To give you some context, OMG’s data goes back more than 30 years, and the assessment is independently validated on a regular basis. Their newest validity study, run across more than 3,000 salespeople, is their largest yet (read more here). No assessment is perfect; human behavior is too complex for that. But OMG earns the confidence its clients put in it, and it’s the best sales assessment I’ve seen in my 30+ year career.

Here’s why that’s important. As a partner, I had access to run reports against OMG’s database and slice the data multiple ways. That access gave me an idea for the webinar: pull ten years of competency data for salespeople assessed in Wholesale Distribution, then query the same ten-year window across every vertical OMG measures. This would allow me to report how distribution compared.

• Worth flagging: the “all verticals” comparison group includes distribution sellers too. I couldn’t isolate them out. If I could have, the gap you’re about to see would likely be wider.

What I found wasn’t flattering. Distribution lagged the broader market, though not because of mindset or coachability. Sellers were willing, and open to coaching. The gap was in the selling competencies themselves, the trainable, coachable stuff. I built that into the 2023 webinar, along with what distribution leaders could do about it.

Fast-forward to 2026. DSG invited me back to present another State of Distribution Sales webinar. I was hopeful going in that the data might have improved for distributors, but not particularly optimistic. Many distributors don’t invest in sales enablement or sales training in a way that materially moves performance, and three years is roughly the window it takes a large sales force to carry a methodology from adoption to mastery, if the investment is there. So, I reran the comparison, this time able to line 2023 up against 2026 using the same methodology.

Almost nothing had moved.

The Five Big Skill Gaps

There’s a lot more detail in the analysis, but the short story is this:

Five selling competencies separate distributor sellers from the broader market by the widest margins, and each one has a predictable pattern behind it.

Average sellers do average things. The top 4%—the elite performers OMG’s data identifies at the very top, and the same kind of performer I’ve spent sixteen years studying in my own top-performer analyses—are far more deliberate and nuanced. Here’s what I’m calling “the five big skill gaps”:

• Hunting: Most sellers open a prospecting call, email, or meeting leading with their company, their catalog, their price. The top performers lead with a problem a similar buyer already had, the outcome they helped that buyer reach, a brief mention of how, then a check for relevance before going any further.
• Reaching Decision-Makers: This is where multi-threading either happens on purpose or doesn’t happen at all. Work the one friendly contact who returns your calls, and you’ll stall the moment that contact changes jobs or loses influence. The sellers who reliably get to decision-makers map everyone touching the deal, by influence and by attitude toward the seller, and work out what each person needs before asking for anything.
• Relationship Building: Building relationships and trust is worth a second look, because most distributors would say they’re already great at it. The data says otherwise. On the relational half (empathy, kindness, active listening) distribution is close to parity with the rest of the market. Nobody needs to teach distribution sellers how to be likable. The real gap sits on the cognitive half: judgment, consulting skills, critical thinking, turning data into insight. Most sellers think relationship means friendliness. The best ones know it’s servant leadership, delivering value from the buyer’s perspective and making people feel genuinely understood.
• Consultative Selling: This critical competency is the lowest-scoring of these five in distribution, and the lowest of all ten competencies across every vertical OMG measures. Most sellers do light discovery and present or quote something. That’s not consulting. It’s order-taking. Real consultative selling means assessing the current state, the desired future state, and the gap between them before proposing anything. Distribution being lowest here is also the best opportunity on this list, since almost nobody in the market has closed this gap either.
• Value Selling: Selling value comes down to one question: do you know what each stakeholder in a complex deal with multiple decision makers truly cares about? Most conversations stay at specs, availability, and price, because that’s easy and safe. The sellers who preserve margin know each stakeholder’s primary value driver, whether that’s a financial or operational metric, a smoother process, alignment with their mission, or something personal to them, and they speak in those terms specifically. It’s buyer-centric, and it’s learnable. It just isn’t happening consistently.

What Closes These Gaps

Naming a skill gap doesn’t close it.

Each of these five has specific skills and tools behind it, and every one of them is trainable. Here’s the short version, one for each gap.

• Hunting: the POSE Value Story. POSE stands for Problem, Outcome, Solution, Explore. Describe a problem a similar buyer had, share the outcome you helped them reach, briefly mention how, then ask if it makes sense to explore further. You only get one value proposition, but you get a POSE story for every problem you solve. That’s a much bigger toolkit, and it means you open with something relevant to the buyer instead of a pitch about you and your company.

• Reaching Decision-Makers: navigating the buyer landscape. People often call this a relationship map, which is fair shorthand, but the buyer landscape is more than a chart of names. You’re plotting everyone involved by influence level and attitude toward you, identifying who’s a champion, a coach, a gatekeeper, a neutral party, or a detractor, and working out what each one needs to move forward. You can’t reach a decision-maker you haven’t identified, and the route up usually runs through someone who already trusts you.

• Relationship Building: the Human Differentiators and ACC. Start with what buyers say about us. Only 33% feel their sellers are well-informed about their business, and buyers think just 25% of sales reps are effective at engaging with executives (a juxtaposition of data from CSO Insights and ValueSelling Associates). Buyers do not feel understood.
  
  The Human Differentiators are the capabilities AI can’t replicate and buyers still want from a person: empathy, active listening, judgment, consulting skills, critical thinking, ethical persuasion, connecting dots, and turning data into insight.
  
  ACC is the active listening model built to close that understanding gap directly. Acknowledge what the buyer said with an empathy statement. Clarify with questions. Confirm by summarizing and asking them to verify you got it right. Do that consistently and buyers feel understood, because they actually are.

• Consultative Selling: a structured situation assessment with COIN-OP. COIN-OP covers Challenges and Opportunities, Impacts, Needs, Outcomes, and Priorities. Run it with ACC and you peel the onion, getting past surface symptoms to root causes.

The average seller skims the rock across the pond.
Top performers do a deep dive.

Average sellers hear a stated need and they present, quote, or propose. Going deeper does two things at once: the buyer feels deeply understood, which almost no one delivers, and you learn what really matters and where you can genuinely help. Watch the Impacts especially. Most sellers jump from a challenge straight to a need, skipping the part that builds urgency and proves understanding.

• Selling Value: know each stakeholder’s value driver. There are four, and different people in the same deal care about different ones. Business Value is the impact on financial or operational metrics: revenue, margin, fill rate, uptime. Execution Value is improving processes and experiences, whether that means removing friction or making something work better than it did before. Purpose Value is alignment with the organization’s mission, values, or strategic objectives. Personal Value is the impact on that individual: their workload, their credibility, their career. Learn which one a given stakeholder cares about, then talk in those terms.

None of this is innate talent. It’s all learnable. That’s what makes three flat years so frustrating.

How This Maps to My Top-Performer Analyses

I didn’t pull concepts like POSE, the Human Differentiators, COIN-OP, or Value Drivers out of thin air. They came out of twelve Top-Performer Analyses I’ve conducted over sixteen years, studying what the very best sellers do differently from everyone else. The patterns kept repeating across industries, so I built them into a sales methodology, The CoNavigator Method for B2B Sales Mastery.

This is one of the things I’ve enjoyed about working with OMG. We have two different bodies of evidence and the same gaps: my research keeps turning up the same behaviors that separate top performers, and OMG’s data keeps confirming distribution specifically hasn’t closed them.

That same validity study also showed something specific to this piece. Of the three competency groups OMG measures, Tactical Skills, the learned, executable side of selling that the five gaps above belong to, had the strongest correlation to actual job performance. Stronger than Will to Sell (a seller’s desire, commitment, and motivation to succeed). Stronger than Sales DNA (the underlying beliefs and traits that either support sales success or sabotage it, like needing approval or being uncomfortable talking about money). The category distribution has failed to close for three years is also the one that most predicts higher performance.

The Role Sales Managers Play

It’s one thing to define gaps or even determine what will close them. Important work, but incomplete. It’s quite another thing to close those gaps and improve sales performance. This is where sales manager engagement is critical.

Your frontline sales managers are a force multiplier. They’re the single strongest performance lever you have, and the change agents you need to truly transform your sales force.

That said, the sales rep owns their development, and their manager is like their guide or Sherpa. Both are accountable in different ways. As part of being that guide, managers should have a full sales coaching system available. I built that system out of the same top-performer analyses, since I included frontline sales managers in the research. It covers the inputs, the roles each person plays, a coaching process, a set of tools, the outputs you should expect, and four models.

The four models are what managers use to solve the gap identified: one for leading individual coaching sessions, a Field Training model for knowledge gaps, a Sales Coaching model for execution gaps (also used for counseling, when the issue is mindset or a self-limiting belief rather than skill), and a Feedback model for debriefing what you observed. Each has its own steps. I’ve written about the full system before, and there are links in the Resources section below.

That full system is what creates radical change, real performance improvement, and a coaching culture where managers and reps stay in a genuine cadence of continuous improvement. It’s also not something a manager adopts overnight.

So, for today, we’re going to skinny it down one step further, to three moves that will start closing the gaps above right now, while you build toward the full system. Call it a kickstart.

