This claim is not wrong. But it’s not helpful either!
I’ve spent a week at the nation’s leading distributor conference, listening to executive after executive proclaiming the criticality of local customer relationships, maintained by branch salespeople.
Now, on the final day of the conference, McKinsey is presenting survey results, suggesting that customers value availability, price, and value-added services much more than they do relationships with salespeople.
Who is right here?
In my opinion, both parties are right, but the careless use of terminology is obscuring true insights.
Muddled thinking
It’s almost certainly true that customers value availability, price, and value-added services above all else.
But it’s also true that, in most cases, salespeople have a good deal of influence over price, availability, and value-added services.
Accordingly, there’s nothing technically wrong with the claim that branch salespeople’s customer relationships are the organization’s key value driver.
But this statement has limited utility because it’s based on an assumption begging to be questioned.
The pivotal assumption
If customers value availability, price, and value-added services above all else, and if salespeople have a good deal of influence over all three of these parameters, then the claim that salespeople’s relationships are a key value driver assumes that salespeople’s influence over these paramaters is either necessary, or beneficial, or both.
So let’s question that assumption.
To what degree should salespeople influence availability, pricing, and value-added services?
How we answer this question depends on the operational capabilities of the organization.
If the distributor has very limited operational capabilities, then it’s both necessary and beneficial for salespeople to involve themselves deeply in availability, pricing, and value-added services.
By present-day standards, distributors have evolved over many generations with limited operational capabilities, leading to the development of the current customer interface, featuring autonomous branches and commissioned branch salespeople.
However, recent advances in technology have collapsed the tyranny of distance as it applies to both material products and information.
Consequently, we’re starting to see examples of national organizations that can distribute at scale to small customers without a network of autonomous branches and commissioned salespeople.
The existence of these edge cases does not instantly invalidate the standard business model, but it should cause us to question the primacy of branch salespeople’s relationships.
I suspect that branch salespeople should probably maintain some influence over availability, pricing, and value-added services, but much less than they have today.
But the degree of salespeople’s involvement will not be seriously debated for as long as we continue to embrace the primacy of salesperson relationship assumption.
Update that mental model
So, I’m calling for an update to our mental model of the distributor organization and the marketplace in which it operates.
Let’s accept that customers value availability, price, and value-added services above all else. But let’s engage in a forensic analysis of the mechanisms via which these critical values are—and possibly can be—delivered.
This means—and folks will hate me for suggesting this—eradicating the word relationship from our mental model and from all serious conversations within our organizations.
The fact is, this word serves more to obfuscate than it does to inform.
Talking points
Eliminating the primacy of salesperson relationship assumption opens the door to conversations that aren’t otherwise possible and to approaches to organization design that would be otherwise unconscionable.
Here’s just one example.
Many distributors have embraced the idea of a hybrid sales environment. In practice, this means that different sets of customers are allocated to different channels.
But why is work divided according to customer type rather than activity type (which would be the case in any other environment)?
The answer, of course, is because of the the primacy of salesperson relationship assumption.
Because we assume that value is delivered to the customer via the salesperson rather than by the organization directly (with the salesperson’s involvement, when appropriate), we prohibit ourselves from even considering a more conventional division of responsibilities.
Here are some other talking points:
- Would you rather your salespeople were skilled at persuasion or at solving technical problems (and which of these skills does your organizational structure reward)?
- Branches should obviously have some autonomy (as should all parts of your organization that contain humans), but should branches really be encouraged to operate autonomously?
- Is it realistic to expect the growth of the organization to be driven by the same group of people who are responsible for business as usual?
