbers, but you have an average sales
SP: Can you elaborate?
Zoltners: Look at insurance companies. Many insurance companies make
their numbers but have as much as 60 percent turnover among the sales force.
SP: Is turnover in this case a sign that there’s room for
Zoltners: High turnover is usually an indicator of a problem. In
this case, existing salespeople do not share their accounts, and new people do
not have enough opportunity to be successful.
SP: In your research, you’ve said that many companies tend to retain
poor or under-performing managers for “too long." What constitutes "too
Zoltners: One day is too long! Evaluate and replace sooner.
SP: Sounds simple. Why is it so difficult?
Zoltners: Because they’re buddies. The company says, “He’s done so much
for us. We should give him another chance.” They don’t want to make their
valued employees sad.
SP: So what’s the solution?
Zoltners: You make ’em sad.
SP: What role
does technology play in creating a successful sales culture?
Zoltners: I’m a
meat and potatoes person. The precedent that sales can really sell better with
all this technology needs to be established. You have to be smart about how you
use technology. If you’re overzealous, it can end up costing you money.
SP: Would you say technology alone isn’t the answer? That it’s more
about how people use technology?
Zoltners: It’s about getting the best people to engage in the right
activities. You can’t ask for anything better than that.
For more insight based on ZS Associates’s
research and expertise, download the first chapter of Building
a Winning Sales Management Team, by
Zoltners and coauthors Prabhakant Sinha and Sally E. Lorimer.