The Three Moves for Managers

First, decide whether you’re looking at a knowledge gap or an execution gap. If a rep doesn’t know what to do, why it matters, or how to do it, train it. If they know what to do and they’re trying, but they’re not good enough at it yet, training again wastes everyone’s time. Coach it instead. Most managers get this backward more often than they’d guess: they re-explain things to reps who already understand them, and skip the practice reps need to get better at doing them.

Once you know which one you’re dealing with, we’re back to the three moves:

• Practice with understanding checks: Role-play the skill until the rep can do it under pressure, not just describe it back to you. A rep who can explain a POSE story in a meeting isn’t the same as a rep who can deliver one on a cold call. Don’t move on until they’ve proven it in the room, in their own words, to their own satisfaction as much as yours.
• Feedback with the SOIL model: Debrief what you observed so it’s usable: Situation, Observe, Impact, Learn. Specific, not vague. “Good job on that call” changes nothing. “When the buyer mentioned budget, you jumped straight to price instead of asking what budget was protecting” changes something.

• Rolling reviews until it sticks: One good coaching conversation doesn’t fix a skill gap any more than one good workout builds a habit. Schedule the follow-up, check whether the behavior actually held, and stay on that same skill until it does. Then help the rep pick the next gap.

What Managers Can Inspect

Each of these gaps produces something concrete a manager can inspect, so you’re not guessing whether your coaching is working. Relationship building and consultative selling are combined here, because they share the record from a discovery call, showing both how well the rep understood the buyer’s situation and how well they connected with the buyer while doing it.

Here are four things to look at:

• For hunting: look at the rep’s POSE stories. Do they have more than one? Does each one start with the buyer’s problem, or does it start with your solution? How did they personalize it, and was it relevant to that buyer?
• For reaching decision-makers: look at their relationship maps. How many contacts do they have on a deal? Which roles are missing, compared to who is normally involved? Do they know what each person needs to move forward or grow the account (aka, buying process exit criteria)?
• For relationship building and consultative selling: look at their situation assessments and the COIN-OP information they gathered during discovery. Are the Impacts filled in, or did the rep jump straight from Challenges to Needs, skipping the parts that allow them to build a compelling business case? Did they use ACC to peel the onion and demonstrate understanding? Did the solutions presented align to the needs and desired outcomes?
• For selling value: ask the rep to give you a value driver read on each stakeholder in a live deal. Can they name what that person truly cares about, in that person’s own words, not generic language from internal product documentation?

By the way, if you lead a smaller team, lead an inside team, or work as a player-coach, you can still inspect all four of these. The methods and tools remain the same. (And while we’re at it, CEOs and CROs, it’s time we put the player-coach model to bed. Managers can’t be force multipliers and maximize rep development and coaching impact when they’re also working as a seller. Food for thought.)

Closing Thoughts

Three flat years of skill development isn’t bad luck. It’s what happens when a rep’s development and a manager’s guidance never turn into a habit on either side, meaning a repeatable, replicable process they both follow.

Closing these skill gaps doesn’t mean waiting until you can implement a new sales methodology or roll out the full sales coaching system (although you should eventually ensure you have both in place). It doesn’t mean a rep waiting for someone else to develop them. It means a rep is willing to own their gaps, and a manager is willing to guide them through the three moves: practice, effective feedback, and staying on it until the skills improve and the numbers follow.

The ball’s in your court now. Show us your moves, managers!

Resources

Links already in the body, repeated for convenience

• Objective Management Group—What Actually Predicts Sales Performance (the 2026 validity study): https://www.objectivemanagement.com/research-blog/research/what-actually-predicts-sales-performance/
• Objective Management Group (Sales Force Diagnostics | Hiring Assessments): https://www.objectivemanagement.com/

Sales methodology

• eBook: How to Choose and Implement a Sales Methodology That Delivers Results

Sales coaching system, referenced in “The Role Sales Managers Play”

• 4 Coaching Models That Sales Managers Need to Master (DSG)
• Your Sales Managers Think They’re Coaching, But They’re Probably Not (DSG)
• Sales Coaching Excellence Is a Competitive Differentiator (DSG)

Other related articles on Distribution Strategy Group

• The Influential Power of Storytelling in Sales
• How to Navigate the Buyer Landscape
• The Combined Power of AI and Human Differentiators in Sales
• Discovery Skills + Patience: The Superpowers of Selling

How to Improve Opportunity Management and Increase Win Rates

The post Three Years, No Progress: Why Distributor Sales Skills Haven’t Moved Since 2023 appeared first on Distribution Strategy Group.

This is not limited to wholesale distribution, by any means, but I do still see it occurring in our noble profession, even today.  

We’re on the Right Track 

Now, that said, there has also been positive change in our profession recently. Given: 

• the industry disruption we’ve faced (and still face) 
• the changes (and after-affects) thrust upon us by a global pandemic 
• the ongoing evolutions in B2B buying behavior 

… Forward-thinking company leaders, researchers, educators, consultants, associations and experts like those at my employer and the team here at Distribution Strategy Group are leading the way into an even better future for distributors (or at least for those that are paying attention and taking action).  

I’m seeing business-model and sales-model evolutions, smarter and more targeted marketing, the blending of ecommerce and field sales, the optimization of inside sales teams, the intelligent application of technology, the application of strategic pricing methods to increase profits to support other growth initiatives and more.  

Yet, while these things are both strategic and critical, to refocus on the point of this post, investments in developing front-line sales managers are not as common. These managers are a key performance lever for change and performance improvement, and when well trained, are truly a force multiplier. After strategic and tactical planning, these managers are your implementation and execution team.  

If I had a dollar to spend on sales training, I’d spend 75 cents on the front-line sales managers. 

You can’t eat an elephant in one sitting, and I’m not going to try to cover all the gaps I mentioned above in The Challenge section in one article. So, let’s start with purposely teaching front-line sales managers, both new and seasoned, some diagnostic skills for sales management.  

Diagnose First, Then Prescribe 

The other thing that’s true is that front-line sales managers are incredibly busy. Leaders should do whatever they can to remove non-essential tasks from their plates to free time to engage with their teams and lead, manage and develop them to higher levels of performance. (Is anything they could do more important than that?)  

Even with barriers removed, it’s still a busy role. This is one of many reasons why teaching diagnostic skills is important. It’s counter-intuitive, because analysis and diagnosis take time, but the time spent upfront will speed everything afterward, and improve the return on their efforts with their team.  

Consider the difference between these two scenarios, where a sales manager says: 

Scenario 1: 

“Hey Ruth. I’m available next Tuesday and would like to attend some sales meetings with you. What do you have scheduled that day?” 

Scenario 2: 

“Hey Ruth. Based on my analysis, I’d like to spend time with you when you’re working with buyers in [Stage 3]. When can we do that?” 

In the first scenario, any feedback or coaching will be random. If the manager sees anything that she can coach to improve performance, it will be entirely opportunistic and based on luck.  

In the second scenario, the manager is purposefully targeting a process stage for a reason, perhaps based on lower-than-average conversion ratios between Stages 3 and 4, based on an analysis of pipeline and opportunity management data. To make this even more effective, the manager can have Ruth do her own analysis, and meet to review her work and compare it to the manager’s analysis. This is a great exercise, will help the rep develop diagnostic skills, and fosters buy-in from the rep, as well. 

This is just one possible example, but hopefully it points out the power of diagnostic skills to target areas for performance improvement, that will make a difference in results, when addressed.  

How to Actually Do It 

For some folks, and understandably so if they haven’t done it before, this is easier said than done. Let’s break it down.  

Leading and Lagging Indicators 

Leading indicators are the things you do to produce a result. The results are your lagging indicators. Both are important for diagnostic purposes.  

If your sellers are prospecting for new business or working with an account to expand and grow results, there are steps they take, or tasks and activities they perform to achieve the desired outcome. By measuring what they do, with whom, how often, and as applicable, when and where they do it, you’ll be better able to predict the outcome, or the lagging result.  

In every process, there are stages, objectives, tasks, and exit criteria. The type, amount and frequency of activities can be tracked as leading indicators. Without this, you are left guessing at why the lagging indicators are off target.  

[click the image to view a larger version]

For example, for prospecting, who are they targeting, what pre-contact research are they doing, which channels are they using to reach out, and what is their messaging and approach for each? Then, how many contacts (email, voicemail, calls, LinkedIn InMails or comments) do they make per day, and what is their nurturing sequence?  

If their role is to set appointments for others, the appointments set and held is their lagging indicator or result. If their role entails opening and managing new opportunities to a successful close, the sale itself is the lagging indicator. It’s contextual and role based.  

Note: For a deeper discussion and one example of a report that you can build for diagnosing pipeline metrics and new business development, see this post. To see a detailed webinar deck on various sales metrics across the customer lifecycle, download this (ungated) document.  

Use ROAM for Root-Cause Analysis 

ROAM is a diagnostic method that helps managers get to the root-cause of performance issues. The acronym stands for Results vs. Objectives, and Activities plus Methodology.  

