Direct sales jobs often seen as the initial proving ground for young college graduates across industries and businesses. Whether it is a product, a service, financial, pharmaceutical, industrial, consumer or advertising, direct sales forces have traditionally been the revenue engines for business. But as technology, demographics and buying behavior have changed over the past decade, there are signs that the traditional direct sales force may be going the way of the typewriter and carbon paper.
Cost. Direct sales forces are costly. They require extensive management, systems and tools, training and often office infrastructure. Additionally, they are generally paid an amount of base pay plus benefits before they get a penny of sales commission. In effect, they are usually on salary with sales commission from 25-50% of their pay. But even if they do not sell a penny of product or service, they still get their base pay, their benefits and all the expenses associated with them and their management has to be paid also.
Flexibility. Direct sales forces are inflexible. Usually they have a fixed organization structure tied either to an account or a territory. Their management is an aggregation of the same. As is their executive management. Any changes to this structure usually happen annually, if then. The same holds true to compensation plans. Direct sales forces usually have annual sales compensation plans. Yes, they do have periodic promotions, incentives and “kickers”. But these are almost always incremental (on top of) the annual sales incentive plans.
Resellers. Most companies have some level of dealers, distributors, wholesalers or manufacturer’s representatives. In most cases, these structures are above and beyond the direct sales force. They are not employees of corporation they represent. Often they are local and geographically focused. In other cases they target specifics markets or customers. Dealers, distributors and resellers are usually not corporate organization men or women. They are more entrepreneurial; customer focused and keep costs to a minimum.
Off-shoring. Whether you love or hate off-shoring, it is a fact of life for all types of businesses. Selling that does not have to be face to face – whether is a product, a service, aftermarket or upgrade can be done remotely. In many cases, the combination of catalogs, television and the internet have made it possible to do must more selling remotely rather than face-to-face. This can be done with high levels of cost and quality control too. When was the last time a direct sales team was focused on reducing costs and improving quality?
The reality. It is unlikely that the direct sales force will totally disappear from the corporate organization chart. The largest customers often demand their own account executive to serve them. But increasing, it is possible the meet the needs of customers of all sizes without a direct sales force by effectively using combinations of dealers, distributors, resellers, off shoring and utilizing the latest technology. In addition to increased sales and customer satisfaction, these distribution alternatives serve to reduce sales and overhead expenses plus increase the level of flexibility – all important steps toward being more competitive and profitable.
George F. Franks, III is the founder and CEO of Franks Consulting Group, a Bethesda, Maryland based management consulting and leadership coaching practice. He is a member of the Institute of Management Consultants and the International Coach Federation.
George can be contacted at: gfranks@franksconsultinggroup.com
Franks Consulting Group is on the web at: http://franksconsultinggroup.com
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