Wednesday, November 03, 2010

Sales Management and Performance

By: Gary J. Salton, Ph.D.
Chief: Research & Development
Professional Communications, Inc.

This research sampled 711 Sales and Marketing people from 193 different firms. The study found a statistically significant relationship between the “I Opt” style and hierarchical rank in a firm. The study also found significant differences between sales and marketing professionals as well as between types of sales (i.e., relationship vs. transactional). Practical guidance arising from these findings are outlined.

A brief video outlining the findings of this research is available on YouTube. Click the image on the right to view the video.

The data for this study comes from the “I Opt” 70,000+ person database. People whose titles clearly indicated that they were involved in Sales and Marketing were used for this study. Table 1 shows the sample arranged by organizational rank.

Table 1

The significant sample size and the wide variety of organizations strongly indicate that the data is representative of the Sales and Marketing profession.

The “I Opt” database was used to determine the mix of strategic styles being used by each person at each level. These scores were then averaged to get an overall profile of the strategic styles actually being used.

Graphic1 shows a pattern that literally jumps off of the page. There is a virtual “stair step” relationship between rank within the firm and the mix of strategic styles being used. This kind of stair step indicates that something fundamental is in operation. “Something” is causing certain styles to be favored and others to be devalued with changes in rank.

Graphic 1
Strategic styles (e.g., RS, RI, HA, LP) are names given to different ways of processing information. Different styles produce predictable behaviors that effect job performance. This is easy to see.

For example, ignoring detail means that precision will be lost. It does not matter how anyone feels or what they believe. The information that precision requires is just not there. Similarly, spontaneous decisions gain speed at the cost of more mistakes. Not considering all relevant circumstances make this condition a virtual certainty.

The same phenomenon happens with every other strategic style. Every style carries with it a corollary vulnerability. It is reasonable to assume that the “stair step” is the result of different jobs that make use of particular style strengths and are relatively insensitive to their corollary vulnerabilities.

A strategic profile is just a particular mix of styles. Graphic 2 groups strategic styles by level. It immediately shows that different profiles (i.e., mix of style strengths) are being used at each level.

Graphic 2
The LP (methodical action) and HA (analysis) are favored at the professional sales level (group on left). This makes sense. Persistence is the lifeblood of sales. The disciplined LP is nothing if not dogged. The logical, reasoned analytical HA addresses the other sales key—answering objections. This style mix is well suited to the demands of the average sales position.

The job changes at the executive level. Executives must plot a course over an uncertain future. Their creative RI strategy produces ideas, options and alternatives. These can be slotted in and developed as the future unfolds. It is ideal for meeting unexpected and/or changing conditions.

Executives also have another job. They settle issues that cannot be resolved at lower levels. These are typically fraught with uncertainty and which have no clear answer. The executive’s secondary RS (decisive action) style is an ideal complement to the dominant RI style. The RS shares the outline knowledge used by the RI but adds a decisive, action oriented component.

Managers (mid-level executives) have a foot in both executive and professional camps. They guide the professional while contributing to the executive’s strategic perspective. Their relatively balanced profile (middle of Graphic 2) is ideal for bridging the gap between professional and executive levels. Effectively, they have a foot in both camps.

With this reasoning, “I Opt” offers a simple explanation of why different level favor different strategic styles. Different levels do different things. These different things require different kinds of information. A solid “reason” gives confidence that the findings are not transient. They are "built in." They are here today and will be present as long as the sales/marketing structure exists. It is worth investing to optimize performance with the expectation that these conditions will persist.

What does this mean on a practical level? For one thing it means that excellence at one level does not imply excellence at another. For example, one way to negatively effect sales is to take the professional sales person and make them a manager or executive without preparation.

The loss could be more than the sales they were generating. If they apply the styles that were successful in their sales capacity they can compromise their new function. This can further erode sales—both short and long term. The value of effective training and development that addresses the style issue is obvious.

Other things also “jump out” of this finding. For example, tension is built into the relationships. What seems obvious at one level can be viewed as irrelevant at another. Management systems ignore this reality at their own peril. A small investment in tension management can go a long way.

Are the style differences shown in Graphs 1 and 2 are just a matter of chance? If the study were redone using a different sample would we get the same results? This is a question statistical significance was created to answer.

Table 2

Table 2 shows that all but one style difference between levels is statistically significant. The lone exception is the Reactive Stimulator (RS) scores between professional and managerial levels. The difference between professionals and mangers on the RS dimension may just be random noise. However, the RS style is not a major influence at either level and can be safely ignored for the purposes of this study.

