Closing Sales.(Industry Trend or Event)
Author/s: Ruhan Memishi
Issue: June 15, 2001

AS COMPANIES EVOLVE AROUND THE NEW EFFICIENCIES E-COMMERCE IS BRINGING, SO TOO MUST THE TRADITIONAL SALES PROFESSIONAL

THE SALES PROFESSION IS ALL ABOUT HUMAN INTERACTION AND getting potentially jittery buyers to feel good about making a purchase. Yet it's clear that the automation of buying and selling processes made possible by B2B technologies will radically redefine the sales landscape and eliminate the need for certain sales-related jobs. * Sales professionals don't necessarily have to dust off their resumes just yet, however, since B2B e-marketplaces and customer relationship management (CRM) software still have a way to go before they offer buyers and sellers a seamless and cost-effective way to do business online.

Just look at where these systems are today. Companies are able to participate in on line auctions through e-mar ketplaces, but most lack sophisticated cataloguing capabilities, and transactions are still being completed offline. Applications designed for customer service, marketing, and sales force automation aren't yet at a point in their development where they can work together to effectively support sales across multiple selling channels.

It'll probably be a couple of years before the bugs in B2B e-commerce mechanisms are worked out. But when that happens, certain salespeople--as well as certain buyers on the other end of the transaction--will need to start explore other career options.

Trying to predict who will be affected by the shakeout is challenging, however; there are many variables to consider, such as what vertical industry the sales person is working in and whether he or she sells basic commodities or more complex products and services.

One thing is dear, says Frank Meister, a senior analyst at Doculabs, an independent research firm that tests business software: "You will see the old box kickers, the sales folks that have been used to selling just on price and products and not solutions, go the way of the dinosaur--and they are today."

Mike Hogan, vice president of strategy and business development at Poet Software, a content management solutions provider, agrees. "The whole B2B thing is going to impact the order takers more than the salespeople," he says. "The order takers, particularly in commodity goods, are going to be hit hard." Hogan defines order takers as those who have a sales-related job title but "essentially go out with an order pad and say, 'OK, how many more of these do you need?"'

Many have already been whittled away by call centers and catalogs, Hogan says. "This is just kind of one more step. It's not like a number of exchanges go live and all of a sudden the next day a ton of salespeople are laid off."

However, even leaving the effect of B2B e-commerce aside, businesses can't afford to have salespeople who function simply as order takers, stresses Dr. Jonathan Frenzen, a professor at the University of Chicago's Graduate School of Business. That's because it costs companies anywhere from $500 to $1,000 a day to have people out in the field. Order taking has already been brought in-house or replaced by much cheaper telemarketing positions.

Frenzen has been conducting research on the topic with executives at U.S. and European firms for three years. What he has found is that there has been a boost in productivity in salesforces, now that most of the tedious tasks, such as filling out order forms, can be done through Web interfaces.

Frenzen, however, doesn't believe this development will necessarily lead to layoffs of sales personnel, despite the fact that in today's economic climate, many companies are trying desperately to do more with fewer people.

"It's up to the company, as a strategic decision, what to do with that available resource," Frenzen says. The firm, for example, may decide to retask that re source to pursue a new market segment. This would be the smart way to go, in fact, because the sales professionals on staff already know the products and the competencies of the firm. "So when you've got extra time among that skilled pool of people that you've invested in, you don't necessarily want to lay them off," Frenzen says.

Even Frenzen acknowledges that the outside salesforces of organizations may indeed get smaller over time. The range of skills that will be required from them will actually increase, however.

Bob Traughber, chief technical offer of Electronic Data Systems' CRM group, says, "In certain industries, sales jobs will go away or dwindle. I'd stay away from the words 'go away,' because a lot of times, many things don't just go away; they get refocused, or they may dwindle down." Still, he says, "I don't think the salesperson will ever be totally eliminated. But there will be a restructure of how we will do business in the future."

Clearly, big changes are in store for both B2B and B2C sales as consumers use the Internet to shop around for the best prices on the things they are looking to buy. But especially in the case of really big-ticket items, Traughber says, "There are still people who have to go feel and touch somebody and talk to them."

Consider Salesforce.com, provider of an online CRM system that's delivered over the Internet for a monthly subscription fee. Jim Burleigh, VP of marketing, says Sales force puts all the information potential customers could possibly need on its Web site so that they never need to talk to anyone at the company to get themselves up and running.

"The problem that we found out is that customers, when they reach a purchase level that's a combination of price point and complexity of what it is they're buying, even if you put all the information out there, they still want the warm and fuzzy component of talking to another person," Burleigh says. "They may ask you exactly what's on the front page of the Web site, or they may want to hear the tone in your voice as you talk about the power of the engine of the tractor that you're selling."

Knowledgeable sales professionals are now armed with the mountains of customer data provided by B2B-like CRM solutions and will be able to play an even more important role with clients. As EDS's Traughber says, "With customer intelligence behind them, salespeople can get reports and analysis on a real-time basis and then start to focus on the right people to go out and get those sales and a better hit ratio."

An informed salesforce helps busy executives at buying organizations as well: Talking with an informed sales person provides them with relevant in formation quickly, without the need to fish around for it.

Even so, Doculabs' Meister says that enterprises fixated on the direct sales force may be making a tactical error. The direct salesforce isn't able to adequately cross-sell and up-sell to customers, mainly as a result of limitations in today's CRM applications. Meister says CRM vendors have brought only a third of the full solution to the table. "And it's really the wrong solution," he says, because it doesn't unify the sales, marketing, and customer service channels. Ideally, CRM is a strategy that ties the three together.

