• September 9, 2014

Extinction Threatens Salespeople?

Extinction Threatens Salespeople?

Is the salesperson facing extinction?

The number of sales jobs in the United States — notes Slate’s James Ledbetter — has decreased dramatically in recent years:

From 1950 to 1980, sales represented one of the fastest-growing occupations in the country. In the 1980s, sales was by far the largest job-growth category, increasing 54 percent. That growth slowed in the 1990s, and by 2007, the number of sales job was shrinking. No other job category has experienced a drop this sharp in the same time period.

But at the same time, sales jobs still comprise 11% of the workforce — unchanged from 10 years ago.

What’s the conclusion to draw? Ledbetter, with props to Arthur Miller, concludes that we’re facing the extinction of salesmen. What’s to blame? “The biggest culprit in killing off sales jobs is right in front of you: the Internet,” he says. In particular, he correlates the declining numbers of salespeople — from car dealerships to pharma — with the rising number of goods and services (music, books, stocks, airline tickets) purchased online.

Sales Isn’t a Zero-Sum Game

Enter Internet, the extinction of salespeople? Not at all. In fact, I’d argue that Ledbetter is falling into the zero-sum thinking trap. Namely, he posits that there are a fixed amount of sales in the universe, hence with more sales happening online, the number of salespeople must decline.

But positing that the volume of sales in the universe is fixed is a fallacy. Otherwise, the economy couldn’t grow. Furthermore, nowhere in Ledbetter’s story does he talk about sales productivity. In fact, I’d argue that when it comes to charting the changing sales profession over the past 20 years, the story is predominantly about CRM-driven productivity gains.

Before: Going “Woodward and Bernstein” on Prospects

To see why, flash back to the 1990s and my job selling middleware for Open Environment. Say you wanted to sell middleware to Caterpillar in Peoria, III. What did you do?

At the time, the sales rep job looked a lot like Woodward and Bernstein: staking out an organization to find the information you needed. You’d dispatch a salesperson to Peoria for 2 weeks, just to figure out what the sales opportunity might be. You’d order an annual report, which was already a year or more out of date. If you were lucky, it would list the names of a half-dozen executives. Contact details for crucial middle managers? Back to the stakeout.

Today: Sales Productivity Surging

Compare the pre-Internet days to today. Ignoring, for a moment, the improvements driven directly by marketing automation, how do you research a prospect or customer?  LinkedIn of course (unless you’re one of the crazy sales people who don’t have a LinkedIn account), then bring up Google Maps to find the best route for 5 site visits in a day. Whereas 20 years ago, it wasn’t uncommon for IBM to put a sales rep in a cube in its customer’s offices, just to know what was going on.

CRM Spending

Now consider productivity gains driven by good sales automation CRMs. In 2012 organizations will spend $20 billion on CRM. I’d estimate that half of that goes directly to one of the major sales innovations of the past 20 years: sales force automation (SFA). Now, with that $5 billion in mind, say your typical sales rep costs you $100/hour. Accordingly, using SFA, companies expect to increase their sales productivity by 50 million hours per year, or 6.25 million days, allowing them to eliminate 28,400 sales jobs.

Again, that’s not the Internet eating away at a fixed sales capacity, but productivity gains, thanks to SFA, buying companies more selling power.

CEOs Calling on Payphones

In the 1990s, when I had a lot of sales calls to make, guess what I had to do? Go to a payphone.

One day, I was standing at the US Airways wall of payphones — perhaps 50 in all — at Washington National airport, with a public address system blaring overhead. During a pause in announcements and my conversation, I looked at the person standing next to me, profanely chewing someone out over the phone. Who was it? None other than Lew Platt. Even the CEO of HP had to stand at the payphone.

Over the past 20 years, we’ve seen enormous productivity gains, and that’s especially true for sales. Accordingly, rather than heralding the decline and fall of the salesperson, this rise in sales productivity means that salespeople are wasting less time and performing at a higher level than ever before. This doesn’t mean the extinction of all salespeople, though.