Steve Deist of Indian River Consulting Group says that getting sales reps to do what you want starts with figuring out what your customers want. In this exclusive MDM Webcast summary, Deist talks about steps distributors can take to segment, target and position more effectively – the first steps to building out a better sales force structure and sales compensation program.
How can you get sales reps to do what you want them to do?
Before jumping right into sales compensation or structure as the answer, Steve Deist of Indian River Consulting Group recommends taking steps to understand the underlying problem. When you do that, Deist says, it’s easier to get your reps to do what you want them to do and to reward them appropriately.
“It’s important you use the right tool to attack the problem,” Deist said recently in an MDM Webcast, Sales Incentive Design Best Practices. “… Diagnose the situation appropriately.”
For example, a distributor is trying to get sales reps to prospect, but instead the reps are just milking their existing base and treating it as an annuity. But if a distributor has assigned a sales rep 150 accounts, it’s going to be difficult for him to prospect because they are busy servicing existing accounts. Deist says that is a structural misalignment.
No matter how much they are paid, “they have a territory that’s not configured to the skill set and time required so trying to get them to do different things is going to be a waste of time.”
Another example: If a sales rep is targeting the wrong person at a company with the wrong message, it’s unlikely that fixing a compensation plan is going to fundamentally fix the issue.
So how do you fix the problem? Deist recommends a market-based strategy built on segmentation, targeting and positioning:
Segmentation. This involves dividing your customer base into what they want from you and what they want to buy from you. “It’s important you look at the world through your customers’ eyes and figure out what they really want to buy from you – not what you think they want or what your salespeople tell you,” Deist says. If you don’t get this piece right, Deist says, it’s difficult to develop an effective strategy.
Targeting. Decide which of the segments are most beneficial to the company from a cost-to-grow vs. potential-to-grow perspective. Which is the sweet spot? “The worst thing you can be is everyone’s third-favorite supplier,” Deist says. “… Targeting is the essence of margin management.” If margins are declining, he says, it’s a symptom of poor targeting.
Positioning. Now determine how you can position yourself in your chosen segments. Positioning is saying how we can get better about meeting the needs of those segments, Deist says. “How can we make sure we have a gun for the knife fight?” In other words, what are the market gaps between what the target customers want to buy and what you are currently selling.
Deist emphasized the point that what customers are buying is not always what distributors are selling, and the exercise above can help remedy that. Most distributors, he says, say they are selling great products and excellent customer service. “It’s pretty amazing how consistent that is,” he says. “If you think about it, the essence of strategy is differentiating from competitors. If everyone’s going to market with the same approach, it doesn’t take a genius to say not everyone’s going to win with that.”
For example, a design/build contractor lives and dies on relationships with his customers. He needs to have no-drama installations and loves heroic recoveries. In other words, he needs a supplier that can help make him look good. He needs to have competitive pricing, but he is more focused on the relationship.
A bid/build contractor has a different focus altogether. He is focused on the lowest price that meets the specs, and cannot have cost overruns because he can’t raise his price. He makes his money on change orders.
These two segments appear to be the same and may even be bidding on the same project, Deist says, but they are “radically different in terms of their key needs. It’s difficult to be good at servicing both types of customers.” Don’t try to service each of these segments with the same organizational structure and the same value proposition.
What’s more, he says, what they are buying is not in line with what most distributors are selling. “We’re not looking at the world through our customers’ eyes.”
Getting clear on what customers are really buying (a supplier that can make your customer look good, for example), and which segments are in your sweet spot, is important, Deist says. “How you organize your sales force and how you pay your sales reps based on that can be radically different in each of these customers’ scenarios.”
Closing the gaps and focusing on external needs strips out the noise, he says. In the end, doing this type of analysis allows you to determine the best structure for your sales force.
Listen to the full program on Sales Incentive Design Best Practices, featuring Deist, Mike Emerson and Mike Marks. Or, call 888-742-5060 or visit the MDM store to order a DVD of Parts 1 and 2 of this program.