But in 87.5% the tests (seven out of the eight) of significance equal or exceed the academic standard of p < .05 (i.e., 95 chances out of 100 that result is not due to chance). These significance tests tell us that these findings are no accident. Different organizational levels are using different profiles. The sales and tension effects noted in the previous section are real and pervasive.

Sales and marketing are combined in this study because that this is the way the real world works. At the managerial and executive levels the functions are often merged. For example, the title Vice President, Sales and Marketing is among the most common titles at the VP level.

However, it is reasonable to ask whether the two functions differ in cases where the functions can be disentangled. Are sales people are fundamentally different than those in marketing? Again, statistical significance is the way to answer the question. Table 3 does just that.

Table 3
(using Student’s-t test)
In 10 out of the 12 test dimensions there is no difference between sales and marketing people at the same organizational level. The two functions seem to be cut from the same cloth but with a bit of a difference in pattern.

The difference in pattern is seen in two strategic styles at only one organizational level—the professional rank. Graphic 3 highlights the difference.

Graphic 3

Graphic 3 shows that the marketing professional favors the analytical HA style. Marketing’s mission is assessment. The higher HA style makes sense. The sales mission is getting buyer commitment. Providing the buyer with options and alternatives directly supports that mission. The strategies being used by both functions make sense for their different jobs.

An implication of this finding is that movement from one function to the other would benefit from some training and education. Since these two functions tend to combine at the managerial level and up, this is not an inconsequential observation. Managerial development would benefit from recognizing and preparing upcoming sales/marketing executives for this condition.

The tendency favoring RI (ideas) and RS (decisive action) as a person rises is not absolute. Firms exist in many niches. Each of these can contain unique drivers. These niches create opportunity for any strategic style preference to advance.

For example, executives in stable commodity based firms typically have higher levels of LP (methodical action). High tech executives put more stress on an RS (decisive action) strategy. Graphic 4 exemplifies this condition. It focuses only on the LP style but illustrates a general case.

Graphic 4
(n = 97)

Graphic 4 shows that 18% of the executives (i.e., VP and up) use high levels of the LP (disciplined action) style. These levels more typical of professional levels. Yet they exist at the most senior ranks. The same condition holds for all other strategic styles.

This means is that there are organizational niches for every style. However, the odds favor people using strategies identified in the stair step chart (i.e., Graphic 1). There are more of these opportunities than there are specialty niche openings.

This study treated all sales as the same. This is an over-simplification. Selling fleets of aircraft is a lot different than selling of television sets in a big box store. Does this kind of difference influence strategic style being favored?

To test this proposition a subset of 62 professional sales people from 27 different firms were extracted from the data. The data was divided into two classes. One group sold products that involved continuing involvement. This was labeled “relationship selling.”

The other product of the other group required only episodic involvement. Once the sales effort was over, there was unlikely to be further dealings. This type of selling was labeled transactional sales. Table 4 shows examples of the type of sales by category.

Table 4

Graphic 5 shows that only one strategic style difference rose to the level of statistical significance. Transactional selling (i.e., episodic, “one time”) finds more value in the idea-oriented RI style. Relationship selling appears to put more emphasis into welding the relationship with dependable action (LP) and insightful analysis (HA).

Graphic 5
(n = 62, Firms Represented = 27)

Once again, this condition makes sense. Buyers who expect continuing interaction are likely to put more emphasis on dependability and insight. New ideas are welcomed but of less value since they can confound the structure of the interactions. The absence of such penalty for the transactional buyer means the net value of new ideas is higher for them.

Practical implications flow from this finding. For one thing it means that the type of product being sold will influence the choice of the ideal sales “style.” The overall finding of the favored sales LP/HA applies to general sales. If you knew nothing about what was being sold to whom, this would be your best choice. However, if you do know the facts of a sales situation there may be better ways of developing a sales staff.

One way of identifying an optimal sales profile for a particular product in a specific market might be to identify the high sales performers. Commonalities in their “I Opt” profile could signal an optimal strategic match. Training and management development programs could then be tailored to move the general sales force in that direction. It could be an idea worth some thought.

This finding also suggests a sales seminar strategy. Sales seminars tend to produce “tidbits” of valuable insight. But they seldom “hit the mark” across the board. The reason is that many seminars use a “one-size-fits-all” approach. This research shows that seminars could be tailored to the specific product and market niches. The strategy is likely produce consistently better learning and sales results. Given the importance of seminars in both learning and motivation, this is an option that may be worth investigation and experimentation.