While at NAFCD’s 36th Annual Meeting in Austin, Texas, Steve Diest presented the session, “The Science of Sales Effectiveness.” Below is a follow-up Q&A with Strategy Editor Dennis Coyle.

Dennis Coyle: The pressure to sell is more intense than ever before. What is the No. 1 thing our members need to know in order to be successful in this very competitive time?

SD: Like our presidential candidates, I will answer the question by changing the question. There are actually two key things for flooring distributors to remember during these tough times. First, don’t forget your customers. This may sound flippant or obvious, but I’ve found that many business owners get so wrapped up in their own challenges that they forget to look at the world through their customers’ eyes. You’d be amazed at how many contractors have told us that they remain loyal to a distributor because it relaxed their terms during the 1991 recession. Some even remember who helped them out back in the early 1980s!

Second, face reality. Experience shows that the distributors which are successful in the long term are those who take early action during downturns. Rather than hope that things will get better, they make a sober assessment of where the market will be in three to five years and immediately adjust their organization to fit. If you’re going to lose an arm, it’s best not to cut off one inch at a time.

DC: Your broke down your presentation into four main areas – strategy, structure, systems and skills. Can you give a brief description of each level?

SD: The point of the pyramid is that you can’t “fix” a problem that rests on a faulty foundation. For example, you are unlikely to see any benefit from sending sales reps to a training class if you don’t have performance measurement and management systems in place to constantly reinforce the stuff they’re supposed to learn. It’s foolish to re-design a compensation plan if you don’t have a clear sales strategy that defines the behaviors you want to incentivize.

Although it’s tempting to start with solutions, years of experience have reinforced the lesson that the levels of the pyramid must be addressed from the bottom up.

“Strategy” simply means that you understand how your company’s sales goals will be achieved. A number is not a strategy. Saying “we’re going to grow 5 percent in a soft market” is only a wish unless it’s backed up with a plan. The strategic plan needs to be clear about who you are targeting (customer segments), what they want to buy (which is usually different from what you want to sell) and how you will give them what they want. For example, you may plan for a 5 percent drop in resi sales but make up for it with a 10 percent increase in commercial project sales, which you’ll achieve by doubling your commercial sales force and halving the time it takes to turn around bids. That’s a how.

“Structure” refers to the way your company is organized. Obviously, your company should be structured around your strategy. In the previous example, you may change your territory assignments so that one residential rep covers $100M of territory potential while one commercial rep covers $50M of potential. You may want to organize your commercial sales force around finding and winning project opportunities, which is likely to involve more of a team selling effort (quotation specialist, supplier negotiator, project manager) than calling on Fred the showroom owner.

“Systems” include all the management tools at your disposal. You might want to include project quotation cycle time and kill rate on your sales scorecard. You might want to increase the commission rate on commercial work. Again, these need to be aligned with your structure and strategy.

“Skills” are all the things you want from individuals in your sales force. It goes without saying that the skills required to win big project bids are very different from the skills used for maintaining good relationships with local builders and contractors.

DC: What are the key differences between the sales strategies methodologies — market-driven and sales-driven? Should a company focus on one type or on all three? Why?

SD: Most distributors are sales driven, which they believe to be the right approach. They focus on maintaining strong customer relationships and doing whatever it takes to keep them happy. They are extremely responsive, which is a polite way of saying reactive. While this is appropriate for sales management , it is not the right way to define your sales strategy. Think about it for a second. You don’t put sales reps in charge of credit, so why would you put them in charge of marketing strategy? It is a proven worst practice to use the sales force as your sole source of customer information. Don’t get me wrong, sales reps feed all of us. But if you ask them what customers want the answer is always “lower prices and more inventory.” I guarantee you that if you sit down with the top executive of a contractor or builder and ask about her biggest pain, she will not say “insufficient distributor inventory.” Being market driven means focusing on what your customers want, not what you or your sales rep is trying to sell.

DC: During your session, you mentioned that managers cannot be held hostage by history or their sales reps. How can a manager break away from tradition? How can they take leadership over their sales reps?

SD: Maybe the silver lining of a down market is that sales reps become a bit less demanding! As Michael Marks says, “loyalty is the lack of a better alternative.” Seriously, we’ve always found that the truth is the best lever for getting adults to accept change. Although your reps may whine, they’re probably not stupid. If your company’s success requires a new strategy, and that new strategy requires a role adjustment, explain it to them in these terms. Just because the last 15 years have been extraordinarily fat in most markets doesn’t mean that anyone is entitled to a big salary. The good times will return but the company has to survive to enjoy them.