Culture counts: HBS Professor Frank Cespedes shares the secrets of sales success

Harvard Business School Professor and six-time author, Frank Cespedes knows a thing or two about sales. On the latest Walker Webcast, he and Willy discussed topics from his most recent book, Sales Management That Works, including the importance of culture, how to hire the right talent, aligning sales with strategy, and so much more. 

Willy begins by introducing his guest, Frank Cespedes, Senior Lecturer of Business Administration at Harvard Business School (HBS). He holds a BA, MS, and PhD, and he teaches entrepreneurial sales and marketing in the HBS MBA program. Frank also heads the Aligning Strategy and Sales executive education program at HBS. He is the co-author and author of many Harvard Business Review articles and HBS case studies and has written six books.  Frank's most recent work is entitled Sales Management That Works.

Willy draws on this book for his first question in the discussion, asking about where Home Depot’s sales management (considered in an early example in the book) went wrong. Robert Nardelli, a former executive at GE, took over as CEO of Home Depot in 2000. The changes he brought to Home Depot's sales approach played out poorly, raising not only the question of where he went wrong, but also how GE could have had people like Nardelli, so close to holding its highest leadership role, who turned out to be abject failures.  

Frank first explains that marketing and sales (and business development in general) in most companies is currently managed how it should have been five to ten years ago, since that's when people making the really important decisions had regular, ongoing contact with customers.  Looking more closely at Home Depot, Frank comments on the need for a strategy to be linked with sales and business development, and details that the value proposition of Home Depot included knowledgeable workers, but in part, given an overblown emphasis on e-commerce, this part of the value proposition saw systematic under-investment.

After sharing why he chose to write yet another book on sales, Frank offers more insight on the over-emphasis on e-commerce that is common in the market today. Offering numbers to demonstrate his point, Frank explains that the market is not as e-commerce driven as many think and that brick-and-mortar operations are not becoming obsolete. There is, however, a shift toward multi-channel and multi-media sales models.  One example of this change is the process of buying cars; commonly today, consumers spend time learning online before going to a dealership, but make their final purchases in person. This reality makes specific demands of sales leaders; they are expected to offer transparency with data on pricing and should move toward value-based pricing. Fortunately, there are many tools available to help company leaders adapt to new sales trends and the changes they demand!

Another area in which change is needed is that of sales incentivizing. The traditional incentive model has encouraged workers to sell as much as possible without having an eye on margin. The message this sends, though, is that any sale is a good sale, and ultimately, this approach disconnects sales from strategy. To bring positive change, sales leaders should consider what behavior they want to encourage in their sales team and work on adaptation. Change like this is difficult, but certainly not insurmountable.

The change required within sales divisions involves the need to hire the right people. It is a well-established reality that finding strong sales talent is difficult. Leaders looking to hire cannot rely on education programs or interviews to direct them to the right people, but rather need to augment the interview aspects of their recruitment strategy with other processes. These additional processes will ideally help leaders gauge important behaviors like persistence and tenacity. It will be helpful, Frank says, for sales leaders to settle on a narrower profile for what they want from a sales candidate.

Moving forward, Willy and Frank discuss the fact that three times as much money is spent on sales versus advertising. Advertising, especially in the digital space, has value, but not as much as people often think. Digital media is expensive and high maintenance, and it is a deep-pocket, big company game without democratized access. Companies also have to navigate the realities of the social media megaphone effect (and often individuals only talking to themselves), as well as of changing and accumulating buyer power.

As they begin to wrap up, Willy asks Frank about lead generation and lead qualification, turning to questions on talent retention.  Frank explains the need for personnel (rather than a mechanized process) to perform the complex judgments of sales qualification, and comments on the fact that talent is crucial in sales but not easily portable. Culture and interpersonal relationships matter and this reality should shape the way sales leaders think about training and retaining sales team members.

Links:

Learn more about Frank Cespedes.
Connect with Frank and preorder his most recent book on his website.
Check out Walter & Dunlop’s website. 
 

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