In any area of performance, compare the Results to the Objectives. You are comparing actual performance to the goal, so this can be done for both leading and lagging indicators. When there are shortfalls, prioritize those shortfalls based on the size of the gap, the correlation between the analyzed metric and the result, and the relative importance of the result. This provides focus.  

In an area of prioritized shortfall, review the leading indicators to analyze the Activities being performed. Who is doing what with whom, what exactly are they doing, with what frequency, how often and when? When you have activity reporting set up, it makes this easy for managers, and that should be your goal.  

Very often, performance can be improved simply by fixing the activities or level of activities. But if not, you must also explore the Methodology of those activities, or how well they are being completed (the quality of execution, meaning the quality of the sales methodology).  

In almost 40 years of diagnosing and addressing performance issues that are people or skill related, I have never seen a ROAM analysis fail to find the root cause. That doesn’t mean that there aren’t causes outside of the person and their skills, though, and managers need to be aware of this.  

I have found the two tools pictured below to be exceptionally helpful for managers in diagnosing and determining a viable solution. 

 [click the image to view a larger version] 

The Performance Analysis Flowchart is more often used by consultants or sales enablement/sales performance pros, but I have seen managers use it. If you like it, see this site to purchase copies. (I do not benefit from this in any way; I just like it and recommend it.) 

The Solutions Chart is from my Sales Coaching Excellence program (adapted from Ferdinand F. Fournies, with permission) and most managers find it very helpful in determining when field training or sales coaching are the right solutions, and also – equally as important – when they won’t fix the issue at hand.  

Best Practices (Sales Methodology/Playbooks) 

If you haven’t already connected this dot, the one thing that the above method doesn’t give you is exactly what to do to close the performance gap – meaning, the exact right Activities or Methodology to use. This is something that your sales managers must bring to the table, or preferably, that you determine as a company.   

It’s best to do it as a team, to align on best practices that produce results with your buyers and customers, with your products or solution sets, and in your industry or sub-vertical of wholesale distribution (electrical, motion control, fluid power, HVACR, plumbing, etc.).  

Where does this content come from? It can come from multiple places: 

• The known best practices in your industry 
• Top performer practices in your company  
• Your chosen and adopted sales methodology 
• Your sales playbooks (buyer, product, process, and methodology documentation in the form of “plays” that you run) 
• Your policies and expectations for activity levels 
• Your company’s training programs 
• An approved external resource 
• Your experience and expertise 
• Your rep’s ideas to try 
• The “A Players” on your team 
• A “B or C Player” who excels at [XYZ]. 

In a perfect world, to avoid a free-for-all, “tips and tricks” sales culture, I’d prefer to see an aligned and adopted sales methodology that is either based on internal top performer analysis or a commercial sales methodology based on proven-effective practices. But all the above are viable to solve an identified performance issue, and can support your chosen sales methodology, as well.  

Don’t Leave It to Chance 

Have you ever seen training like this for sales managers? Have you ever gone through it yourself? I’ve done this for employers and with clients, and I know some companies do it, but generally speaking, it’s very rare. Some sales managers learn from a mentor, others through tribal knowledge, some figure things out on their own, and others never do.  

Why leave this to chance, with some of the most valuable leaders on your team, in one of the most important functions for your company?  

Think about that. It’s worth your time and attention, and I hope this article helps.  

If you’d like to dig in deeper or talk about these concepts, reach out and let me know. If this article helps you in any way on your journey toward improved sales effectiveness, please also feel free to share. I’d enjoy hearing about your successes. 

The post Teach Your Sales Managers Diagnostic Skills appeared first on Distribution Strategy Group.

Such a slight increase may seem simple enough, but it’s probably no secret that improving margins is tricky. You can’t raise prices without justification, or you risk losing customers. Today’s saturated market makes it easy for buyers to shop for a comparable supplier with lower costs. Not to mention, higher prices don’t always equate to higher margins.  

Instead, consider your margins through the lens of customer experience. When you offer better service and a more consultative experience, you can justify price increases, improve unit sales per rep, and ultimately drive profitability.  

To provide a truly robust customer journey, however, you need the help of artificial intelligence (AI). 

4 Ways AI Improves the Customer Experience 

AI-powered software has revolutionized the way reps interact with their customers, enabling them to provide more personalized and efficient service. Below, learn four ways AI enhances the customer experience.  

1. Offers a Consultative Experience

AI can enable sales reps to have a deeper understanding of each customer, their buying behaviors, and reorder needs — benefiting customers by providing a truly consultative experience.  

For example, some distributors leverage AI to guide reps to meaningful customer conversations: AI can surface customers’ potential needs to give reps a talk track for their call or visit. Are they due to order some products? Are they underspending in a certain category? 

Then, once the rep is on the phone or visiting the customer, they can see specific AI-generated upsell and cross-sell recommendations from their computer or mobile device tailored to that customer. These product suggestions are based on years of historical data, item pairings, and products frequently purchased together.  

Additionally, AI-powered semantic search crawls every single document a distributor has. So, if a rep is asked a specific question about one of the millions of SKUs in the distributor’s catalog, it’s easy to find the answer. Reps can use semantic search to find information related to that product and offer a solution on the fly. 

When your sales reps understand their customers’ needs and know which items to offer them — from a consolidated dashboard — they can add value at every step. 

2. Anticipates Customers’ Needs

Some distributors leverage AI to enable proactive outreach. By analyzing all the customer’s transactional data over time, AI can anticipate customers’ needs and prompt sales reps to reach out. This allows reps to make helpful, proactive product suggestions before their customers even realize they need something. 

Suggestions can include: 

• Reorder reminders 
• Upsell and cross-sell recommendations 
• New product categories customers might not be aware the distributor carries 

No matter the specifics of the suggestion, making proactive recommendations signals to customers you’re on top of their account and leaves them with a positive impression. With the unique personalization that AI can bring, your customers will feel like you actually know them. 

AI can also highlight categories where customers are underspending. Chances are, if a customer is underspending in your “personal protection equipment” category, they’re buying it elsewhere, possibly not knowing you offer that line of products.  

Having this insight helps reps anticipate the product categories a customer should be buying so that they consolidate their orders to a few distributors instead of shopping around from dozens. This improves the customer experience, as customers won’t have to worry about keeping track of orders and can focus on their work.  

3. Allows for a Seamless Omnichannel Experience

Global management consulting firm McKinsey & Company recently found that “all B2B customers prefer omnichannel, no matter their industry, country, size or customer relationship stage.” In fact, they’re willing to switch to a different supplier if it means gaining a better omnichannel experience. 

By connecting business systems such as ERP, CRM and ecommerce, and storing the data in a centralized location, you can give customers an omnichannel experience.  

With omnichannel, customers will have the same experience across every channel and touchpoint. For example, if they browse your online catalog and save an item to their wish list, their assigned rep will see it and know to mention it during their next conversation. This visibility allows reps to “wow” customers and streamline their shopping journey.  

AI helps distributors optimize the omnichannel experience from the supply chain to customer service by enabling personalized recommendations, price optimization and more. AI recognizes patterns in the data to help organizations deliver an outstanding customer experience. 

4. Provides Personalized Product Recommendations

In addition to providing upsell and cross-sell product suggestions, using an AI-powered tool can also provide personalized product recommendations to customers as they browse your website.  

Think back to the last time you went shopping online. You probably saw sections on the website labeled “Other Customers Bought” or “You May Also Like.” These product suggestions are powered by artificial intelligence and use your browsing patterns and purchase history to generate personalized recommendations.  

You can employ the same strategy in B2B. In fact, with the rapidly changing B2B buyer expectations, you probably need to. Gartner reports: “B2B buyers spend only 17% of the total purchase journey with sales reps. 44% of millennials prefer no sales rep interaction at all in a B2B setting.”  

They also want the same personalized experience they get when shopping for shoes or vacations. Giving a personalized experience also makes good business sense: McKinsey found “companies that personalize marketing and sales more closely to the individual customers are more likely to have gained market share.”  

With the magic of AI, you can eliminate the need for manual product pairing. By analyzing your transactional history and product descriptions, AI automatically learns which items pair well together or are usually purchased together. AI then uses that knowledge and the customer’s information to make personalized product suggestions when a customer visits your site. 

Improve Your Margins by Improving the Customer Experience 

Redefining your value proposition through the lens of customer experience can be a powerful way to improve margins. By leveraging the power of AI, you can add value to every step of the customer journey and ultimately drive profitability.  

AI is a technology that improves exponentially, meaning the longer you wait to incorporate it into your customer experience, the less you’ll reap its rewards. Take advantage of its continuously evolving capabilities now and witness the transformation it brings to your customer experience. 

The post How AI Can Support a Greater Customer Experience – and Drive Greater Margins appeared first on Distribution Strategy Group.

Bear with me a moment as I share some career history. I promise there’s a point at the end – just stick with me.  

