While Daniel Pink had many powerful insights and recommendations for the sales profession in his book To Sell is Human, in one key respect he was wrong. He asserted the sales profession was flourishing, but it is actually struggling. Digital technology is fundamentally disrupting the sales function.
Sales Jobs are Stagnant
A rigorous analysis of the US labor market reveals that sales jobs are declining slightly as a percent of total jobs in the US economy. While the sales profession has fared much better than production and administrative office jobs, other functions such as business/financial operations and computer/mathematical jobs have been far more effective in responding to recent labor market requirements.
To correct Daniel Pink, a macro view of the US labor market shows the sales profession is, at best, treading water.
A U-Shaped Employment Curve for Sales
The number of sales jobs as a percent of all US jobs peaked in 2005 and has declined ever since. There were six years of sales job stagnation before Daniel Pink published in 2012. This is not a forecasting error on Pink’s part, it is a failure to read the writing on the wall.
Is Retail the Culprit?
Some might argue the relative decline in sales jobs does not apply to what might be called “professional” sales positions. The theory has three parts. First, retail is a very large portion of sales jobs. Second, retail sales is often a high-turnover, intermediate, non-professional sales position. Third, the retail sector is experiencing tremendous decline. So, the assertion is that the decline in sales employment is really driven by the decline of a single sector: retail.
Wrong again. Retail employment has held steady relative to all sales jobs. Instead, the biggest employment declines are in telemarketing and manufacturing/wholesale. This later finding is especially alarming; technical and scientific manufacturing sales jobs have been the bedrock of professional selling for decades.
On the growth-end of the job growth spectrum, the services industry is the big winner. Its share of all sales jobs increased by 4.5 percentage points from 2004 to 2018.
Is Sales Pay in Decline Too?
Overall, the answer is yes: the trendline for median sales pay as a percent of the national median is negative. Sales pay peaked in 2006, dropped to a low in 2015, and is now rebounding.
Low Pay in Services
Much of the decline in sales pay is due to lower pay in services sales jobs. For example, in 2018 service sector sales jobs were paid almost 32 percent less than technical manufacturing and wholesale sales jobs. In other words, the transfer of sales jobs from sectors such as manufacturing to services has exerted a strong downward pressure on median pay for sales jobs.
Sales Management Pay Recovering
Is the pay picture any brighter for sales management? Well, after 10 years of losing ground to marketing management, sales management pay is making a comeback. Since 2015, sales manager median pay relative to marketing managers has increased and recovered about half of the decline from the peak in 2003.
Digital Disruption of Sales: the Real Culprit
From the standpoint of employment and pay, sales forces have seen far better days … but why? In short, the answer is digital disruption. Two major interrelated dynamics are disrupting the sales function.
Customers are increasingly more informed and therefore more powerful relative to the salespeople calling on them. Customers can browse website content and complete much of the buyer’s journey before they ever need to directly engage with a salesperson.
As customers gained access to information on the internet, they increasingly avoided less efficient purchasing activities and more biased information sources that are inherent with in-person and telephone sales calls.
It is now commonly accepted that at least half of the buyer’s journey is complete before salespeople are invited into the process.
In other words, one macro-level cause of decline in the sales profession is the vast amount of useful information buyers are finding through the internet. Where salespeople were traditionally the primary conduit for information, that need is now being satisfied to a large degree by the internet.
The decline in telemarketing points to a central dynamic: there has been a tremendous surge in digital marketing expenditures over the last two decades. Digital advertising and digital commerce are now the largest marketing spend categories. Companies are also investing heavily in CRM (customer relationship management), websites, social media and content marketing. These digital expenditures are funded not only at the expense of traditional marketing programs such as TV and print advertising, but also at the expense of inside and outside sales positions.
The Necessity of Innovation
Most studies of digital disruption focus on industries or specific companies. Their conclusions typically address its pervasiveness, momentum and impact. They also consistently point to the mandate to create bold, innovative strategies in response to digital disruption.
The pressing question facing the CSO is: Do we have a bold, innovative response to digital disruption?
