HBR.org

When You Need Sales Specialists, Not Sales Generalists

Given that business customers want their providers to have expertise in some combination of product, industry, and capability, sales specialists are here to stay.

By Mark Kovac

Published on February 17, 2016
min read


This article originally appeared on HBR.org. Companies that compete in business-to-business markets have traditionally relied on generalist sales reps to unearth and close opportunities. Yet as companies expand their range of products or solutions, no generalist can credibly sell every offering. So these companies have to train and hire for specific product, technology or industry expertise. Adding more industry and domain specialists, however, can add complexity that undermines the ability to sell efficiently. Specialists often get sucked into lead generation or deployed to low-quality leads. How do you know whether you have too many or too few specialists, and whether they’re deployed on the best opportunities? There are several ways to produce a reliable picture of where it makes sense to add and where to cut back. To start, you can estimate the full system cost of hiring, training, compensating and integrating each specialist into the organization, and weigh the cost against the specialist’s value—the amount of profitable revenue you would not get without that specialist. You can do this through a regression tool called counterfactual analysis. My colleagues and I ran a regression analysis for one technology company to determine what each major customer account would have generated in sales and profit over the previous year if it did not have specialist support, compared to what the account actually generated. Because some accounts had intense specialist involvement while others had little or none, we were able to isolate the effect of specialists. The sales specialists contributed a gross profit of $236 million at a compensation cost of $20 million, for a net contribution of $216 million or a return on investment of more than 1,000%. Even figuring that the additional costs of hiring, training w integration would lower the ROI, and that other “fixed” parts of the selling system had to be used, the profits would still be quite attractive. The real payoff comes from improving the ROI. To that end, we determined the optimal number of specialists. Examining the relationship between specialists who serve several accounts and the manager for each account revealed how many account managers a specialist can successfully support, and how to improve their assignments. We found, for instance, that a 1:4 ratio of specialists to account managers generated the highest profitability for the tech company. In accounts where there were fewer specialists, the company was foregoing profits and could add specialists. And where there were more specialists, they didn’t pay for themselves, diluting profitability. This dynamic applied companywide, by territory, and by product category. You can raise the ROI even further by identifying the factors that have a pronounced effect on account performance. These factors range from an account manager’s tenure and number of accounts, to a specialist’s tenure or certifications, to the attributes of assigned territories. Cutting the data this way allows you see where to improve assignments across territories and products. Some areas of expertise, such as product features, will become more common knowledge over time. Companies need to anticipate this pattern if they hope to continually improve the economics of their selling model. Think of the investment in specialists as “perishable” through a product’s life cycle. You can deploy specialists early in the cycle to gain a foothold, and expand to build expertise ahead of the competition. Once sales increase, make sure the account manager learns the basics from the specialists, in order to independently generate and qualify leads. When sales have ramped up sufficiently, reserve the use of specialists only for the biggest, most complex deals, and redeploy them to other potential high-growth areas that are at the early stage of the cycle. Given that business customers want their providers to have expertise in some combination of product, industry, and capability, sales specialists are here to stay. The trick is to get the right specialists in front of the right customer at the right time. Mark Kovac is a partner at Bain & Company who leads the global Sales & Channel Effectiveness group.

This article originally appeared on HBR.org.

Companies that compete in business-to-business markets have traditionally relied on generalist sales reps to unearth and close opportunities. Yet as companies expand their range of products or solutions, no generalist can credibly sell every offering. So these companies have to train and hire for specific product, technology or industry expertise.

Adding more industry and domain specialists, however, can add complexity that undermines the ability to sell efficiently. Specialists often get sucked into lead generation or deployed to low-quality leads. How do you know whether you have too many or too few specialists, and whether they’re deployed on the best opportunities? There are several ways to produce a reliable picture of where it makes sense to add and where to cut back.

To start, you can estimate the full system cost of hiring, training, compensating and integrating each specialist into the organization, and weigh the cost against the specialist’s value—the amount of profitable revenue you would not get without that specialist. You can do this through a regression tool called counterfactual analysis.

My colleagues and I ran a regression analysis for one technology company to determine what each major customer account would have generated in sales and profit over the previous year if it did not have specialist support, compared to what the account actually generated. Because some accounts had intense specialist involvement while others had little or none, we were able to isolate the effect of specialists.

The sales specialists contributed a gross profit of $236 million at a compensation cost of $20 million, for a net contribution of $216 million or a return on investment of more than 1,000%. Even figuring that the additional costs of hiring, training w integration would lower the ROI, and that other “fixed” parts of the selling system had to be used, the profits would still be quite attractive.

The real payoff comes from improving the ROI. To that end, we determined the optimal number of specialists. Examining the relationship between specialists who serve several accounts and the manager for each account revealed how many account managers a specialist can successfully support, and how to improve their assignments.

We found, for instance, that a 1:4 ratio of specialists to account managers generated the highest profitability for the tech company. In accounts where there were fewer specialists, the company was foregoing profits and could add specialists. And where there were more specialists, they didn’t pay for themselves, diluting profitability. This dynamic applied companywide, by territory, and by product category.

You can raise the ROI even further by identifying the factors that have a pronounced effect on account performance. These factors range from an account manager’s tenure and number of accounts, to a specialist’s tenure or certifications, to the attributes of assigned territories. Cutting the data this way allows you see where to improve assignments across territories and products.

Some areas of expertise, such as product features, will become more common knowledge over time. Companies need to anticipate this pattern if they hope to continually improve the economics of their selling model. Think of the investment in specialists as “perishable” through a product’s life cycle. You can deploy specialists early in the cycle to gain a foothold, and expand to build expertise ahead of the competition. Once sales increase, make sure the account manager learns the basics from the specialists, in order to independently generate and qualify leads. When sales have ramped up sufficiently, reserve the use of specialists only for the biggest, most complex deals, and redeploy them to other potential high-growth areas that are at the early stage of the cycle.

Given that business customers want their providers to have expertise in some combination of product, industry, and capability, sales specialists are here to stay. The trick is to get the right specialists in front of the right customer at the right time.

Mark Kovac is a partner at Bain & Company who leads the global Sales & Channel Effectiveness group.