I’ve been in the sales performance improvement business since 1991. I’ve had titles including sales training, sales effectiveness, sales enablement, sales transformation, sales performance development and sales management development.  

As an employee, I’ve worked in entertainment, advertising specialties, B2C/B2B financial services, B2C/B2B insurance, high-tech, software, pharmaceutical, med-tech, hospitality, meetings and convention services.  

I worked for a top 20 sales training company to develop and implement a course for them, prior to SPARXiQ, where – in addition to strategic pricing and sales analytics services – we also develop sales and management training.  

As a consultant, I did work for companies in high-tech, SaaS, manufacturing, document management, packaging and assembly, telecommunications and office equipment. And now, I’ve been at SPARXiQ for just over four years, working primarily in wholesale distribution.  

Through my experience, I became familiar with the many sales nuances – B2C/B2B, tangible/intangible, product/service, long-cycle/short-cycle, high-ticket/low-ticket, inside sales/outside sales and direct/channel sales. I understand new business development, opportunity management and strategic account management in those various nuances and vertical industries.  

Why do I share this?  

Because there is a lesson that I didn’t expect to learn but did anyway.  

“Selling is not the same everywhere.”  

This is very different than the “sales is sales is sales” message that some spread. Yes, if you go up high enough in an airplane, even the most complex terrain looks like little circles and rectangles. It’s the same with selling. There’s awareness, interest, relationships, explorations, decisions and purchases. It’s these patterns that allow us to develop and align sales process to buying process and move our products and services.  

But when you get down to the street level, it’s not the same across all distributors. While the concepts and skills (the sales methodology) are relatively the same, the real difference is in how you apply those concepts and skills.  

The Necessary Nuances for Sales Success 

To better illustrate this, let’s imagine you are a seller in the below scenarios, using sales discovery skills. I refer to this as a Situation Assessment with COIN-OP, which stands for Challenges, Opportunities, Impacts, Needs, Outcomes and Priorities. This is the discovery methodology we teach in our Modern Sales Foundations program.  

This framework can be applied to a very deep, consultative analysis, or a faster, higher-level transactional analysis. You can flex it and adapt to the situation (often referred to as situational fluency). Here are two examples.  

Scenario 1: Counter Sales, Simple, Transactional 

A customer walks into a branch, inquiring about cordless impact wrenches. You sell various tools from Milwaukee, DeWalt and Ingersoll Rand. Some sellers might just offer the Milwaukee because of the spiff on that unit, and because they know it’s a good tool. Or, someone like you who wants to provide real value might ask about: 

• The Type of Work: The work being performed (examples: automotive, heavy plant maintenance, construction projects, scaffolding, etc.).  
• The Application: The way the tool will be used on the job (environment, projects, constant vs. intermittent, etc.) 
• Battery Requirements: Average length of use between charging times (could determine a recommendation for one tool over another, or the purchase of multiple batteries).  

This discovery will allow you to consider the needed power, breakaway torque, size, speed, chuck type required, battery requirements and other factors known to an expert, and then recommend the best options to your customer. During the discussion, you may even learn about the context of the current project(s), and uncover a need for other things you can provide (one-stop shop; preferred provider).  

See the power? (Pun intended.) Simple and transactional do not mean rushed or poorly done, do they? The Situation Assessment with COIN-OP, even done at a high-level for this type of sale, is a powerful differentiator and ensures Need And Solution Alignment (NASA). Plus, the expertise and guidance provided could certainly earn you preference as a supplier when something else arises. There are many positive possible outcomes that branch out from an outstanding customer experience.  

Scenario 2: Engineered Solution, Complex, Consultative 

Now, imagine you are creating a digital twin for a series of industrial high-capacity chemical pumps. You are working with technical experts from an industrial Internet of Things (IoT) systems partner, an edge computer/sensor vendor, mechanical and electrical engineers from partners, your company and the client, the plant management team, and the client’s COO and CFO. It’s a bespoke solution in the high six-figure range, possibly seven. There is a lot more at stake, and it requires a far more detailed understanding of the current and desired future states. This will require more time, more questions, “peeling the onion” to get to root causes, and taking purposeful steps to understand multiple perspectives.  

You will still use the Situation Assessment with COIN-OP from above, but the details have now increased by a factor of 100 and the situation requires a partnered team of solution providers to serve a large buying committee. It’s also no longer a counter-conversation where you’ll remember everything easily, is it? You’ll need a system to capture what you learn, so you can review, absorb, analyze and share it effectively with others.  

Then, in addition to documenting the two states with COIN-OP, understanding the deep business and technical requirements, and co-creating a workable solution, there is a business case development with cost-benefit analysis. There’s also likely a prototype process with a pilot, pilot review and analysis and eventually, if all goes well, an implementation phase with monitoring and maintenance.  

This sales process will require: 

• Deeper discovery skills (an extended Situation Assessment) 
• Expert navigation of the buyer landscape 
• Outstanding process management (satisfying buying process exit criteria for a large team of buyers) 
• Great call planning and sales meeting management 
• Strong qualification and Need And Solution Alignment (NASA) at every stage
• Building strong relationships with a high degree of trust, as you co-create solutions with your client and a team of experts.  

As a seller, you will need to be like an orchestra conductor (who occasionally also plays an instrument). You will be a facilitator.  

Same Stuff, Different Way 

Now, looking closely at the complex Scenario 2 example, not all those opportunity management skills are required for the Scenario 1 simple sale, are they? Especially not navigating a complex buyer landscape.  

Yet, the Situation Assessment with COIN-OP, NASA, qualifying, satisfying exit criteria for at least one person (what the buyer needs to see, hear, feel, understand and believe to move to the next step), and establishing trust (earned through your servant leadership and buyer-centric approach), all apply to both scenarios. They are just done differently, to different depths.  

So, now we can say…  

“Selling is not the same everywhere. But it is similar.”  

The difference is context. Based on your judgment of the situation and its nuances, you adapt to apply the right skills in the most effective way.  

If you manage a sales force that sells in multiple scenarios, like the two examples above, this is how you can use a single methodology and just adapt and apply it appropriately. You simply teach and coach your teams to transfer, adapt, and apply what they have learned, to the situation at hand (situational fluency).  

It’s rare that an individual seller would find themselves in both situations above, but there may be nuances and levels in their environment that require an adaptive approach, even in their world.  

An example of this would be speaking the language of an individual buyer, based on whether they have: 

• Business value drivers (interested in financial or operational outcomes) 
• Aspirational value drivers (aligning with mission, vison and values) 
• Experiential value drivers (improving processes, practices, procedures and experiences) 
• Personal needs (things that impact their career, role, success, compensation, personal life or how they feel).  

This “multilingual” messaging capability allows sellers to speak about the same solution, or its related features and benefits, differently, with buyers who care about different things. This may apply to a simple transactional sale of an impact wrench, or the complex, consultative sale of a digital twin design. Same concept; done to different depths.  

Closing Thoughts 

In an article, this is a deep as we can go, with the examples above and using the Situation Assessment. But you can think about situational fluency and adaptive selling approach across your entire customer lifecycle and sales methodology.  

No one in your company should be more prepared to do this than your front-line sales managers. Once they understand the concepts in this article, with their experience, they are uniquely qualified to help your sellers connect dots, adapt and apply their sales skills in context. If you give them the time to assess their reps’ ability and coach to ensure mastery, you will soon be maximizing all sales interactions at your company.  

Side note: This is how front-line sales managers can become a force-multiplier for your company. 

Well, that’s it for today. If you’d like to dig in deeper or talk about these concepts, reach out and let me know. If this article helps you in any way on your journey toward improved sales effectiveness, please also feel free to share. I’d enjoy hearing about your successes.

The post How Distributors Can Maximize Sales Interactions appeared first on Distribution Strategy Group.

Do you know how many customers you lost last year?  

I’m not looking for a precise answer, just a rough approximation. Is it hundreds, thousands, or tens of thousands? In my experience, it is surprising how many businesses have no idea – maybe have never even considered the concept of a lost customer. 

In my 40+ years as a management consultant, I have seen this situation many times.  

One example comes to mind. This company was an industrial MRO business. The company was looking for growth, something more than the low single digit growth they had been experiencing for the past few years. Every manager I spoke with characterized the business as a stable business that, as evidenced by the flat top line, just didn’t have the market to grow.  

The data told us a different story.  

Underneath that top-line veil of stability, there was a whole lot of churn going on. As we looked at year-over-year customer purchases, we could see that they were losing close to one-third of their customers each year (over 4,000 lost customers).  

These lost customers represented about $14 million in annual sales. They were working hard to bring in enough new customers to keep top-line sales stable and even grow it a little, but this was a very inefficient and inadequate business model. 

When we applied analytics to the problem, it took the vague concept of lost customers and provided a quantitative and financial platform for the business. Losing customers has a compounding effect. The initial reaction is to assume that one loses that year of revenue from a lost customer. In our example, the $14 million from 4,000 customers.  

