January is typically not a big sales month for Earnest Machine, a 72-year-old fastener distribution company out of Cleveland. But this January was not typical. The company was up 29% at the start of 2019, said CEO Kirk Zehnder. Speaking last month at MDM’s Sale GPS Conference, Zehnder explained the radical shift in Earnest’s sales department structure that he credits for the boost.
Zehnder’s grandfather built the now third-generation family business with a traditional sales approach as an importer and reseller of industrial nuts and bolts, selling primarily through distributors ranging from top MRO companies down to tiny independent shops. About 20 years ago, Zehnder’s father, John, added a European sales division and the company now has two U.S. distribution centers, in Indianapolis and Atlanta. Earnest also started manufacturing about five years ago. “The focus for us is high strength, high quality. We’re really in a niche within a niche,” Zehnder said, adding that Earnest sells about 1% of the roughly 1.2 million different fasteners being used at any given time.
Last year, about 10 years after his father retired and Zehnder took over, Zehnder found a lot of “deferred maintenance” was coming to a head. Business had dropped by a third soon after John Zehnder left, and the younger Zehnder spent the better part of the last decade rebuilding. He put in a new IT system, relocated distribution centers and closed a “renegade” satellite headquarters in Iowa. He made company culture a priority in the process of restructuring the business, but through it all, Zehnder knew he still needed to address longstanding issues in the sales department. “We knew we had to change the sales piece, but it was really easy to ignore it and focus on these other things,” he said. “We knew we needed to make a change in sales, but as a team, we didn’t know what to do.”
Zeroing in on Sales
Earnest spent a lot of time moving things around, bringing in three different sales managers over eight years and not making much progress. The company did have a strong 2017, Zehnder said, but he also realized he had no idea why — or how to ensure Earnest repeated the performance in 2018. In pursuit of the answer, he took a hard look at the way the sales team was structured. The inside and outside sales teams were separated by a “razor wire” of distrust and blame. The inside sales team said outside sales did nothing but travel, golf and create a lot of work for inside sales. The outside sales team complained that inside sales did nothing to help them support business and close sales. Zehnder’s cultural anthropologist wife described it as “a culture war between the two teams,” he said.
Conflicts aside, Zehnder wanted to get down to the nitty gritty: Was the sales department actually selling and converting opportunities, or were they preoccupied with “creating a lot of noise.” When he asked team members about where they found difficulties, they reported a litany of challenges that made them too busy:
- “The system won’t let us do it.”
- “The phones were crazy today.”
- “The fax folder was overflowing.”
While Zehnder found legitimacy in the complaints, he also wanted to explore the role of skill limitations in the sales team’s performance. “We looked all that whole team and could see people who were really good at some things and really awful, like tremendously awful, at other things,” he said.
For example, one inside sales team member Zehnder referred to by the pseudonym Martha was known for being “the pit boss of the sales organization.” Team members credited her for handling tremendous amounts of data and calls at lightning speed. Her average call time clocked in at one minute and 37 seconds, but she was always busy. So Zehnder decided to sit in on a call, and realized why she was moving so quickly. When a customer called in asking for 800,000 pieces, Martha quickly dismissed them, saying Earnest only had 30,000 in stock. “We don’t have enough stock to support you. Anything else I can do for you? No? OK! Bye!” he recalled her saying — without any follow up as to why the customer needed so many pieces or what Earnest might be able to do to help them handle it. “Oh, my God,” Zehnder said. “That was one call record. How many times was that happening?”
Through this process of observation, he came to a conclusion: “There are people who are really good at some things and really bad at others. Unfortunately, we still called them salespeople.”
From the customer perspective, Zehnder heard nothing but good things. Calls into the service department were great. Everyone was doing a wonderful job. Service was top notch. “I thought, yeah, of course you love them. They’re not trying to sell you anything,” he joked.
By April 2018, Zehnder came to one conclusion. “We had the wrong people doing the wrong things consistently,” he said. He knew it was time for a radical change, but what that looked like was still unclear. A self-proclaimed “data guy,” he decided to do a one-day test of a radically different sales structure and analyze the results. “The thing I liked about the one-day test is when you tell the team, ‘Hey, we’re going to do something radically different and we’re just going to do it for one day,’ there’s not enough time to create insurrection,” Zehnder said.
