By students, for students.

Always Be Closing: the dirty business of direct selling

In Coaching, Management on April 13, 2013 at 9:01 pm

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It is indicative of the strains of direct sales, that the biggest issues facing customer-facing departments are the recruitment and retention of salespeople.

The sales function has an average labour turnover of 100% per annum. Small wonder! Salespeople can expect brusque rejection, high pressure targets, pick up deflected business risk and see skill go unrewarded, while ineffectual effort is recognised.

It’s a difficult job, but somebody needs to do it.

The six million involved in all variations of direct sales in the US are employed with a purpose. Teams of experts in face-to-face selling was conceptualised as a response to the burst of innovation and mass-production in the late 19th century. Firms suddenly had great need for a form of selling which consistently created need for products which the public did not understand, let alone want. The travelling salesman would pound pavements and knock doors, demonstrating why the latest output of Fordist manufacturing was an essential addition to their home.

By the 1920s, the essential characteristics of the profession had been etched. Attracting Attention, fostering Interest, forcing Decisions and driving Action continues to be the preserve of salesmen and saleswomen. Likewise, businesses knew which products benefitted from direct sales channels, namely experience goods which a demonstrable function in markets characterised by strong customer inertia and limited price transparency.

Direct selling was designed to meet the business needs of an era of transformation in manufactured goods. By going to possible customers and engaging them in a face-to-face meeting during which a sales representative hoped to create a urgency to purchase, direct sales pioneers found a way to quickly distribute products in advance of demand, at low costs (saving on promotions) and even passing the risk of failure onto the sales force.

This last point is particularly true of multi-level distribution systems which use independent contractors as salesmen. In this model, the sales force buy stock and the rights to sell in return for commission. The business is relieved of employment costs, but loses control over its sales force, the behaviour of which can establish or destroy a brand.

Recommended practice in direct sales mercilessly pushes for improved results. Managers encourage a vigorous culture of success, built on providing good careers for top salesmen and weeding out those who fail to meet the required number of conversions. Status is based on financial success, enshrined in tiered sellers clubs. Further, ostentatious consumption is institutionalised in schemes such as Eureka Forbes’ ‘Buy Your Own Bike’ incentive.

So, direct sales serve a unique and results-driven role in business. But brutalised and independently-minded salesmen are liable to strive to improve their lot by acting opportunistically. This includes jumping ship for a more attractive role in another business. Salesmen are a necessary part of business, but salesmen may not be tied to their firms until they are seen as a long term investment.

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