Forcing Change

The world’s oldest profession is probably not the one we normally think of.

Ever since man climbed down from the trees and had something to barter, there have been people going around hawking their wares. Once they were wrapped in animal skins, now they are more commonly cocooned in Vauxhall Cavaliers.

However, there is now talk of the sales rep becoming an endangered species. Many companies slashed their salesforces during the recession, others have opted to use contract staff. So what is the current attitude towards the salesforce? How much is invested in training? And what is the future of the rep?

“We don’t have what you would call a salesman at all,” says Robin Walker, commercial director of HP Foods.

“Twenty years ago we had between 70 and 100 reps. The change in the retail environment from small retailers to central warehouses and multiples, has meant a big change in the way we communicate with our customers. Instead of sending reps out on the road, we now collect a large proportion of our sales on the phone or by computer.

“We have replaced the traditional field salesforce with 12 business development executives (BDEs) who each have a small portfolio of accounts dealing with customers at both national and regional levels.”

Although the change has been gradual, it is a significant shift that amounts to more than cutting the salesforce and giving those remaining a fancy name.

“We have invested heavily in training for our BDEs,” adds Walker.

“This has included programmes focusing on business objectives, individual personal development skills and negotiation skills, as well as category management and computing.

“The 12 BDEs were promoted from within and have learned new skills to cope with the transition.”

For many companies, however, there is still a need to retain face-to-face communication, particularly with retailers of impulse purchases. Representatives must visit thousands of small turnover retailers – to take new orders, and to motivate them to give prominence to display material.

The cost of running such a salesforce is huge, and most such manufacturers have now opted for the cost savings and flexibility offered by contract staff.

“The big companies in the tobacco, soft drinks, snack foods and the confectionery business now use contract sales staff,” says Nick Fennell, development director at field marketing specialist, CPM International.

“The benefit to the client is that it provides flexibility. We can match skills to the task, and have a lot of people in tight territories. Because many of them work part time and cover only a small area, they can be more efficient than someone working full time in a wide area.

“The cost to a company of employing a full-time sales rep and giving them a car is very high. These reps tend to spend a lot of time travelling between customers, which is very inefficient for visiting outlets with a small turnover.”

The main criticism of taking on contract sales staff, is that they are not employed directly by the company for whom they operate and, therefore, are neither particularly loyal nor motivated.

Fennell discounts this argument: “All our staff work exclusively for a single organisation. If, for example, they are representing a confectionery manufacturer, that company is the only one we have them working for. They will attend regular briefing meetings and will have a senior member accompany them occasionally to monitor their performance and help them to develop. They effectively become an extension of our client and, if we are asked by a snack food manufacturer to send someone to the same retail outlets, we would find another person to do that – again working exclusively for the client.”

The approach is different to that taken by brokers, which take on several clients and have them served by a single salesperson.

Neil McNicol, managing director of broker McCurrach, explains: “We believe our method of operation has several advantages. Our staff are representing several different manufacturers on each call so they can spend more time with the retailer. They can talk about the local market conditions with a greater understanding because we have invested heavily in training and research into, for example, the demographic profiles of the areas our people visit.”

McCurrach has also invested in computer audit systems to help keep clients informed about what is happening in the stores.

“We can report back to the client details of displays, stocking and promotions in more than 1,300 stores throughout the UK by simply calling the information up from the computer,” says McNichol.

“There is no way an individual manufacturer would be able to afford to install a system to do this. The fact that we represent a range of clients, however, means that we have the economy of scale that enables us to do this.”

Most brokers and contract sales companies have reported strong growth in the past few years. Since the most recent recession, companies have sought to cut costs by switching from internal salesforces to contract. Without pensions, office space, national insurance and the company car to provide, there are clearly big savings to be made, and the trend seems to be continuing regardless of the overall economic picture.

“Two of the main business sectors traditionally employing large salesforces have progressively outsourced their sales teams,” says David Gilbert, sales manager at contract salesforce company EIR.

“Pharmaceutical companies now rely heavily on contract sales organisations, and the fmcg sector has switched much of its sales activity to field marketing agencies.”

There is, however, one area where the in-depth product knowledge is so great that contract sales staff are unlikely to be considered. The financial services sector has long been associated with the need for personal contact and, despite the inroads being made by telemarketing, independent financial advisers and products being sold in banks and building societies, there is still room for the man from the Pru.

“We’ve had a direct salesforce since the 19th century,” says Prudential spokesman Mike Davies.

“Its role traditionally was to service the cash collection customers. Now the sales team tends to concentrate on high net worth individuals. Because we need to adhere to the regulations concerning the sale of financial services allied to the fact that clients are becoming more sophisticated and the products are more complicated, we do not use contracted salesforces.”

Such is the requirement for specialist knowledge, the company has set up a large training facility to service its nationwide sales team.

“All our staff have to go through rigorous training. We spend about 1m a month putting the staff through our training centre in Newport Pagnell,” says Davies.

The complex nature of the products on offer has also meant that Prudential has not opted to use telemarketing as an alternative to conventional selling methods.

“Because of the complexity of the products, we feel that clients are best served by face-to-face meetings,” says Davies.

The fact that salesforces still exist, whether contracted or internal, is solely down to the dynamic of meeting face-to-face. The growth of telemarketing in business to business has had an impact, but a personal visit from a representative undoubtedly works better.

Indeed, Richard Pamment, business development manager at telemarketing agency InTelMark, which like CPM is part of Omnicom, sees telemarketing as an enhancement to, rather than a replacement for, the sales team.

“We’re not pulling the budget from field marketing; what tends to happen is that we add an extra dimension. It may be through dealer support using an 0800 number, or we may run telemarketing campaigns between the normal business cycles when retailers receive a visit. The important point for clients is that they are increasingly seeking to optimise all levels of communication.”

The sales rep has seen a big reduction in numbers recently but is not yet on the endangered list. The big difference for many individuals is that they are now employed by someone other than who they are representing.

For these clients, big savings have been made by using an agency and they now have greater flexibility over the size and nature of their workforce.