COLUMBUS, Ohio, April 14, 2016 /PRNewswire/ -- An effective sales force is a key component to any middle market company's ability to bring in revenues, but the most desired attribute for the ideal salesperson may no longer be the ability to sell. According to a new joint study from the National Center for the Middle Market (NCMM) interpersonal skills are considered by executives to be more important than selling skills when hiring new salespeople. This finding punctuates insights gleaned from the NCMM's "The Force Is With You: Building a Highly Effective Sales Organization," which explores middle market C-level executives' impressions of their sales forces and the differences in structuring, hiring and compensation practices for sales teams. The study was developed by the NCMM in collaboration with the American Marketing Association and Greg W. Marshall, professor of marketing and strategy at Rollins College and co-author of Sales Force Management, the top-selling sales-management textbook.
Among high-growth middle market firms (firms with 10-plus percent annual revenue growth), successful practices for sales teams include formal mentoring or coaching for new hires (61 percent), the implementation of sales quotas (54 percent) and the use of at least some online sales (51 percent). Half (50 percent) of these high-growth companies employ straight commission salespeople while 41 percent of slower growing firms do the same.
"This is the first time anyone has collected data about how the most successful mid-sized companies develop, organize, pay, and deploy their sales forces. We're shining a bright light on best practices. We also learned some fascinating stuff about how sales force management changes as companies get bigger," said Thomas A. Stewart, executive director of the NCMM, a partnership between SunTrust Banks, Inc. and The Ohio State University Fisher College of Business.
Additional key findings of the report include:
- Eighty-three percent of high growth firms believe their sales teams are more effective than other sales forces in the industry
- Base salaries are the most likely form of compensation for salespeople (57 percent) versus commission (25 percent) and bonuses (17 percent)
- Fifty-nine percent of senior sales management positions are promoted from within their respective organizations
Middle market companies are defined as companies producing annual revenues between $10 million and $1 billion. The U.S. middle market consists of nearly 200,000 companies, 44.5 million employees and over $10 trillion in combined revenue annually.
Interpersonal Skills More Important than Selling Skills
When hiring new salespeople, middle market companies tend to place higher value on interpersonal and executional skills. Skills considered extremely/very important ranked as follows:
- Interpersonal skills, 86 percent
- Executional skills, 84 percent
- Selling skills, 82 percent
- Organizational skills, 77 percent
- Technical skills, 72 percent
While selling skills are not the most prioritized skill in new hires, 78 percent of companies with effective sales forces provide in-house training for new hires. Half (49 percent) of these firms provide formal mentoring or coaching for ongoing professional development.
Individual vs. Team Mentality
Responses demonstrated a clear shift from an individually centered sales philosophy to a more collaborative approach as the size of firms increase. While individual performance is a critical component to a salesperson's evaluation, large companies place greater importance on company and team performance (31 and 21 percent, respectively) than mid-sized (23 and 17 percent) or small firms (24 and 15 percent).
"As larger middle market companies rely more on sophisticated sales organizational structures and team-based performance management, we find they focus most on employees that can fit into the firm's culture," said Professor Marshall. "Smaller firms, meanwhile, utilize smaller sales forces and are more likely to rely on the skills of their individual salespeople."
Key Avenues for Improvement: Prospecting and Technology
Despite the general effectiveness and success of middle market sales forces, there is room for improvement in several areas. The positive sentiment from top growth companies notwithstanding, only a quarter of firms overall believe they are much more effective than other sales forces in their industry.
Around 40 percent of firms believe they can improve the sales force's ability to drive the business. The two top ways of spurring development in this front – particularly amongst smaller firms – were reported as becoming more effective at using technology and building new markets.
When asked about sales force effectiveness and improvement, executives considered prospecting and developing customers to be more challenging for sales forces than maintaining existing customer relationships. Seventy-six percent of companies considered themselves to be either very or extremely effective at maintaining customers, compared to developing customers (67 percent) and prospecting/capturing customers (64 percent).
"Whether it be through developing better prospecting techniques, establishing a mentorship program or turning to new technologies to advance the capabilities of the sales team, the fact remains that high-growth firms are more likely than others to place a great deal of importance on their sales forces," said Stewart.
About the "The Force Is With You: Building a Highly Effective Sales Organization" Study
Conducted by the National Center for the Middle Market, the study surveyed 400 C-level middle market leaders and executives who are responsible for or share responsibility for the company sales department (internal or outsourced) that sells to other businesses; these leaders and executives are involved in making decisions regarding the sales force. The survey was developed by the NCMM to improve understanding of middle market sales force practices. Respondents completed the 15-minute, self-administered survey between February 18, 2016 and February 29, 2016.
About the National Center for the Middle Market (NCMM)
The National Center for the Middle Market is a collaboration between The Ohio State University's Fisher College of Business, SunTrust Banks Inc. and Grant Thornton. It exists for a single purpose: to ensure that the vitality and robustness of Middle Market companies are fully realized as fundamental to our nation's economic outlook and prosperity. The Center is the leading source of knowledge, leadership, and innovative research on the middle market economy, providing critical data analysis, insights, and perspectives for companies, policymakers, and other key stakeholders, to help accelerate growth, increase competitiveness and create jobs in this sector.
Housed at The Ohio State University's Fisher College of Business, the National Center for the Middle Market is the first center of its kind in the nation. The Center enthusiastically serves middle market firms, students, academic researchers, policy makers, the media and other key stakeholders with interests in the health and well-being of the middle market. The Center is fully committed to funding and distributing the most credible open-sourced research, dynamically creating new knowledge, providing programs that drive value for middle market companies, and offering a well-informed outlook on the health and future of the middle market via the Middle Market Indicator.
About the U.S. Middle Market
With revenues between $10MM and $1B, the nearly 200,000 companies that comprise the U.S. middle market encompass 44.5 million jobs, account for one third of total private employment, and generate more than $10 trillion in combined revenues annually. If looked at as an individual market segment, the middle market would be the world's fifth largest global economy. Obviously, the middle market is critical to America's competitiveness and future. Remarkably, prior to the advent of the National Center for the Middle Market, little has been known about this segment; even less about how to help it grow.
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SOURCE National Center for the Middle Market (NCMM)