This week is the last week of a financial quarter. Phones go unanswered, emails get put off, conference calls are rescheduled, and for many years (when I ‘carried a bag’), there would be a nervous pit in my stomach. So it goes in sales.
There are tremendous benefits into going into sales. One of the top ones mentioned by salespeople is the flexible schedule, the freedom to determine a day’s activities. One of the top ones not mentioned by salespeople (unless they are particularly gauche here in the US), is the great compensation. (By ‘great’ you will have to take my word for it, or go to Wikipedia and see what the top 96th percentile of household wage earners received, and consider that it goes up from there.) (Clarification though – this assumes a few things, one of which is that one is not just ‘starting out’ in sales, it would be more like the 80th percentile. And this is counting only one wage per household, but you probably already assumed that, and that this person can routinely beat the sales quota expectation.) Other benefits are exhibited by a recent Tweet from a colleague, “ What a jolly nice day at work, great customers, great science, and get to be out and about in the London sunshine.” Couldn’t express it better in 140 characters – especially without a proper British accent - and I’ve mentioned how great it was to work with customers before.
But with great rewards comes great responsibility. The one thing a salesperson is not in control of is the number they would need to meet, and typically this number is what a company could recognize, rather than book. Revenue recognition is a topic for an MBA student, but in brief it is to comply with Generally Accepted Accounting Principles. Thus what that typically means is that there needs to be time for a purchase order to come in, be processed (if it comes from a recently-established entity a credit check and approval is in order), and the item(s) shipped and received by the customer (depending on the terms of the order, whether FOB origin or FOB destination, and in the case of equipment, depending on any installation requirement). The sales representative, in turn, needs to do a lot of pushing the beginning of March, June, September and December, on prospective customers, on purchase agents, and on their managers (to get special pricing or terms negotiated and approved). All the while looking for new business, helping out existing customers as needed, and learning about new products to offer.
So to say there is an unlimited amount of work to do is an understatement. But at the top of my own list of things that are great about sales, is the fact that every motivation and incentive is lined up. ‘Everybody wins’ is what is at work here – what’s best for customers, what’s best for the company, all the way from the CEO down to the individual rep through several layers of management. The individual sales representative has strong financial incentives to meet their number; this gets consolidated across several individuals to the sales district manager’s number; this gets ‘rolled-up’ (business-speak here) to the regional number; and then goes up to the company’s head of commercial (if the company is large enough), and then on to the C-level (CEO, CFO). The emphasis on the top-line is more important than ever in the Life Science space, as reduced NIH budgets are the norm now, and the temporary effect of the ARRA funds from 2009 have been allocated and spent.
Due to the fact that this is an imperfect process driven by humans (both on the selling and fulfillment side in addition to the deciding and purchasing side), the ‘hockey stick’ effect is in full force in the case of large capital equipment purchases or large consumables purchases. (Large is a relative number; in the case of equipment that number can be any item larger than $50K or $100K, and in the case of consumables any item larger than $10K or $50K.) This effect has large impacts all throughout the organization (supply chain, manufacturing, and fulfillment), and affects many companies regardless of the industry.