Using Complexity Science to Optimize your Sales Force

I recently heard tell of a Fortune 1000 company with a sales force in the tens of thousands that discovered its sales representatives were spending too much time in low potential accounts. It is a “repeat” business, and the sales force was spending most of their efforts on either the big buyers of their products or in places where there was little or no current business. Their research revealed that if the sales force was more focused on middling accounts, those that were only partially penetrated, they could expect better results. How can this be? It seems to imply that sales representatives are acting “irrationally” or against their own interests.

The root causes of this phenomena were not part of my discussion, but I was left speculating about how it might occur. Understanding the behavior of individual sales representatives and the incentives which they are responding to seems a good place to start. Let’s start by restating the problem. The sales force isn’t optimizing its operations to maximize revenue growth, in other words, it’s misaligned with the corporation’s goals. When framed this way, one quickly sees how troublesome a problem this is. The behavior observed was essentially that sales representatives spend more time on accounts that didn’t buy anything from the company or large accounts that were already large purchasers than accounts with partial penetration, when in fact, valid research indicated that effort expended in these partially penetrated accounts yielded better results than the other segments. Insight into the potential drivers of behavior could account for both the individual sales representatives actions and the outcome of the sales force being focused sub-optimally. In other words, the movement of the overall sales force isn’t optimized for the business while the individual sales representatives are actually acting to optimize their outcomes. Incomplexity science, this is referred to as an emergent property, not unlike the effect of a flock of gulls flying faster in a V formation, but in their case, their forming up makes the whole group go faster. Emergent properties aren’t always good for us, and can just as easily work against the outcomes we seek in ways that aren’t obvious. The sales force is often incentivized to pursue new clients, who would have high initial spend potential and high growth potential in the future. This may be an incorrect assumption, and a tip to where sales representatives make mistakes. We can give great credit to the unknown while the known can seem bleak in comparison. See this recent article from Time Magazine discussing the irrationality of optimism for more on this idea. If an entire sales force operates like this, it could explain why a companies sales force is operating sub-optimally with respect to a companies objectives. If one were to model the behavior of sales representatives accurately, I think that many companies would find their sales representatives act quite rationally given their perceptions of risk and reward, and this could lead to aligning compensation plans and territory/account assignments more thoughtfully or even in more varieties

to achieve alignment. For more, see the unabridged version of this article at B2BSalesology. Glenn Donovan, Founder of B2B Salestalk, has over 25 years of B2B sales experience. His focus is to share what he’s learned with others and also provide a place where experienced B2B sales pros can talk with each other. Follow Glenn on Twitter.

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The Complex Cost of Customer Experience

It’s 6am and once again I am crawling along the security line at Boston’s Logan Airport. Stomach growling, brain fuzzy: I need food and caffeine. Can’t stop at the Dunkin Donuts outside security – at least not if I want to have coffee while waiting at the gate – and I find myself dreading the grim selection beyond security as I stand beltless and shoeless while the scanner ensures the safety of my fellow travelers. But wait! What’s this? Now shod and belted, I glance up and see that Terminal B is graced by a new coffee shop called “Espressamente Illy.” Having been born and raised in Italy, and being a total coffee snob, my spirits quickly lift as I approach the new establishment. The shiny counter-top espresso machine, crowned by a collection of white espresso and cappuccino cups emblazoned with the red Illy lettering, momentarily transports me back to my homeland.

Marketing and Complexity

Solving marketing complexity is not about just about getting the next campaign right. It’s about a new philosophy of marketing strategy – a new type of understanding, where micro changes in individual behavior yield large changes in macro results. At the heart of this capability is the field of complexity science. Complexity science leverages the latest ideas from behavioral economics, neuroscience, psychology, system dynamics, and network theory to help marketers understand how their message is received, when it is passed on to other people, and best placement to achieve the highest impact.

The goal of this new approach is to provide answers to the tough questions:
  • How well do my marketing tactics work together?
  • When should I launch a new product or a service innovation?
  • Which of my media channels delivers the best returns?
  • What is the best way to adapt to and beat the competitors?
  • How should I change my marketing mix to grow sales and protect brand equity?

How does this type of strategic capability do this? Three powerful ideas shape the model and its outcomes: 1. The Social Network

Whatever choice you make regarding what you buy, later you will tell your loved ones, friends, and colleagues about it. And they’ll tell their friends and onward this information will flow around towns, cities, and the world about brands, from where, and under what conditions to buy them. Complexity science models the structure of these networks and interpret all the interactions within it. It express the results in measures of paid and earned media, word-of-mouth, and on-line behavior. 2. The Product Reality You can have the best marketing strategy in the whole world but if your product is not very good, it won’t last long in the market. This key difference between a consumer’s perception and ultimate experience can have huge ramifications, either positively or negatively. Until now, no one has been able to build this difference into an analysis of marketing econometrics – but we’ve done it. 3. Agent-Based Modeling This is the tool that brings everything together: Agent-based modeling is simply creating “agents” (customers), connecting them to others (over a network), and strategically assigning them to receive marketing campaigns and influence others. We want ABMs that are simple (contain only what is necessary, and no more), valid (produces scenarios that match the real world), and useful (they provide strategy recommendations like, “Increase television marketing to people 15-19 years old” or “Host a modern art installment in front of your corporate headquarters”). ABMs incorporate feedback. Feedback empowers us with a terrifyingly accurate understanding of the consequences of our actions (changing this here does what way over there?). It also builds in interdependence: Even our connected models are connected to each other. In addition, it allows for self-organization. Like in most of the marketing environments in which our customers live, there is no central authority telling them what to do. They’re reacting totally organically to media, friends, and their own product experience. Insights into Sales and Brand Equity Why do all of this? Well, first, ABMs help us Explain: All results tell a story. They also Predict: What’s next? ABM results are richer and more robust than a statistical prediction without losing the rigor of traditional analysis. Finally, ABMs Empower: Marketers become in charge of it (the fractured and diverse marketing environment). It’s no longer in charge of them. They are able to shape perceptions as pat of the conversation not as an intruder How a person feels about a brand and whether they buy the product are not the same thing, yet we often use one to approximate the other. Concentric’s system analyzes and reports sales and brand equity separately and simultaneously, a holy grail of sorts for marketers looking to optimize investments. Not only can you provide ROI analysis across all touch points but also nuanced intangible insights about the brand and the way it works in the

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communities in which it lives. Based in Cambridge, Massachusetts, Greg Silverman is the CEO of Concentric, a company empowering their customers to create innovative and breakthrough strategies through the use of agent-based modeling and complexity science. Connect with him on LinkedIn here.

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