It should come as no surprise to read last weeks announcement that the pharma giant Merck is planning to lay-off a large part of its salesforce. Saying that they can create more sales momentum from other channels such as product marketing, brands and sales promotion is becoming a common refrain.
They are only following a trend that began in other industries that are dealing with what Jeff Immelt CEO of GE calls ‘commodity hell’. Insurance, direct selling and generalist territory based sales organisations are all finding the same thing, expensive highly trained salespeople who cannot move their proposition further up the value chain cannot bear the sales cost of their existence.
Its worth remembering what the 4 major change drivers are that have created this situation:
- Smarter customers. Because of the falling cost of information acquisition, and the increasing transparency of supplier/customer relationships, customers are more demanding of value-add. Salespeople who only know what customers know, basing their difference on price negotiation will really struggle.
- Margin erosion. Margins have never been tighter, with the cost of sale rising at a faster pace than top-line inflation ‘the jaws of death’ are closing on many P&L graphs. The salesperson is a big slice of the sales cost, having them because you’ve always had them is no longer a sustainable argument.
- Disruptive technology. Citing the internet seems boring, people have been saying the same thing for many years, but that doesn’t make it untrue. Customers are using the internet to for general information gathering (see point 1), market intelligence about suppliers, competitors and more detailed research. Also closed extranet spaces, are increasingly being used to build partnership environments where many more people in the selling organisation are engaging with customers.
- Time pressure and speed of business means two things. Shortening pipelines, decisions are being made faster, there is less dead time and wastage in the chain. Customers don’t want to be in meetings with salespeople. Of course if the conversation contains, thought leadership, insight, strategic perspective and value creation customers are delighted to see salespeople, but these meetings aren’t needed often and not many salespeople can deliver them to the quality required.
In the next article we look at where salespeople are thriving in B2B sales arena.
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