Why Is The Sales Team Collapsing in the Middle?
Updated: Jan 19
The forces of value migration will require tough decisions as we engage and retain customers with specialized sales teams.
We have seen many times, since March of 2020, the rows of books sitting behind someone in video meetings or on our favorite newsworthy TV interviews. You may have your shelves full of books that have been deeply sampled, while others became an actual turning point in thinking and building blocks of knowledge. One book on my shelf that rocked my point of view years ago was "Value Migration" - How to Think Several Moves Ahead of The Competition by Adrian J. Slywotzky.
What is "Value Migration," and what are the lessons today?
"Value Migration" as a book defined the shift in established business models that created new value for customers and new opportunities for startup companies. The book promoted the new vanguard of brands in the mid-nineties, introducing superior business designs for success.
A seismic shift in value creation and distribution provided a backdrop to strategic business thinking. Big corporations were trying to retain control because their size had become a roadblock, and their business models were getting stale. The future view was infused with increased uncertainty as technology caused dramatic changes in process, customer interaction, and productivity. Sound familiar?
Low-cost distribution and high-end solutions.
Chapters 10 and 11 in "Value Migration" focused on two of the seven patterns of value, the move from a manufacturer's conventional selling approach to one of low-cost distribution or, conversely, high-end solutions. The classic sales mechanism in the age of manufacturing was the direct sales force in the middle (managing customer communications and acquisition) to drive sales and profits. That changed as the sophistication of customers was increasing faster than products or services, and a more informed customer was pushing price sensitivity into the sales process.
Low-cost distribution became more of a competitive edge for companies like Charles Schwab as they focused on the volume of transactions to drive revenues by growing customers. The high-end solutions came from outside vendors with specialized knowledge like IBM or Oracle giving their clients a competitive edge with technology and information.
Fast forward 20+ years from "Value Migration."
"Value Migration," highlighting this relationship between low-cost distribution vs. high-end solutions, has me thinking about the current structure in media sales. The middle of the sales function in media is now officially collapsing, aided by rapid advances in technology that are shifting the value relationship with customers and a massive abundance of information that creates pressure to lower cost.
Media companies are searching for cost savings and better product distribution, and the impact on sales is on all levels. The middle in sales relies on their historical value more than the requirements for success today. The salesperson who does not embrace change, learn enough about new product offerings, and rely on long-term customers from the last two decades will get left behind. The future shows two sides evolving in sales to serve the needs of customers and support revenue creation for sales teams and their companies.
Two different models for selling without the middle.
Defining our teams and their roles in monetizing our content and solutions is critical. Being
a successful sales organization requires a hyper-focus on high-end sales strategies with the segmentation of knowledge between customers and sales. For example, in traditional media sales, there is a growing division between the commodity seller on one end and the "Swiss Army" seller (high-end) on the other end.
Advertising RFPs (requests for proposals) are shrinking and moving off traditional metric goals; traditional media dollars are also shrinking. The middle of the sales process journey has collapsed; the low-cost end is moving to automation and programmatic buying. This low-end solution will be managed by AI robots and target direct customer interactions without interaction from a salesperson. High-end sales require more time interfacing with customers, a highly customized experience, and compensation tied to the investment of time by the sales team.
Pain or pleasure?
Building on the high-end sales strategy takes investment, changes in responsibility, improved marketing skills and rethinking the relationship with your most valuable customer. There is no overnight solution to avoid the impact of value migration, and it requires a fundamental change in how leadership works with sales teams and how teams are supported. The clock is ticking, and the next few years will create increased pressure to make tough decisions about how we introduce value into the sales process.
The pain or pleasure principle, developed by Sigmund Freud, states that we choose to avoid pain and increase pleasure. There are two choices for all of us, avoid the pain as business improves post-pandemic and lose sight of what needs to be done, or take on the challenge of becoming high-end solution providers to our customers. The middle is gone, and the other side is moving to the cloud.
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About The Author:
Alec Drake openly shares revenue management strategies and sales improvement ideas in the "Sales Success Library" at Alecdrake.com. He is a regular contributor to Radio Ink Magazine, where he leverages four decades of experience to write about sales and management. Alec is the founder of The Radio Invigoration Project (T.R.I.P.), a support initiative for local radio sales and promotion staff.
Drake Media Group, LLC retains exclusive rights to any original content in articles written by Alec Drake or published on any third-party platforms and featured in any podcast.