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« Management and Leadership | Main | More on Rising Fuel Prices »

Improving the design of your sales organization

Many wholesalers are taking a new look at the structure of their sales and merchandising organizations.  It is no small feat selling and supporting a full line of domestic beers, imports, crafts, perhaps an energy drink or two, a water, miscellaneous NAs, perhaps a spirit brand or two, wines, and whatever else flows through your warehouse on a daily basis.

The A-B network was recently told that if they hadn’t re-structured their sales forces in a couple of years, they were behind the times.  This concept could probably be extended to the entire industry.  Even more so in these times of high fuel costs when distributors are trying to balance a strong, full product-line selling, merchandising and delivery effort with the realities of high operating costs.  So, what to do?

I believe it is a very rare sales rep who can truly sell everything I just listed above… I know I most certainly couldn’t.  Many distributors attempt to address this by adding a brand specialist here or a category specialist there.  This might be how the organization ends up, but it is completely the wrong process if you want to build the best, most efficient, highest performance organization possible.

Every time you think about making modifications to your organization, regardless of where or why, you should start with a blank slate, and analyze and build from there.  You might end up at exactly the same place… but you might not.  When you build from an existing structure you are making a HUGE assumption, which may or may not be true… when you build from an existing structure you are implicitly stating that the present structure (or way of doing something) is the BEST possible.  There is no chance for improvement so you build from the perfection you already have.

This is generally not the case… things evolve… things change… even if it was the best 3 years ago doesn’t mean it is the best today.  And this “blank slate” process doesn’t imply any huge additional effort… it might be as simple as a 30 minute discussion and more importantly, the mindset to always look at things anew… but it should be done.  You will always arrive at a better solution. 

Also remember that your organization is an integrated system.  You shouldn’t just add a category specialist.  Rather you should design them completely into your system.  These are much different processes and you will get far better results by designing the changes in, rather than simply tacking them onto your present organization design.

That said, here is my generic advice.  First and foremost, in most situations I would have an on- and off-premise sales force.  The demands of those worlds are so different I don’t think in most cases you can have a single individual selling both and maximizing results.  In many ways even the skill sets required to succeed in on-premise selling versus off-premise selling are different.  In addition, the volume realities in both are very different… and if you pay some sort of volume-based commission (and you should), you will find your people will often ignore on-premise.  It makes complete sense and the commission structure pushes them in that direction.  Why take 45 minutes trying to sell 5 cases on-premise when I can go right around the corner to a chain grocery and perhaps sell 500 cases?  Even if I can’t sell anything, perhaps just filling the cold box and re-stocking the displays will generate far more immediate sales than that on-premise account.  If you don’t specialize, you need to adjust your sales commissions so on-premise volume pays a lot more than off-premise volume.  Otherwise your sales reps will never give the on-premise world the attention it deserves.

But also note with every type of specialization… whether in sales, merchandising, or delivery… each type of specialization adds a complete layer of routing and is thus at least a little more inefficient than not specializing.  Visualize the routing of your territory.  With only one type of sales staff, the routing (perhaps not the sales effort but the routing) will be the most efficient.  Add specialization and you now have two complete sales routings for your territory… because on- and off-premise accounts are spread throughout your entire territory.  This is true with all specialization. 

When considering specialization, your analysis should be is the additional cost (and there will be at least some) justified by the increased performance?  This increased cost versus hoped for increased performance is something every wholesaler should examine… especially in delivery.  With high fuel costs, getting rid of too much delivery specialization can help generate some substantial savings.  Also with specialization you must ensure the hoped for increases in performance actually occur.  The increased costs are a guarantee, the benefits are not.

But back to sales structure.  As the beer wholesaler (and even suppliers) continues their evolution from a beer distributor to more of a beverage distributor, the demands on the sales, merchandising and delivery organizations continue to mount.  In the sales arena, I believe ultimately the solution to this is to separate the high-level selling functions from the order replenishment, merchandising, and opportunistic selling functions.  One individual’s job will be to support everything you sell in the account… everything.  Their primary role will be complete account management… order replenishment, some merchandising, and being an opportunistic sales rep.  You never want to take the sales aspect completely away from this type of position since in our industry you can sell a lot of product on quality service alone.  A lot of those “extras” are given out on the basis of service, and this individual… a true account manager… is who will be driving total service at the account level.  But make no mistake; this is not “just” an order taker position.  If you try to build it and treat them as such (and more importantly compensate them as “just” order takers), you most likely will fail.  This is an extremely important and demanding position; the entire smooth functioning of almost your entire company rests on these individuals doing their job well.  Re-read that last sentence.  It is very important.  You must hire and compensate accordingly… whether you want to pay this amount or not is meaningless.

In addition to this person, a more specialized sales force(s) will call on retail at a much lower frequency, but making more detailed brand or category specific sales calls.  In this fashion you can truly support all those various brands and categories you distribute… and this list is only going to grow whether you’re an A-B or MillerCoors distrib.

This structure provides inherently superior sales impact and account management focus and also allows for you to relatively easily add new products/categories with little additional cost.  Looking to enter wine and spirits?  No problem.  A major push for energy drinks or NAs?  Again, no problem.  The account manager’s scope grows a little at retail and you supplement that with a new, small, focused sales team.  It works in whatever direction you go.  Of course at some point the work load of the account manager might grow to excess, but then you simply add a couple new account mangers to bring everyone’s workload down to an acceptable level.  Simple.  In addition, you can still have additional specialization under this same structure, such as a chain grocery team.

You can of course send different sales reps into the same account, each representing a different brand or category, but to maximize delivery efficiency they will generally have to call on the account on the same day.  Seems like a waste of resources to me for very little, if any gain.  And often retailers won’t spend time with both anyhow since they know both are from the same company.  They too have extremely busy days so you can’t really blame them for this attitude.

Regardless of how you structure your sales organization… or for that matter your entire organization… you need to accept that your organization is becoming more complex by the day.  You need to accept that in a world of very high energy costs (in addition to cost increases across the board) your organization must be lean and efficient.  You need to accept that a high-performance sales organization is not just desirable, it is a requirement.

And for this to all occur, you must understand and treat your organization as a complete, integrated system.  And for this system to work well it must function seamlessly… with every single part doing its job, 100% of the time.  It requires high performance from every single person and it requires a complete integration of every action.  Better planning from top-to-bottom.  Better communication throughout the organization.  Better coordination of every act.  In fact, better everything.  Easy?  No.  Doable and desirable? … oh yeah.

 

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