The principle of organizing the sales department or the hard choice between “whom?” and “what”?

One of the acute issues that has to be addressed by any executive is the right principle of organizing the sales department. As a top manager, coach and business consultant, I often face this challenge which is on the agenda of different companies, big and small, global and operating in local markets, with an authoritarian and democratic management style.

There exist two mutually exclusive principles of sales: the principle of product orientation and the principle of focusing on clients. What are their basic distinctions and which principle may best serve your sales agenda?

The sales department based on the principle of product orientation implies that managers of the sales department focus all of their resources on the promotion and sales of a specific product of which they are well aware and which is part of their professional competence. One example is an auto show manager working with a certain automobile brand and knowing all about it.

The product orientation of sales allows each salesperson in the company to focus on one product or a small group of products. This format may prove effective if product sales requirements are way different and call for certain skills from the personnel.

A very important advantage of product specialization is that employees have an excellent knowledge of the product they work with, which is the key and actually the only factor of their competitive efficiency. Eventually, sales volumes may increase due to an incredibly detailed, expert approach of employees to the product which can be sold not only by them, but which can be presented in a spectacular and spellbinding manner only by them.

An objective shortfall of this sales format is an obvious increase of sale costs – as we earlier mentioned, other companies may also work with this product in the market. This means that for retaining leadership positions in the market extra financial injections will most likely be required – more professional and skilled personnel (recruitment, training, mentorship, motivation) and high promotion costs (that the client could distinguish you in the crowd of competitors). Relatively high product orientation costs always need to be compared with gains from its use for the company.

Nevertheless, even if hypothetical gains from the work in this specialization are rather high, they still need to be put into life, since the sales department often declares its orientation towards a product, but in reality does not know anything about this product, although the product knowledge is the key point in competing with other companies. But unless you have effective tools and can “demonstrate another option of a product or service for the client” and thus have an edge over the rival engaged in the same thing, you are a bankrupt.

If you decide to choose product orientation for your company one of the tests, which need to be constantly passed by sales managers, is the product information quality test – how competitive the data possessed by your managers are. What kind of product is that? What benefits does it bring to the client? How is it different from similar products? Why is it the right choice? Answers to all of these questions – inventive, complicated, convincing – must be known by your employee almost by heart.

Furthermore, specializing in a certain product, a company must have ample resources to be constantly updated on the competitor’s activities: what new products they offer, which methods they use that your development department could come up with a timely response. We often lose a market share without even guessing it!    

Focus on the client is normally typical of the companies selling the same product or service to various categories of clients who have different needs, different motivation in product purchase and stick to different procurement policies. One example is an advertising agency which, having a unified portfolio of services, sells them to a different type of clients, adapting this portfolio to each new buyer. Account managers in charge of their own clients at the agency, know well what’s going on in their clients’ companies, how their business is organized, how they earn money and their buying motivation. Account managers are almost like members of the client company’s staff – they know this company “far and wide”, being well aware of its “wants”.

Another example is the market of brokerage services in real estate, which is built on managing cases with different demands. The manager aims at meeting the demands of his consumer.

A fundamental downside in this form of the sales department organization is that the manager does not have thorough expertise in the product which is actually a “subject of the deal”. He knows the lowdown on the client and its needs, but is nowhere every time a specific product is discussed. It’s evident, however, that any demand from the client must be met with respective supply. Companies differently address this problem. Any company normally has a certain functional “product” unit which, working in a tandem with a sales manager, is capable of offering the client a “proper” relevant range of services. At any rate, communication with the client is realized through the sales manager. But then another downside lets itself known: working closely with a client, enlisting its loyalty, the salesperson actually forms her own pool of happy clients and, leaving the company, leads his clients away.

An obvious question is whether the sales department operations could be organized in such a way that managers might know both their client and product very well. I have to disappoint you: the answer is negative. Nobody can know everything! But your task as the top manager is to tune up the system so that a company, having certain specialization, would be able to fill the gap, whether it be ignorance of the client market or the lack of exhaustive data about a product, using experts from other teams, special managers and line personnel.

I’ll give a publishing house as an example. Traditionally, the editing department generates a large number of projects for which the sales department needs to attract advertisers. In fact, the sales team communicates with clients of various specialization, having different objects and business specifics, so dividing into segments/clients is more justified in this case. But, as is often the case in this format, sales managers know their product only “to some degree” – first of all, because there are many products; secondly, because a thematic plan is devoid of “stability” and changes from one issue to another; and, thirdly, there is an editor-in-chief who might dwell on details if need be. Sales managers who always work in the “fields” may know only a general profile of the product they sell, but get an editorial plan on a weekly/daily basis for thorough familiarization, in order to build their sales policy and plan meetings accordingly. However, this does not seem realistic, especially in large publishing houses. Yet it’s quite within their powers to hold occasional meetings of sales teams with the editorial department, to identify some common editorial barometers, renew the available information and get updates. If a loyal client suddenly calls his manager and asks how one magazine is different from another and which project could better increase the brand awareness, a manager would not feel clueless and could give valuable advice to the client.