But the reality is much more sobering – businesses lose the following when customers defect: 

• The target year of revenue from the lost customer 
• The ongoing revenue stream from the lost customer (this could have an impact for many years) 
• The marketing cost requirement to replace those lost customers with new customers. 
• The lost goodwill and brand equity 
• The loss of any referrals that these lost customers would have made. 

In this case, the actual lost revenue was an order of magnitude higher than the initial one-year estimate of $14 million. And this loss has an impact on the business for a number of years. 

The first step is always measuring what you lose.  

Hopefully it is a small number, but if not, it can be the impetus for change that many organizations need. The question for this business was what was it worth to save 100, or even 1,000 customers? What would they be willing to invest to save those customers?  

In the short term, this measurement sparked a win-back program. This was a successful program – as they were able to win back almost 10% of these lost customers.  

While the win-back programs provided some incremental revenue, they required an investment above and beyond what would have been required to retain these customers. And this is simply an inefficient way to run the business. It is a bit like catching the water that leaks out of the bottom of the bucket and pouring it back into the top without ever repairing the leaky bucket. 

This dynamic is the reason that two-thirds of the Fortune 500 companies are using voice-of-customer feedback and Net Promoter Score to gauge customer satisfaction and loyalty and to determine the risk of customer defection before it occurs.  

In this process, companies ask customers to tell them what they are doing well and what they are not doing well, and what elements of the business relationship are most important to them. With that information, companies are able to plug the leak and save some of those customers that would otherwise be lost.  

This typically has a much better ROI than any lost customer win-back programs. 

And it all starts with a greater awareness of the economic importance of customer retention. And the answer to that question: “How many customers did you lose last year?” 

 Learn more about how you can more effectively measure customer satisfaction.  

The post How Many Customers Did You Lose Last Year? appeared first on Distribution Strategy Group.

All these critical actions require human behavioral change.  

But changing behaviors is difficult. We are complex and irrational thinkers.  

“We are prone to overestimate how much we understand … We can be blind to the obvious, and we are also blind to our blindness,” Daniel Kahneman, one of the greatest minds in behavioral sciences, said in his Nobel Prize winning book, Thinking Fast and Slow. 

But it’s made easier when you have the right tools. Behavioral Economics, or the theory that “combines elements of economics and psychology to understand how and why people behave the way they do in the real world,” is key to selling better, marketing with more intent, and persuading others. 

Here are three principles  – and their practical applications for distributors:  

Principle No. 1: Choice Architecture 

Having an abundance of choice is what we conceptually believe to be a good thing; the more, the better. However, for humans, abundant options are actually mentally distressing. This tends to create dissatisfaction with the choice we ultimately make.  

Choice Architecture is being deliberate with the information we display and the way we set up the choices people need to make, whether digital, physical or in conversation.  

Sales 

In sales, using Choice Architecture means understanding how people make decisions. Here’s how to apply it:  

1. Set up a default choice. 

A default choice is a statement or price that’s easier for a buyer to agree to. This could be the base price of a product or establishing an agreed-upon goal for their company. Default choices help a salesperson ground the conversation by reminding the buyer of choices they’ve already made.  

For instance, your product might have a service tied to it like expedited delivery. The default choice here is the base price for the product, which we can always come back to if they don’t want to shell out for the extra fast delivery.  

2. Flip the question. 

Flipping a question is a powerful way to get a buyer to second-guess their mindset. It’s best explained with an example. Using the example above with the expedited delivery, let’s say the default choice is to include the delivery and the fee, rather than ask if they’d like to add it on. 

The question then becomes, “Would you like to opt out of the expedited delivery?” This option makes it feel like they’re losing something they’ve already gained and be more likely to not opt out. More on that in the Loss Aversion section.  

3. Create urgency. 

While this is, of course, not a new concept for sales, there’s significant Choice Architecture backing it. As stated in Nudge, a book written by Richard Thaler, a Nobel Prize winner for economics, “people make decisions quickly under pressure, based largely on intuition, and unconsciously guided by biases.”  

A sense of urgency, especially when presented as a gap in the buyer’s needs, creates a choice for the buyer: do business with me, or lose out.

Marketing

Marketing with Choice Architecture in mind comes down to product positioning and understanding what your customers buy from you so that you can pitch them higher-revenue, lower-cost products. 

For instance, you might have seasonality in a certain product line. You know that soon, certain products will be bought by certain customers, in line with that seasonality. Look at those products and determine which have the highest margin. 

Start advertising or sending emails about those products to your previous purchasers before the season comes up. By the time the season rolls around, they’ll be primed with an awareness of those higher-margin products and more willing to switch rather than deciding for themselves which one they will buy this year.  

An interesting example of Choice Architecture within Apple is their limited number of available products. Yes, they come out with a new phone every year, but each model offers only one or two variations. As well, they offer only a few versions of headphones or watches that you can buy. By limiting the number of products it creates, Apple limits your choices, and thus makes you happier with your overall choice.  

Persuasion 

Choice Architecture has a lot to do with presenting options early on so that when decision time comes up, you’ve already primed your audience with the choice you want them to make.  

A great example of this comes again from Nudge: a daily specials board at a restaurant. Before customers even sit down, they see that board. A significant number of customers will instinctively opt for the specials because it’s already in their minds.  

So, if you want to persuade someone to pick something, prime them early with the choice you want them to make.  

Principle No. 2: Decoy Effect 

Decoy Effect is perhaps the best tool for creating easy paths to upselling and is a subprinciple of Choice Architecture. Consider the pricing options you provide to customers: low cost, middle, high cost. By making one of those slightly less attractive, you will nudge people toward a more profitable choice.  

Marketing 

Let’s open with marketing this time because Decoy Effect is best explained with a visual. Pricing pages are your No. 1 example of Decoy Effect in the digital space. Take this example from Campaign Monitor.  

Campaign Monitor probably makes the most amount of money on their Unlimited offering. Here’s why.  

Next to the other two prices, Premier is a huge jump. $120 more than Unlimited. Premier is their Decoy price, because the presence of a $149 price tag makes the Ultimate plan seem like a steal. The Basic package by comparison seems like you might be missing out on the value of Unlimited. What’s another $20 compared to the $140 more for Premier? 

You can effectively implement the Decoy Effect if you have an ecommerce platform. Think about how products are displayed on your website. Can you subtly create paths for people that lead to higher-margin products shown next to similar but more expensive, lower-margin products?  

Counter displays are the same way. The wine example below is your classic retail example of the Decoy Effect. Your space is yours to display how you want. Make sure it’s working for you.  

Sales/Persuasion 

Here, we combine sales and persuasion because they tend to be similar. Employing Decoy Effect in sales or persuasion means including three options within your conversation or sale, knowing full well which are the most attractive and which is just the decoy.  

For instance, the decoy price may be a non-fit option based on the conversations you’ve had in the past, but you’ve included it to make it seem like the other two prices are more reasonable, even though the middle option gets you the most margin.  

Another example is if you’re asking for a raise. You could come to your boss with three potential compensation plans, saying, “Here are my three options for comp plans in 2023. Have a look and let’s discuss which your most interested in.” Meanwhile, you know that there are two in that group that your manager is most likely to lean toward.  

Principle No. 3: Loss Aversion or Fear of Missing Out (FOMO) 

Loss Aversion has many different forms but uses the negative emotion all humans have toward losing something or missing out on something. FOMO or fear of missing out, is a more pop culture way to refer to this behavioral economic principle. People are more likely to avoid the pain of loss than to seek gain, thus there’s a lot of effort to be gained by creating a sense of missing out. 

Sales 

When motivating a sales team, you want to create a sense of exclusivity in competition. For instance, in a sales incentive, you could have a leaderboard of your top 10 outside sales personnel. Those top 10 get a trip to Vegas every year. Missing out on that trip could be a pretty big motivator for the sales team, especially those who have already achieved that status and don’t want to lose it. 

When selling, create a sense of exclusivity and urgency within your pricing model. Time-based pricing models can help you secure better pricing if your customers fear that they’ll lose their better pricing. 

Marketing 

Using a “limited availability” message in your marketing, “limited-time” offers on your ecommerce site, and “limited product availability” are three ways to drive home the Loss Aversion message in marketing. Simply put, using language that conveys “don’t miss out” or “act now” tends to move the needle.  

Persuasion 

Typically, when applying Loss Aversion in persuasion, you’ll want to use language that assumes others are in the know. For instance, while on a selling call, you could say, “I’ve been able to hold this price for people in your area and wanted to make sure you got the offer before it’s gone.” This implies that their competitors or people like them are getting this deal while they may not, strengthening the Loss Aversion. 

Additionally, taking advantage of a perceived or real risk can be an avenue for persuasion. Airline insurance is a great example of this. You’re offered airline insurance because there’s a real risk that your flight might get cancelled or moved. This insurance, of course, is realized by the airlines as 100% margin most of the time.  

Selling warranties can be another example. Try displaying the value they’d lose if they didn’t buy the warranty. This loss can be very motivating.  

