The Changing Role of Field Sales

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1 The Changing Role of Field Sales Featuring: Mike Marks, Indian River Consulting Group Jenel Stelton-Holtmeier, Modern Distribution Management Sponsored by: Sept. 22, 2017

2 The Key Problems We Solve High cost of manual data entry Costly errors and delays Low adoption rates of your B2B e-commerce platform Customer Purchase Order Processing Reduced levels of customer satisfaction Increases in staff overtime payments 2

3 Welcome to Conexiom Automate sales order processing Eliminate data entry errors Process outside business hours Reduce cycle times Improve customer relationships 3

4 Key Takeaways Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really Means for Distributors

Your Speaker Today: Mike Marks Indian River Consulting Group has been providing

which aligns investments with real market growth opportunities 6 Our relationship with

Marks is the Managing Partner Co-founder of the firm, Senior NAW Research Fellow,

& PCA Competition Licenses, has a Medicare card and enjoys competitive shooting, fine

6 Your Speaker Today: Mike Marks Indian River Consulting Group has been providing business advisory services for 30 years The focus has always been on market access which aligns investments with real market growth opportunities 6 Our relationship with MDM goes back over 25 years The coolest stuff we have done we can t talk about Mike Marks is the Managing Partner Co-founder of the firm, Senior NAW Research Fellow, Graduate adjunct faculty at Texas A&M (past) and Purdue (current) Currently holds SCCA & PCA Competition Licenses, has a Medicare card and enjoys competitive shooting, fine tequila & cigars We are building a digital tool kit for distributors, and Conexiom is a core part of the tool kit

7 AGENDA 7 Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really Means for Distributors From Patrick Carroll

The Historical World View Nothing happens until you sell something. Get them good lines to sell and product training. Sales reps then sell themselves first.

8 The Historical World View Nothing happens until you sell something. Get them good lines to sell and product training. Sales reps then sell themselves first. Put them on a commission so they get to eat what they kill. Leave them alone with the right pay plan and they will manage themselves. When it doesn t work, it is the pay plan, or bad lines, or pricing, or lazy reps, or the economy They own the customer relationship, so hire from the competition to get their customers

9 The World View Is Now Dead Because Our customers are already different and changing rapidly. In mature territories, field sales cost is purely servicing and maintaining revenue, not market making, so incentives become fixed costs to serve. Mature is defined by a same product repurchase rate percent > 90% Field sales cost as a percent of GP$ must decline with scale and specialization to counteract declining margins or improve EBITDA. 9 Buyers are changing!

3 Ways Sales Reps Create Demand with Their Customers A good Critical Selling Event (CSE) happens to a customer and is created by a failure of a competitor distributor or a supplier of that

10 3 Ways Sales Reps Create Demand with Their Customers A good Critical Selling Event (CSE) happens to a customer and is created by a failure of a competitor distributor or a supplier of that distributor, meaning it is an external event and outside the control of your sales rep 1. Protection: Ensuring that they retain all of the flow business that is bought and not sold, avoiding CSEs 2. Interception: Capturing business when a competitor CSE occurs 3. Disruption: Investing sales effort to disrupt a working sourcing relationship, usually driven by a product or programs The secret of share growth is to never experience a CSE yourself and intercept the CSEs of your competitors 10 *Repurchases of identical product

11 Specializing the Sales Generalist Lowers Overall Selling Costs 11 Category Role Typical Titles Primary SOS* Customer assignment % in field % CSEs intercepted Customer Relationship Equity Role Customer Capacity FAM Field Account Manager SAM, AM, TM, FSR, OSR IAM Inside Account Manager AM, IAM, Segment AM Business solutions and Relationship Yes, by dirt >80% Own car >75% Primary Yes, by dirt or segment Partial with a shared car Ranges from 5% to 50% Primary ISR- Inbound Inside Sales Rep CSR Customer/Counter Service Rep Technical Specialist Telesales Outbound ISR, CSR CSR Many TMR, TSR Technical and transactional Yes, by dirt or segment <5% No car Transactional Technical Awareness No None <5% 5% to 25% Primary but often shared with Field Reps Supportive Periodically, by need or project >50% Own car Sent out as they occur Subject Matter Expert ~30 ~100 Several hundred <200 ~30 None but working off a call list None CSE interception, RFM tickler None. They generate activity that warrants the attention of a rep Set changed periodically * Service Outputs Supplied to your customer - what they are actually buying

The Sales Rep of the Future or how Johnny Unitas lost Super Bowl III and the case for transparency 12 The company (a.k.a. marketing) takes responsibility for business development using the sales force as an offensive weapon to gain and preserve share.

They are selling a value proposition not products Scorecards are public and real time. Performance discussions and best practice sharing become the norm.

12 The Sales Rep of the Future or how Johnny Unitas lost Super Bowl III and the case for transparency 12 The company (a.k.a. marketing) takes responsibility for business development using the sales force as an offensive weapon to gain and preserve share. Gaining market dominance is not about selling stuff, rather it is about getting customers to choose you as their supplier of choice. They are selling a value proposition not products Scorecards are public and real time. Performance discussions and best practice sharing become the norm. Geo-location services drive everything. Customer and market data is pushed to sales reps real time without asking. (Google the term SoLoMo.) Everyone knows where the sales reps are always.