Another eloquent example of client orientation can be found in medical business. The example is “eloquent” because it is here that the substitution of concepts and a doctor often takes place, whereas a client-oriented approach is often neglected. Instead of trying to carefully diagnose a disease, doctors often turn their backs on the client and their fronts on the product. It’s not a secret that an entire industry of pharmaceutical companies is at work; using the public health system, medical community and doctors, they promote an incredible number of medical drugs whose significance is negligent compared to proper diagnosing.  

 

One of the indirect criteria of how to choose specialization for a company is the market this company operates on: developed vs developing. Historically, product specialization has been more typical of the developed market, since the client market is already formed and segmented there, communication channels are in place, demands are widely known and understandable. Accordingly, product orientation makes it possible to attract new clients to one’s product and service, expanding the coverage and the market share.

In their turn, developing markets still lack clear-cut gradation of clients, still going through the differentiation stage. Consumer preferences have not been fully studied and explored and it is possible to win the loyalty of clients “by deed rather than by word of mouth.” Unless you know the needs of your clients, but start specializing in the product, your days as a business person are counted.  

But which strategy to follow if a fundamentally new product appears at the company: product segmentation vs client focus? I can tell you from my own experience that if you choose product segmentation you risk not getting the level of feedback from clients, which is so essential at the stage of launching a new project. But if you choose client orientation there is another bottleneck: after a new product is included in the line-up of the sales department, the likelihood is high that the novelty will remain unnoticed: in the list of projects and ideas proposed to the client by your company it will simply not be identified.

As a result, companies try various types of specialization. I’ve deduced the following success formula: a new project must be carried out by a person who is well aware of all its details, but in a tandem with a sales manager having “access to the body” of loyal clients who know your products already and are ready to “continue the acquaintance.” Therefore, this project ideologue accompanied by a sales manager, a zealous guardian of the knowledge about consumers, meet with clients.

This meticulous approach can be explained by two reasons. First of all, any new project is a baby. After being born it must get stronger and develop individual features and character. At this stage the support of a field-oriented manager is very important. The manager collects feedback about the new product, tells the client about its distinguishing characteristics and watches his response. At the same time, he is a rather strong project proponent and does not blindly follow in the client’s lead. The new product/service manager knows how to separate grain from chaff, defend and maybe develop the project’s idea, not reacting to all kind of the client’s “wants”, as is often the case with the client-focused sales manager. The second important point is when a new manager (accompanied by an “old” one) comes to the client and they meet with the potential consumer with a new presentation and new tasks, the consumer understands that something special is going on, identifying a new product in the company’s line-up. It’s incredibly important not to lose the identity of new “babies” and to help each one find its place in this life.   

1. Whatever the specialization of your sales team, do not let it rest on its laurels or think that “now we’ve definitely achieved genuine craftsmanship.” Today markets change very fast, clients develop new needs and the product lifecycle shortens. This open unlimited potential for research and discovering new information both about clients and products. As soon as you fold your hands, you allow your competition draw closer! The process of improvement and exploration must never end in principle! 

2. Whatever the specialization of your sales team, beware of bigotry. Do not develop too much affection for your client or product. Nobody is perfect and there’s always some room for improvement. The manager placing the client’s interests above the corporate interests is a fanatic like also the manager considering its product the only one suitable for the target audience. Staying loyal to your cause, look for compromises in developing your business and in communication with clients… even in the search for your specialization. The market does not stand still and tomorrow you may have to shift from the client focus to product orientation, or vice versa. You should not be judgmental and close opportunities for flexibility and maneuver. Learn to discern hues and undertones. 

3. Whatever the specialization of your sales team, the company’s interests should go first, not the client’s! Sales managers often become their clients’ partisans, seeking their favor by hook or by crook. Beware such employees: in the final analysis, we work with consumers, looking for best solutions for them and creating the products they need in order to earn money for our own company, reward people loyal to our business and attain to corporate resilience in the long term.   

4. Whatever the specialization of your sales team, it is important for you as the top manager to build the system so that it could work as one mechanism. If you saw a little off your chair’s leg, it will fall down. But if the remaining three legs are rearranged in a certain way on the back surface of the seat the chair will remain stable. The same thing happens in business: you need to timely notice the sawed leg in order to take measures and address the problems via symbiosis and interchangeability. It’s obvious that different departments of the company sometimes pursue opposite ends: say, the production team broods over its product developments. In the meantime, the sales team, daily meeting with clients, may not share the delights of “production people and subject their developments to critique.” As the top manager, you should try to reconcile the interests of different departments and possibly make a decision in favor of one of them, changing the “traditional paradigm” and maybe the product specification. Or you may give up on a certain group of clients who are too costly to please. Most successful are those who watch the market closely and get adapted, not those who stubbornly follow the once adopted rules.