By Bridget McCrea
Align sales compensation to match your company’s online selling goals and watch your e-commerce sales volume rise exponentially.
Two years ago, Forrester Research analyst Andy Hoar made a bold prediction: by 2020, 1 million B2B salespeople in the U.S. would lose their jobs to self-service e-commerce. That meant roughly 20 percent of the nation’s sales reps would be looking for new lines of work. “B2B buyers are living in a 2015 digital-first world, but B2B sellers are still living in a 1965 salesman-first world,” Hoar predicted at the time. “New Forrester data shows that nearly 75 percent of B2B buyers prefer to buy online when purchasing products for work, yet just 25 percent of B2B companies actively sell online.”
Fast-forward to 2017 and the plight of the B2B salesperson doesn’t look much brighter, at least not from Hoar’s viewpoint. He updated his Death of a (B2B) Salesman report last month, validated Forrester’s initial predictions, and analyzed how the B2B sales industry has evolved over time. In 2015, for example, 53 percent of the B2B buyers Forrester surveyed preferred to gather information on their own versus interacting with a sales rep.
Today, that figure has grown to 68 percent, the research firm notes. Along the way, inside sales has taken on a more important role in the e-commerce evolution. “Inside sales is becoming more important for ensuring B2B success,” according to Forrester, whose survey found that upskilled inside sales will play an even greater role in all phases of small to midsized business (SMB) and enterprise sales than initially predicted in 2015.
Tighter Online and Offline Sales Integration
E-commerce has been around for a while now, but over time it has significantly changed the way consumers conduct research and shop for both products and services. And as we all became more comfortable shopping with our fingertips instead of picking up the phone or schlepping over to the mall, the trend slowly spread over to the more insulated B2B industries. As a result, we’re now seeing a tighter integration between e-commerce/digital marketing and more traditional sales—a movement that’s pushing electrical distributors to reconfigure (or, at least think about reconfiguring) how they train, manage, and even compensate their sales teams.
From his vantage point as senior partner with B2X Partners in Ashburn, Va., and founder of ecommerceandB2B.com, Justin King sees firsthand the challenges that distributors face when attempting to shift their traditional sales teams over to e-commerce. The fact that some distributors still see e-commerce as a separate entity to be sequestered off in the corner and managed by a different department or person doesn’t help the cause.
“It’s no longer enough to set up a little ‘web shop’ in the corner and hope that it covers the e-commerce bases,” said King in tED magazine’s But Who Will Run Our E-Commerce Site? (Part I). “E-commerce needs to be treated as a strategic initiative just like it is in the retail environment, where companies are using it as a transformation vehicle for their overall organizations.”
The roadblock can often be traced to corporate culture and the way the company has traditionally viewed its sales force and external marketing approach. Veteran sales reps, for example, frequently focus on points like: How do we get this product in front of our customers? How do we get this message out? How do we get out in front of our customers and promote this product? And while the answers to these questions may help a traditional, outside sales team advance, they probably won’t do much to grow a distributorship’s e-commerce sales volume.
The quickest way to kill an e-commerce strategy is for one sales rep to tell his customers, ‘Go look on our website for the products you need and then call me before you place your order. I’ll give you a better price.’
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“As a distributor, your most important marketing effort when you’re launching a site has to be an internal marketing effort,” says King. “These days, it’s your internal teams that have the most influence over your customers.” Yet, as many distributors already know, it’s the outside sales team that has the strongest bonds and ties with existing customers, having worked with many of those clients for years (or even decades) and knowing when their children’s birthdays and favorite vacation spots are.
Because of this, King says outside sales can either make or break a distributorship’s e-commerce plan. “The quickest way to kill an e-commerce strategy is for one sales rep to tell his customers, ‘Go look on our website for the products you need and then call me before you place your order. I’ll give you a better price,'” King says. “This happens all the time because salespeople as a whole go where the money is; that’s how they make a living.”
Retooling the Sales Team
The question is, how can an electrical distributorship retool this mindset and get sales reps onboard with a well-blended offline and online sales effort that effectively taps that $12 trillion in B2B sales that Frost & Sullivan is projecting by 2020 (up from $5.5 trillion in 2012)? King says a good first step is to put the company’s vice president of sales (versus the IT team or marketing department) at the top of the pyramid. Make sure he or she has strong buy-in on the value of transitioning the outside sales team over to an e-commerce mindset, he adds, and use compensation as a foundational element.
“If a sales team is looking at e-commerce as a threat or as a hit to their personal income, they won’t get behind an effort like this,” King warns. In fact, he says the top salespeople have learned how to use the online channel as a sales tool, or another service that they’re providing to their customers. “In most cases, a few sales reps will naturally latch onto the idea,” says King. “Bringing them into the fold early and incorporating them into your e-commerce team early is important.”
Focus on Desired Behaviors
When it comes to salesperson compensation, King says the best way to change behaviors and increase the focus on e-commerce is by aligning compensation with the desired behaviors. Thinking back to the time he spent working at Oracle, for instance, King says whenever the company wanted to push a certain product or new line, it offered sales reps bigger incentives (in the form of a commission multiplier) to support the cause.
“If you want to watch an organization change quickly, start paying 115% on e-commerce sales and 85% on offline sales,” says King, laughing. “You’ll soon realize that the quickest way to get salespeople to adopt new platforms is to pay them more for doing that.”
Using online customer registration as a milestone, for example, companies can offer reps a $100 gift card for getting clients to go online and sign up, followed by a 150% commission once the first order is placed. These incentives go a long way in making outside reps more comfortable with the idea of customers using online ordering instead of picking up the phone to place an order.
“Salespeople may try to game the system, but that’s okay,” King points out. “You’re trying to incent, so align compensation with behaviors that you want out of your teams. These don’t have to be ‘forever’ incentives, but if you do it for a year or even just on first orders, the results will pay off.”
Make E-Commerce a Top-Down Directive
King says distributors that want to claim an even larger slice of the e-commerce pie should work to align their entire organization with the cause. Again, this usually means making the effort “worth their while,” as they say. You might, for example, create an organization-wide profit-sharing or bonus plan that incentivizes employees based on the company’s overall e-commerce sales for the quarter or for the entire year.
Even better, make sure that the directive comes right from the CEO. “Explain that your distributorship has big management objectives attached specifically to e-commerce sales,” King offers, “and that even if the company hits all revenue targets, if it doesn’t hit its e-commerce revenue goals, then bonuses will be smaller. You’ll be surprised at how quickly everyone gets onboard with the effort.”
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McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.
Tagged with B2B, e-commerce, sales, tED