Implementing Behavioral Economics principles into your day-to-day life can be as simple as recognizing the opportunities to do so, which are plentiful. These three principles are just the start! If you want more now, check out these incredible books on the topic. 

• Using Behavioral Science in Marketing by Nancy Harhut 
• Nudge by Richard H. Thaler and Cass R. Sunstein 
• Thinking, Fast and Slow by Daniel Kahneman 

The post The Psychology of Choice: 3 Principles to Move Customers in the Right Direction appeared first on Distribution Strategy Group.

If you want to find easy wins to improve your bottom line, invest in Customer Experience (CX).  

There are many examples of companies that focus on CX that outperform those that do not. 

But how can surveying your customers or listening to them complain result in more to your bottom line? Watermark Consulting dug into this very question. They ran an experiment where they tracked the S&P500 against the bottom 10 and top 10 customer experience-ranked publicly traded firms. (The top and bottom 10 were identified via publicly available third-part customer experience rankings from Forrester, Temkin Group and Qualtrics.) 

Spoiler alert: The top 10 firms’ stock performance outperformed the S&P500 by a wide margin. 

Customer Experience leaders understand that while they are trying to increase customer satisfaction and NPS scores, they are doing so in a strategic way that grows the bottom line. For a customer experience program to be successful, it must be diagnostic and tied to financial metrics. Many Customer Experience initiatives make the mistake of simply taking their NPS score and not digging further.  

Every distributor is different. The survey metrics that matter to one organization may not matter for your own. This means you must have a good in-depth survey solution in place.  

A simple free or inexpensive one-question survey will not give you the data you need to know which Voice of the Customer metrics will drive key financial indicators for your business.  

Look for a survey that can be finished in 5 minutes or less but still provides ample data and is ongoing so you are able to keep up on these metrics. 

Let’s look at an example. 

Right now, everyone is focused on inventory. Two financial KPIs for inventory are Average Order Value and Lines Per Order. The goal is to drive both of these metrics higher. But first you need your customer’s voice. 

You can survey the customer and ask a couple questions such as: 

• “Are you satisfied with our inventory availability?”  
• “Are you satisfied with how we communicate lead times and delays?”  

If you were then to run an analysis, it is very likely that your customers that have the highest Average Order Value and Lines Per Order are also the most satisfied on these two questions. So, now we have found the financial metric to target, and we have found a survey metric that ties into it. 

What Next? 

We have done the science part of Customer Experience. This is where the art comes in.  

Now you need to get your hands dirty, and talk to employees and customers. Take some of the customers that are frustrated on the questions above and dig into what may be causing the delays for them or the lack of communication. In this instance, it will be easier to address the lack of communication than the delays especially with the ongoing supply chain issues. Plus, in my experience, lack of communication of potential problems is a much bigger driver of customer satisfaction than the problem itself.  

People understand things happen – but they need to be kept in the know and given valid reasons. For instance, one issue could be the communication between the warehouse and the customer service reps responsible for an account.  

I have seen many examples of an order picked and sent without important items. But no one tells the CSR and the customer finds out by opening up the box.  

You can’t blame them for being extremely frustrated. 

Now back to the CX science.  

There are many ways to fix this issue; you need to identify what works best for you. You could set up automated emails or texts to the customer (before they get that package), and you could have a notice ping on the CSR’s computer. The warehouse staff could be prodded by a similar notice and be required to tell the CSR.  

Whatever way you address the problem, you can now monitor progress through the survey questions above and see if the procedure put in place is working.  

The important thing is now that we have tied a survey metric to a key financial KPI and put in a process to improve on that. We are now able to measure and pretty quickly see if the procedure is affecting change. That’s going to be so much more effective than waiting to see the financials down the road – a lagging indicator. 

A Customer Experience program can drive increases in bottom-line revenue and help the team work together more effectively. Solid data shows CX leaders based on revenue outperform the laggards. Which will you be? Learn more about how you can make a small change in the percentage of loyal customers to drive a significant impact on profitability. 

The post How a Measured Approach to Customer Experience Can Drive Real ROI for Your Company appeared first on Distribution Strategy Group.

Everyone deserves training, development, support and coaching. Not everyone, though, is pushing massive boulders up hill in a tornado, while being taunted by a carrot and poked by a stick. There are other departments that can take a company down (think about an unscrupulous finance leader or CEO) but none that can save a company if the sales force fails to produce.  

And, even with our sales forces, the old adage remains true… 

“A chain is only as strong as its weakest link.”  

~ Thomas Reid (in Essays on the Intellectual Powers of Man)

A senior sales leader at a client said to me recently, “We need to be like a ‘Seal Team.’” I can’t begin to tell you how much I respect that. If we want to build a sales force at this level, in today’s market, especially, we can’t afford weak links, can we?  

So, what is it that separates the best from the rest? And how do you build this sort of team? The nature versus nature debate has raged for years. It’s a relevant discussion in the context of organizational performance and especially for sales force performance.  

There are two other quotes that, for me, have always exemplified the sides of this debate: 

“Get the right people on the bus, the wrong people off the bus, and the right people in the right seats.” 

~ Jim Collins (in Good to Great) 

“Pit a good performer against a bad system and the system will win almost every time.” 

~ Geary Rummler (Performance Consulting Pioneer) 

Can you feel that tension? Now, in fairness to Collins and Rummler, I’ve taken their quotes out of context. Neither was advocating for just one side of this issue. But juxtaposing them does illustrate the point.  

While there are proponents on both sides, as usual, the truth lies in the middle of a sliding scale. It’s a blend of having the right people (nature) and creating an environment that supports high performance (nurture).  

Behavior is a Function of the Person and the Environment 

Kurt Lewin, one of the modern pioneers of social, organizational, and applied psychology, brought the two sides together in his equation, B = f(P, E).  

The equation means that an individual’s behavior (B) is a function (f) of: 

• The person (P), including their history, personality, motivation, knowledge and skills (ala Jim Collins) 
• Their environment (E), including their physical and social surroundings, and other things such as culture, processes, methodologies, tools, resources, training, coaching, compensation, support and other organizational systems (ala Geary Rummler).   

That said, I think about it this way. There are elements of the nature side that are innate and difficult to train but not impossible. This is akin to hardwiring. Our assessment partner refers to these as your candidate’s “Sales DNA.” There are other things like knowledge and skills that are far easier to train, assuming you’re training someone with the capacity to learn, with an acceptable “Figure It Out Factor,” a strong will to sell and commitment, who will accept coaching, and who possess the supportive mindset and beliefs (that hardwiring) to execute and do what they were taught.  

I offer this long preamble to make the important points that: 

• Hiring effectively for sales is absolutely critical.  
• It’s also one part of a larger ecosystem that is required to produce the best possible sales performance results.  
• You get the best results when you find people with the right sales DNA/hardwiring (nature) and put them in a great environment and sales culture (nurture).  

So, while we’ll now explore hiring effectively for sales roles, and how to get the right people on the bus in the right seats, keep in mind that there is more to the equation. Nature is where it starts. You hire right. Then you build a sales machine (systems/environment/nurture) that will help even average people perform at above average levels. And now, finally…  

The Sales Hiring System 

Ah, the Sales Hiring System. I can almost hear the response. “A system, again, Mike? Is that really necessary? Can’t we just interview people?”  

Why This Is Important 

Well, you can, but interviewing has a validity ranging from 15-44 percent, based on the study/research you come across. Mostly I’ve seen 15-30 percent. Keep in mind that validity doesn’t necessarily mean predictive validity, which is what really matters. And those numbers are based on the interview methods being used very well, executed with discipline. I don’t see that happen very often in the real world.  

Then, consider the cost of a hiring mistake for a sales role. The U.S. Department of Labor claims a bad hire can cost your business 30 percent of your employee’s first-year earnings; other HR agencies estimate the cost to be higher, ranging from $240,000 to $850,000 per employee. For sales roles, given the size of a territory and opportunity-loss costs, I’ve seen estimates up to and over a million dollars.  

• SIDEBAR: To determine the costs of a poor sales hire or turnover for your company, try this Hiring Mistake Calculator from our partner, Objective Management Group. It’s 15 questions and will take 15-30 minutes to give you your total cost of sales hiring mistakes, including recruitment, development, and lost business.

Setting Up the Right System for Your Company

To get started, you have some foundational work to do and a few decisions to make. You’ll immediately notice a good number of moving parts. There’s a reason for this. Research shows that a combination of effective selection methods always outperforms any single method.  