That's where customer service centers come to the rescue. Once viewed as a low-level business activity and a cost of doing business, these centers are becoming the heart and soul of organizations and starting to generate revenue, Meister says.

Such centers allow customers to have a single point of contact with the organization, just the kind of one-stop shopping that customers have been clamoring for. Customers can go to one place for all of their needs, regardless of whether they are buying something or returning it, or whether their inquiry involves an online or offline transaction. It also helps companies put together a complete picture of the customer, which makes it easier for customer service representatives to do subtle cross-selling and up-selling.

Kevin Costello, global managing partner of Arthur Andersen's digital market solutions practice, also sees the duties of sales and customer support staff converging. "They'll be more organization-to-organization relationship managers," Costello says. "You won't see the tremendous push on a product by-product basis," he says, "be cause those products will already be known to the people who are buying them."

The sales positions that will be hit the hardest will be in the area of sales support, Costello says. Today, they are faxing and e-mailing documents back and forth to make sure the paperwork required to complete a transaction moves along, but soon the ability to interact electronically will do away with these jobs entirely.

Big changes are also in store for the folks on the other end of the transaction--the buyers. Every large enterprise, regardless of industry, has a team of people responsible for strategic sourcing.

In service-oriented industries, where complex goods and materials are involved, human interaction will continue to be essential. Buyers knowledgeable about how a highly technical product or service can help their organizations will continue to be in great demand. Like wise, the well-informed sales professional who can essentially act as a consultant or problem solver for the buying organization will also be secure in his or her job. In fact, the U.S. Department of Labor projects employment of sales representatives in the services sector to grow much faster than the average rate for all occupations through 2008.

Sales professionals involved in manufacturing and distribution, in which the products involved are direct materials that is, fairly simple commodity products-are a different story. The Labor Department says employment of purchasing managers and buyers, as well as manufacturers' and wholesale sales representatives, will grow more slowly that the aver age rate for all occupations through 2008.

The department's Occupational Out look Handbook explains the discrepancy: "The increasing use of computers has al lowed much of the paperwork typically involved in order and procuring supplies to be eliminated, reducing the demand for lower-level buyers who perform these duties," it notes.

One of the most important responsibilities of buyers is to identify foreign and domestic suppliers of parts and materials. B2B exchanges are expected to assume that role soon because they serve as such convenient meeting places for buyers and suppliers from around the world.

Some purchasing agents in the manufacturing field will have staying power, however, because many of them are serving an increasingly important role in product development. Companies look to them for their expertise in whether a certain part or material is suitable in terms of cost,; availability, and other factors, in order to prevent major headaches down the road when the supply of materials proves inadequate.

These highly valued buyers will evolve into financial managers of a kind, constantly mining different exchanges to get the best prices on the items their companies use, says Andersen's Costello.

But in order to harness the full benefits of e-marketplace participation, the ability to make quick decisions will be essential, and that will require retooling the approval process within most enterprises, where it now typically takes two to three weeks to get a purchase order approved. "No longer can we do that in the world that we're going to be in," Costello says.

On the sales side of manufacturing, reps must also be knowledgeable and solutions-oriented in order to survive. They have to be equipped to help a potential buyer understand products, correct technical problems, and estimate cost savings, among other things.

At Grainger, for example, a sales force of 1,700 sells maintenance, repair, and operating (MRO) supplies to companies nationwide. Nancy Hobor, vice president of investor relations, doesn't expect that number to change any time soon.

Grainger used to publish its MRO offerings in a thick printed catalog, but a few years ago it also made its offerings available online. Grainger continues to print about I.5 million catalogs annually, however, since people without Internet access or those who don't feel comfortable ordering online still rely on them.

The Internet changes the role of the salesperson, but "it actually makes them more valuable," says Hobor. She notes that Grainger's entire sales team now focuses on relationship building. This includes helping customers get comfortable using the company's Web storefront by, for example assisting them with setting up so-called "personal lists," which contain information about products routinely purchased by the company and are aimed at making customers' shopping experiences faster and easier--a service that is, of course, also good for Grainger's bottom line.

All of the company's sales personnel, including managers of traditional territories, are compensated for sales made through Grainger.com, which are tracked by sales territory. As Hobor notes, this eases tensions among traditional and on line sales forces and preserves a workable system of incentives.

As Doculabs' Meister points out, many other organizations are grappling with how best to reengineer their compensation models to account for the effect of sales force automation, especially now that many third-party and nontraditional exchange businesses offer value-added services to their customers. For example, financial services firms like ABN AMRO and American Express have set up horizontal exchanges that give their customers the ability to buy things like MRO supplies.

This kind of service "disintermediates the salesforce, because the lead generation is already done through the marketplace, and the qualification is already done," Meister says. "So at what point does the traditional sales-person get involved in a lead and take it over?"

While the role of the salesforce is important to consider, it's just one piece of the larger issue at stake, which is how companies will adapt to changes in the business climate and rethinking how to use the entire range of business tools at their disposal. "One of the devices that they've relied upon is the salesforce," Frenzen says. "Increasingly, they're relying on other functions as well, and the way those are integrated together in a company is what's changing."

Ruhan Memishi is a Chicago-based freelance writer specializing in B2B.

COPYRIGHT 2001 Penton Media, Inc.

COPYRIGHT 2001 Gale Group