The entire sales department was divided into two groups. Group one handled all calls, quotes and account-specific email. Group two handled all other emails and faxes. Everyone predicted it would be a disaster. “Let’s just try,” Zehnder said.
At the end of the day, a Friday, he asked everyone what they thought of the process. Many said it wasn’t bad, but it was a slow sales day. It was a Friday, after all. It just wasn’t busy, Zehnder heard repeatedly. One sales team member did report enjoying it, saying she had more time on the phone with customers. In fact, when Zehnder checked the data, her average call time that day was three times longer than normal — over six minutes. But as for those reports of a slow day? Earnest, on average, brings in 145 orders a day. That day it was 169. “With the right people doing the right things, we were 15% over our norm that day,” Zehnder said.
Over the next few months, Zehnder made some personnel changes by parting ways with some members of the sales team — ‘Martha’ included — who were no longer a fit for the new structure Zehnder envisioned. “It was an amazing change to the mood in the office, where we went to the sales group and we said, ‘Hey, why don’t we try …,’ the response was, “Yeah, let’s take a look at it,’” Zehnder recalled, rather than instant dismissal or complaining. “It had a huge, huge impact. And I don’t know how to quantify that number.”
Around the same time, Zehnder attended MDM’s Sales GPS 2018 and learned about the integrated sales model, which sounded a lot like what he was already envisioning for Earnest. He ended the inside/outside sales team structure, eliminated the sales manager role and got to the heart of what sales team members really do. They’re either selling, servicing or supporting accounts, he said.
On Aug. 2, 2018, Earnest rolled out its new model: Sales teams of three, with one person on each team assigned to the key categories: selling, servicing and supporting.
Each role entails certain personality characteristics, as well as the functionality that the role requires, Zehnder explained.
The characteristics: great communication and people skills; high emotional intelligence and empathy; comfortable with uncertainty; and tenacious.
The role: mine existing data for untapped opportunities; explore markets for new opportunities; develop customer relationships; uncover customer pain; and convert large opportunity RFQs.
The characteristics: extroverted and curious; great conversation and listening skills; comfortable with asking questions; and works well with others.
The role: Service inbound call activity and direct calls; execute customer outreach programs; engage with customers to discover opportunities; develop customer relationships; and assist with large opportunities.
The characteristics: Experts at task management; ability to triage customer needs; executes efficient and organized processes; and highly accurate.
The role: quickly assess and deliver data as needed; accurately process quotes and orders; manage and prioritize inbound activity; assist with data for large opportunities; and manage data in systems.
“Looking at that whole list of all that stuff, there’s no way that one salesperson can do it. An outside salesperson who doesn’t want to talk to their inside sales team is never going to do those things. So what happens is we drop the ball,” Zehnder said. “Now, we have this opportunity where the sales lead is working with their service person and their support person. We can do more things that we know we need to do, and the right person’s doing it.”
Each of Earnest’s three sales teams were charged with coming up with a team name, but Zehnder was pleasantly surprised when, on their own, they also started referring to the sales department collectively as Team Us. To build off that unity, they moved desks around to bring the teams physically together as well.
To introduce customers to the new system, Earnest sent out an email to each account with their team’s photos and each team member’s new role. “The response from customers has been, ‘Wow! About time.’ The customer is delighted,” Zehnder said, adding that if someone on one team is out of the office, Team Us will rally and cover their duties.
Zehnder charted the company’s daily average sales throughout 2018. There was a noticeable jump in April when they conducted the one-day test, and then orders took a jump again when Earnest implemented the new sales team organization in August. Meanwhile, eCommerce and web orders remained relatively stable throughout the year as a comparison.
In the end, the company’s Q1 daily average versus Q4 went up 28.4%. “The only thing that changed was the [organization of] the sales team. The right people doing the right things to connect with our customer and maximize opportunity to create the best customer experience possible,” Zehnder said. “I really love our sales team. They’ve embraced change readily.”