Here’s what you need to do: 

• Determine the sales competencies required for success in each sales role. 
• Determine the top-performer traits for success, meaning mindsets and characteristics – not personality. 
• Create job documentation, including sourcing strategy and recruiting ads. 
• Select the right psychometric assessments for sales: 
  • Look for assessments that are sales-specific, normative, customizable by role, statistically validated by a reliable and neutral third-party, with predictive validity for sales roles.  
  • Ask to see what assessment vendors often call their Technical Manual (the statistical analysis). Ensure the assessment is fair, reliable, legal and valid. If you don’t know how to interpret for this, seek expert help. It’s worth it. A great assessment is priceless and will tell you so much about your candidate and their fit for your open role, or even what other roles they may fit.  
  • Favor assessments based on sales competencies versus personality. Also avoid non-sales assessments massaged to seem like sales assessments.   
  • See: http://bit.ly/ModernScience-SalesSelection and this link for additional information. The assessment I recommend is 91 percent predictive for sales roles, and even so, there is still a 9 percent margin for error – hence the system.  
• Consider behavioral interviewing. This is asking questions about the candidate’s past experiences with the key competencies for your open role. You might recognize them as, “Tell me about a time when…” questions.  
• Consider hypothetical questions to assess situational judgment. These are “Imagine you are in this situation…” questions, which test a candidate’s judgment against your preferred decision, often culled from your own top performers.  
• Consider skill validations, known as role plays. This is where the rubber meets the road, and the candidate must demonstrate their prowess (or not). I simply won’t hire for a sales role without doing this. For example, if a candidate will be prospecting as part of their role, have them call you, send an email and leave a voicemail.  
• Research the appropriate legal, background and reference checks. If needed, seek guidance from your HR professionals, legal team or a consultant.  

At this point, you’re following the framework to develop a custom hiring process.  When you’re done, it will be your sales hiring system.  

Next, you need to: 

• Pick the elements from above that you will use and complete the appropriate steps for each.  
• Determine your process. Nail down the “Who, What, Why, When, Where and How.” For example:   
  • When will you use assessments? 
  • Who will ask and validate the hypothetical questions to assess situational judgment? 
  • How will you conduct the skill validation role plays and who evaluates them?  
• Train hiring managers and interviewers. 
• Develop a coordinated plan for interviews.  
  • Will you separate competencies among interviewers, or not? Who does what? 
  • How will you calibrate interviewer ratings when they’re done? (With a Likert scale of 1-5, for example, what’s the difference between 3 and 4, and are all the interviewers rating the same way?) 
• Consider how you will monitor for compliance; consistency is key for fairness and legality. 
• Implement your system and measure results.  

A Sample System / Hiring Process 

Here is one possible process, using all the recommended parts: 

• Determine your sourcing strategy and posting locations for the role and run your recruiting ads.  
• Assess candidates (a resume review and the psychometric assessment) and interpret results. 
  • Reject, prioritize, set aside or move candidates forward. 
  • Rarely should you reject a candidate solely on assessment/testing results. Most assessment companies will tell you to weigh the assessment results at about a third of the hiring decision. No assessment is perfect. You might adjust this based on the validation studies and level of predictive validity. 
• Screen your chosen applicants to ensure they fit with your open role and schedule the interviews. Some prefer to phone screen applicants for some factors before using a psychometric assessment. The danger of that is forming a bias, so those screens should be fact-checks for critical criteria, not interviews. As much as possible, you should guard against forming biases that will reduce your hiring effectiveness. 
• Conduct behavioral interviews and rate/calibrate them.  
• Include hypothetical questions to assess top-performer situational judgment, and rate and calibrate them.  
• Run and score skill validations/role plays. Keep these simple and related to the job.  
• Calibrate results across methods and interviewers, make a hiring decision, and present/negotiate an offer. 
• Perform your appropriate, legal, and selected background and reference checks.  

Putting Your System in Place 

And finally, here are some considerations as you implement your system. 

Top-down Support: This will be required for a major process change with hiring and to hold managers accountable for using the new process. 

Train: Use the Sales Training System to train for behavior change.  

Support: Be prepared to support managers with all aspects of the new process, including logistics and administration. 

Coach: This is included in the Sales Training System but must be ongoing. Many managers do not hire frequently. It’s likely that both Support (above) and Coaching will be required. 

Monitor the Process: For fairness and legality, establish how you will ensure compliance with the new process and then monitor that the process is followed. (See Top-down Support above.) 

Hold People Accountable: Process and behavioral changes do not happen naturally, especially with something as personal and emotional as hiring. Leaders will need to hold managers accountable for using the new process. 

Measure & Report: In addition to the compliance to the new process, a hiring system for sales is only as good as the results it produces. How did hires ramp-up, perform, and what is the turnover? Based on the results, what might you need to adjust to improve? 

Since I’ve done so much quoting in this post, I’ll end with one more – a favorite from author, James Clear (from his book, Atomic Habits).   

“If you want better results, forget about setting goals. Focus on your system instead.” 

Ah, James. I couldn’t have said it better myself.  

Get your Sales Hiring System set up, and remember that there is more to it, with the environment and other systems you create to help your team operate at their peak effectiveness. I’ll write more about that in a future post.  

Well, that’s it for today, with my advice about hiring salespeople. If it helps you in any way on your journey toward improved sales effectiveness, please feel free to let me know. I’d enjoy hearing about your successes.   

The post Advice You Need to Hear About Hiring Salespeople appeared first on Distribution Strategy Group.

Wholesale Change hosts Ian Heller and Jonathan Bein, Ph.D., recently spoke with Mark Peck – who has decades of experience helping distributors drive greater profitability through smarter sales strategies – about how distributors can build and sustain a profitable inside sales program. 

The key: Stop viewing inside sales as a customer service function. 

They discuss the six elements of managing proactive outbound sales, how to measure sales performance and the importance of developing a coverage model for sustained growth. 

Peck is the Vice President of Analytics for Distribution Strategy Group.  

Ian Heller: You have provided us with so many lessons over the years on how to integrate inside sales, outside sales and customer service. In all your years of consulting, where do you begin when helping your customers look at inside sales differently?  

Mark Peck: Most distributors have an existing inside sales team, whether it’s just a few people or many. They always seem to struggle with trying to understand the metrics. They ask, “How do I measure this, and how do I use those metrics to manage this as a business?” What happens is they end up measuring what’s convenient and easy to measure or what they understand – things like the number of calls made by inside sales reps.  

It’s not that those are bad measurements. However, optimizing talk time or getting on the phone a lot doesn’t equate to selling time. That’s the issue most distributors I’ve worked with experience. What do they measure and how do they measure it in a way that’s productive and helps them manage that part of their business?  

Distributors need a system of measurements to manage outbound proactive inside sales whether they have an existing inside sales function in place or are implementing a new team. Those are the tools that will help them notch up performance and turn their inside sales team into home run hitters.  

Heller: Some distributors have a function they call inside sales, which is more customer service as opposed to traditional outside sales. It’s an important function and customers have great loyalty to their inside salesperson. But they aren’t salespeople in the sense that they manage accounts and proactively generate sales.  

Distributors need to accept upfront that their inside salespeople are never going to be effective outbound sellers. In most cases, you can’t blend the roles. But once you are ready to create an outbound calling group that is proactively generating sales, it’s at that point you can start talking about how to turn them into home run hitters. 

What are your thoughts on that? 

Peck: Absolutely. Some people move from customer service, or the inbound group, to the outbound group and are successful. However, they are often the exception. I have seen many people try to move, not make it and end up back in customer service.  

Inside sales can sell. They react to the customer, sense the customer’s needs and can cross-sell and upsell. However, to have them be outbound, prospecting and pushing new opportunities is not typically a good behavioral fit. When you try to convert a big team of those people into outbound sellers, they gravitate toward inbound tactics, toward being reactive and solving the customer’s problems. There’s nothing wrong with that, it’s very important for the business. It just doesn’t drive the same productivity model that you want in an outbound salesperson. 

Heller: That’s been my experience. There’s about 10% of people who can do both. What happens is that sales leadership starts believing that if a handful of people can do it, then everyone can do it.  

Peck: I’d like to walk through a productivity and coaching model. It’s a simple model made up of six elements or steps that result in an equation. The result of the equation is how much revenue a person or a team generates. The revenue equation is: 

It’s important to note that I define contact as a substantive dialogue with a decision-maker, which means you dialed a phone number and engaged in a conversation with a decision-maker. Dialing the phone and leaving a voicemail is not a contact. 

When a distributor factors these elements, the model tells you what each salesperson does well and what they don’t do well. It also shows revenue performance.  

Heller: Can you put metrics around each of the six elements?  

Peck: To some degree, you can have metrics for each step and there will be a lot of variation. You’ll see some salespeople are good at timing and scheduling calls or getting through screeners to get to the decision-maker. Then, how good is that inside salesperson at listening to the prospect to identify the needs of the potential customer? How good are they at closing? What’s their average order size? You can begin to take these metrics and begin to use them as coaching tools and identify your stars and what they are doing to make a difference in this model. But when you see a team of good salespeople, it’s important to remember they each sell a bit differently. They are not clones of each other. 

Heller: I’ve worked around inside sales models for years. I’ve never seen this before, but it’s so holistic. This data allows people to leverage where they’re strong and then work on areas where they’re not. For instance, “I don’t make as many dials per hour but I’m better at getting through because I’m more thoughtful about how I do it” or “I don’t make as many contacts but the ones I do turn into bigger orders with a better close rate”.   