13 AGENDA 13 Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really Means for Distributors

14 How Distributor Sales Reps Operate Distributor sales reps in North America generate the vast majority (>80%) of their business (and income) from < 10 accounts. 47.2% of a rep s annual pay is variable and based on margin dollars. (Source: NAW) Priority one for any distributor sales rep is defending what he or she already has. They will NEVER jeopardize a big annuity account (never). Distributor sales reps must be perceived by the customer as adding value. 1. Being accountable (one butt to kick or I ve got your back! ) 2. Being responsive (e.g. heroic recoveries think crappy supply chains or hard to get product) 3. Solving technical problems and/or introducing profit enhancing improvements The above are typically referred to as having a relationship. Any time available outside of defensive selling is allocated based on: Total customer opportunity (dollars not percentages) or intercepting an opportunity or the ease of finding a technical problem to solve or a profit enhancing improvement to introduce 14

The Relationship will be with a Team Versus an Individual Customers are Changing How They Want to Buy 15 According to the U.S. Bureau of Labor Statistics, in 2012 the U.S. economy employed 4.

15 The Relationship will be with a Team Versus an Individual Customers are Changing How They Want to Buy 15 According to the U.S. Bureau of Labor Statistics, in 2012 the U.S. economy employed 4.5 million B2B salespeople. Forrester estimates that 1 million of those sales professionals, mostly what we call Order Takers, will lose their jobs to self-service e-commerce by The field sales profession will simply evolve to fewer reps that manage significantly larger volumes enabled by significant support structures. A successful rep is comfortable acting as the point of the spear and being a team member.

AGENDA 16 Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really

16 AGENDA 16 Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really Means for Distributors eferral&utm_campaign=photographercredit&utm_content=creditbadge

17 Purpose Eclipses Pay Just as you can t manage a sales force with a compensation plan, you can t attract millennials with a pay package. 17 Typical critical job satisfaction drivers: Purpose Work-life balance Professional development This isn t to say that compensation is not important, because it is, but non-pay factors carry much more weight among those 20 to 35 years old.

18 Predictable Pay is Key Compensation packages that include a high variable component are viewed negatively by Millennials. Many Millennials are operating under crushing debt: Most college students graduate with close to $20,000 in student loan debt. 1 Millennials now entering the workplace earn less than previous generations. 1 Millennials entry into the workforce has coincided with rapid increases in key living costs. Education, housing and health care costs have increased rapidly over the last decade. 1 $200,000 Commission and draw is a non-starter, but a salary-and-bonus structure allows meaningful pay-for-performance. Establish meaningful salary (70-80% of target pay) Set GP$ goal with payouts starting at 70-80% achievement Model to avoid unintended consequences Pay Salary and Bonus $180,000 10% Commssion Bonus $160,000 $140,000 $120,000 Salary $100,000 $80,000 $60,000 $40,000 80% of Goal $20,000 or Plan $0 $0 $500,000 $1,000,000 $1,500,000 GP$s 18 1 Fuse: Making Sense of the New Cogenerational Workplace by Jim Finkelstein, Greenleaf Book Group Press

19 AGENDA 19 Why Field Sales Must Evolve The Future of Relationship Selling Sales Compensation Models for Millennials What Omnichannel Really Means for Distributors Markets and channels evolve with power constantly flowing downstream to the customer, so the primary rules for channel design are: 1. It is not about you. 2. It is about them. 3. If confused, follow rules one and two.

20 Customer Life Cycle Many firms know change is required but remain stuck because the reps own the accounts, so there are large risks as a major and complex change management process is required. 20 The key concept is that field sales time investments (think sales calls) can be invested in alternate ways: Offensively: allocated based on opportunity for increase (right side) OR Defensively: allocated based on existing volume (left side) 2-6

A Multichannel Example 4. Punchouts & LOOP* Inside sales leads with specialists You have sticky customers with reliable service Field sales is on call, as necessary, by your team Start 1.

21 A Multichannel Example 4. Punchouts & LOOP* Inside sales leads with specialists You have sticky customers with reliable service Field sales is on call, as necessary, by your team Start 1. Telemarketing E-catalog or Amazon Easy to buy & once and done CSE alert * Lights Out Order Processing What % of your sales calls are on the right side of the model? 3. Field Sales Leads Expand share of wallet using team members and introducing specialists along with special services 2. Field Sales Leads Prospect with provided marketing analysis on cost to grow and potential to grow Your value proposition is explicit and key

22 Let Go of Selling Products and Instead Help Customers to Buy Your Actual Selling Process The four discrete components are hard to discern as the intermingling hides inefficiencies in each core process and their respective costs as this is way that everyone does it What is the process to acquire a new customer? 2. What is the process to quickly gain appropriate share of their wallet? 3. What is the process to cost effectively maintain that customer over their lifetime with you? 4. What is your process to extend life and reduce self-inflicted customer departures? Each process has costs, tools, resources, performance metrics and different objectives for the enterprise. 2-11

23 Questions? The Changing Role of Field Sales Sponsored by: Sept. 22, 2017

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