Perhaps the most common and substantial innovative response involves CRM. Many justifications for a CRM initiative involve paying better attention to the details of selling or reducing how often things fall through the cracks. For example:
- Being more aware of account status via dashboards and drilldown capabilities.
- Increasing customer attentiveness via easy access to contact information such as names, email addresses and phone numbers.
- Staying more alert to competitive threats through more frequent contact.
- Driving a steady diet of leads into the sales funnel.
- Keeping better track of the numerous details associated with prospects in the sales funnel.
Sometimes innovation is all about making leaps in business basics, such as improved management of the details of selling. Other times, however, tactical improvements fail to offset the dramatic power of digital disruption.
The Sales Strategy Mandate
It is increasingly clear that functional areas need strategies. While some hold this is always true, it is safe to assert that a functional strategy is essential when it is under intense attack from technological change. Certainly, the sales function qualifies as being under severe attack and in dire need of a functional strategy.
The first obligation of the sales function is to deliver the top line of the business plan. This goes without question. The problem is whether the sales function can deliver. Traditional approaches to sales management may not be sufficient in the face of digital disruption.
Today’s functional strategies go beyond organization structure. They take a strategic and quantitative view of the buyer’s journey and determine the key jobs that must be performed by salespeople versus the marketing function. They define the capabilities that are required to fully complete the jobs assigned to the sales force. Then they ask: Do we have the requisite skills and talent levels to deliver? Do we have the necessary performance management and motivation systems in place? What key sales management programs need to change (e.g., recruiting, selection, training development), and how do we measure their implementation and impact?
A browser search on “sales strategy” does not yield a vast store of highly relevant content from leading business publications. In contrast, a search on CRM yields page after page of ideas from a wide variety of publishers and providers. This gap suggests that the sales profession may have the proverbial cart before the horse. While it could be that “everyone needs CRM,” it could also be that everyone needs sales strategy before considering a CRM acquisition.
Two Pressing Questions
The preceding analysis leaves the CSO with two pressing questions:
- Is CRM an incremental enhancement, or a dramatic innovation for transforming the sales force? If you must fight fire with fire, then CRM counters digital disruption by arming salespeople with digital tools to better serve their customers. The recent upswings in pay for sales people and sales managers may indicate that CRM is having a positive impact on the profession.
- Can improved one-on-one selling offset digital disruption? It can be argued that the core power of selling lies in person-to-person connection. If so, then driving one-on-one sales effectiveness is the most important strategic response to pursue.
CRM is experiencing dramatic growth. This alone may be an indication that it is a critical component to fighting digital disruption. The early days of CRM implementation were often marred by low or no returns, but this seems to be much less problematic today.
If the core value-added of the sales function occurs at the customer interface, then the most fertile areas for innovation should be to maximize: (1) the amount of time salespeople spend with customers and (2) the effectiveness of that selling time.
One of the major cost justifications for CRM systems involves increasing sales time by reducing the time it takes for salespeople to satisfy all of the administrative demands placed on them. This maximizes selling time and the opportunity to have a greater impact on customers.
Simultaneously, the sales training industry is growing. This suggests that companies are offsetting digital disruption through improved selling capability and methods. Indeed, the most popular books in sales are written by top sales trainers, reflecting a high thirst for improved one-on-one sales effectiveness.
But these two streams of effort have not yet offset digital disruption—as evidenced by the aforementioned decline in sales jobs. So, we need to question whether something is still missing. Is the general lack of sales strategy a root cause?
The sales function has been severely disrupted by digital technology.
Customers resist contact with salespeople because they have more efficient and unbiased means of obtaining information and assessing vendors. Marketing departments are developing ever more effective digital interfaces with customers, which further reduces the demand for salespeople. These trends are driving stagnation in the number of sales jobs and their pay levels.
The best way to cope with with an innovative sales strategy
The only way for the sales function to thrive in the face of digital disruption is through strategic innovation. To-date, CRM and sales training have been the major responses—but they are not a complete answer. While they have helped the sales function avoid the plight of manufacturing and office administration, they have not yet offset the full might of digital disruption.
CSOs must not only create plans to deliver the top line of the income statement. They must also craft sales strategies that truely enable the sales force to thrive because of the game-changing nature of digital disruption.