Peck: If you give them a metric, your good people will find a way to hit it and perform.  

Jonathan Bein: What occurs to me when I look at these metrics is that calling hours and dials-per-hour don’t have anything to do with skill. It’s just showing up. The selling ability comes in the subsequent metrics.  

Heller: How do you measure each of these steps in the equation?  

Peck: I would hope most people running an inside sales program have a CRM system in place. If you do, you can integrate it with your phone system to obtain metrics on dials-per-hour. Other metrics will be self-reported by the inside sales team and tracked in the CRM.  

Heller: If distributors are reluctant because they had trouble introducing a CRM to the outside sales force, they shouldn’t let that color their impression. In my experience, a CRM is often enthusiastically adopted by inside sales even in those distribution businesses that had a hard time implementing one with their outside sales force. It flips the reluctance factor on its head because outbound callers need information like contact data, proposal history and previous transactions to work efficiently.  

Mark, what’s next?  

Peck: I’d like to talk about building a coverage model. The tendency is to overload inside salespeople with many accounts, hundreds even. When you do the math, there are situations where the inside salesperson never spoke to a third of their assigned accounts.  

If we don’t build a coverage model that covers those accounts, the wallet share is already small. If we put an account in inside sales and no one ever speaks to that account, now we’re getting the smallest percentage of wallet share. That’s why it’s important to look at the numbers and decide how frequently we need to talk to customers and calculate just how many contacts an inside salesperson can make in a year.  

Heller: I think this is part of a broader issue. Most distributors don’t have a plan for how frequently they’re going to contact each customer. We know that there’s some correlation between the frequency of contact and the frequency of purchase. And yet, distributors have thousands, sometimes tens of thousands of accounts and contacts in their system, and there’s no structured plan to reach out. 

This is something we learned from you early on, Mark. There needs to be a plan to multiply the number of outbound contacts. Not only to remain relevant and top of mind to the customer but also because customers segment their distributors according to their needs. To overcome that, you have to constantly educate and remind them of what you sell. If you doubt that, walk through a branch with a customer and you’ll hear them say at one point, “When did you start carrying that?” 

Peck: Right. If you start an inside sales program with a set of customers and hand them off to an inside salesperson, they often tend to follow the path of least resistance. They’ll talk to the customers that seem to want to talk to the salesperson.  

They’ll focus on the large customers that order every week, but they won’t find time for the bottom half. The bottom half are typically smaller buyers, but probably have some diamonds in the rough. With the right coverage strategy, those accounts can grow. I like to have a coverage model that varies the coverage for inside sales based on what the account is worth today and what the account could be worth tomorrow.   

It’s important to grade those customers according to frequency and volume of purchase and speak to them at a frequency that’s meaningful for that customer level. If we don’t have a coverage model, some of those accounts get lost in the equation. A coverage model helps to set expectations with your salespeople as well as calculate the appropriate territory size. This all impacts the cost of selling and how well you balance economic investments in the top level of customers as well as bottom levels and prospects.  

I caution distributors to not underestimate the value of customer accounts. They’re always more than you expect. Of course, you need to know where your “break-even” is, but don’t set your expectations too low. That’s why I think it’s helpful to get outside data to validate your estimations.  

Heller: What does compensation look like for inside sales versus outside sales?  

Peck: Depends on how you have it structured. I like to see it portion-variable and a significant portion based on performance. If you have an integrated team, you won’t get what you want out of the team unless the variable portion is based on team revenue. I’ve seen goal setting based on previous year sales to be effective when they get a percentage of the total and a percentage of growth above historical performance, maybe even a stretch goal that offers a higher percentage.  

Heller: Generally speaking, outbound callers make less than outside salespeople, right? 

Peck: Yes. Inside sales compensation is about 60-70% of outside sales. Outbound calling is a bit lower risk than outside sales and less demanding.  

Bein: And those numbers will vary by geography. What you’re paying for a proactive inside sales rep in New York is going to be different than what you pay for one in Texas, right? 

Peck: I think what’s more effective is if you have a stable base and a variable, you let the variable drive the difference. I like to see people have a living wage base with a variable that allows them to get significantly above that. The variables should be economically justified based on their performance within the company.  

Bein: Do you have a preference for attaching bonuses versus commission to inside sales performance?  

Peck: I like commission better. Depending on how you structure it, they can work similarly. However, with a commission, you get those smaller incremental improvements and people are rewarded for that. With bonuses, they are more stepped. They are rewarded for the big improvements but not rewarded for the smaller incremental changes that get them there. I think they are more motivated by commission.  

Heller: It’s easy to underestimate the power of proactive inside sellers. Most distributors have an outside sales force that is competing with other distributors, and there is tremendous competition for these big customers. There are relatively lower margins because these are big customers and have big potential for every distributor.  

The most natural progression to expand your demand generation is to move into mid-market with outbound sellers because you already know how to manage your salesforce. Of course, there are some things you have to adapt and learn. But it is still managing a salesforce, and it’s not like installing a capability that distributors have no background in.  

There are two big advantages in doing this. One, there is typically less selling competition. And two, mid-market goes at significantly higher margins than big customers. If you cultivate this model, you’re dealing with less competition and higher margins.  

Want to learn more? 

Download our three reports, with practical tips, tricks and frameworks for building a successful proactive inside sales team: 

• Reinventing Distributor Sales and Service: A Framework for Implementing an Integrated Sales Model 
• Reinventing Distributor Sales and Service 
• A New Sales Channel: Telephone-Based Sales Reps 

The post How to Turn Inside Sales Reps into Home Run Hitters appeared first on Distribution Strategy Group.

Download Now: How to Ensure Successful CRM Adoption to Drive Sales

Sales reps should be looking at their CRMs upwards of 30 times per day, but half of them don’t. Why is that? 

The issue often stems from a lack of buy-in at the onset. When distributors decide to adopt a CRM, they design the system without the insight from and support for the people who will be using the software day in and day out: the sales team. A foundational design criterion is that 80% of the information in the CRM goes to the sales force and only 20% comes from the sales force. 

CRM Checklist for Success: The 5 Core Sales Effectiveness Processes  

An effective CRM provides insight to sales reps that they use to improve their decision making around what they do and how they do it.  

All CRMs provide the following:  

• Territory intelligence offers insight into which customers and prospects offer the highest potential to grow at the lowest cost to grow, even as they keep changing.  
• Call management helps analyze where best to invest sales calls and provide capability to adjust on the fly. 
• Opportunity pipeline which allows you to pay attention to major transaction opportunities and increase close rate. 

The customer attractiveness, call logging and other opportunity details are important—and all-important to sales reps. But performance measurement and coaching and feedback are the most critical elements for CRM effectiveness. 

• Performance measurement helps sales managers determine whether defined activities generate the desired results by creating territory scorecards. 

• Coaching and feedback by sales managers using sales metrics (even 15 minutes a month) helps them to adjust or improve the performance of their sales reps. 

Building a scorecard is a required step for coaching accountability. Scorecards demonstrate whether the sales manager has done an effective job. It’s about recognition and accountability, looking at activity measures, results and investment criteria. Coaching should be done on a continual basis, reassessing actions every 30 days and should take into account the values, territory performance and opportunities for talent development.  

The scorecard and coaching steps often intimidate managers; they’re too visible and vulnerable to feedback. If all the sales reps in a manager’s area meet or exceed expectations, and the area is not meeting expectations, you have successfully identified your problem. 

Because CRM is a multi-year adoption process driven by improving sales effectiveness, the benefits are most impactful when all five processes are adopted; distributors should view this as a continuous loop of improvement. 

Early Engagement in CRM Design is Critical 

The system is meant to make salespeople more effective, yet they’re often not involved in the design – Managers end up designing the system, enforcing its use – then receiving complaints from their team as a result.  

We recommend you follow this process instead: 

• Have your sales team nominate the best reps (but don’t let them vote for themselves), then crown the top six to eight people the “Best of the Best Team” to design the CRM. 
• Grab a knowledgeable facilitator for this team to work with. The facilitator can help them define the most common situations that they find themselves in, such as major service failure or initial sales call. 
• Break the team into smaller groups and ask them to create the perfect screen of data (also known as dashboards) that they want in each of those situations.  
• Ask them to list their typical tasks (like territory planning or midmonth adjustments to make quota) and identify the perfect screen of data to help them complete those tasks effectively (and hopefully more easily). 
• Next, grab a technology expert to answer a difficulty scale from one to three (low to high) as well as the cost associated with each design feature. At the same time, the team should be ranking (1 to 3) the commercial benefit of each feature. 
• Develop a minimum viable product (to show true senior executive commitment) and outline a phased roll-out, starting with the high-impact and low-cost requests. 

Buy-in and participation creates commitment. End of story.  

If you’d like to learn more about CRM best practices, check out a report I wrote in partnership with Distribution Strategy Group, available free: The State of CRM in Distribution: Best Practices in CRM – Now and in the Future 

The post CRM Checklist for Success: What to Look for in a CRM appeared first on Distribution Strategy Group.