Next up in our series on how economic philosophy can be readily applied in sales, we will take a look at a factor called comparative advantage and how it can greatly assist sales management.
The term is normally used to describe the ability of a party to produce a particular good or service at a lower cost than another party, and take advantage of that fact in trade. For example one country with an advantage in producing beef at lower cost than another country can trade with another country that, say, produces dairy products at a lower cost than the first country. Both obviously benefit from this arrangement.
Comparative advantage has an application within the realm of sales management, however: optimizing a sales force based on differing strengths of salespeople.
Assignment By Strength
While many sales managers simply add sales reps into the overall sales force as they come on board, there are others who take a different approach. They will be able to see—usually through the use of a leading-edge CRM solution—that salespeople have differing strengths. One will be excellent at being a “hunter”—that is, finding and bringing in new opportunities. Another might excel at being a “farmer,” which would be the nurturing of leads and readying them to be closed. And of course there are the closers, who excel at finally bringing deals through the door.
Good salespeople are never easy to find. Hence when one is located, a sales manager’s instinct might be to focus on that person’s weaknesses so as to strengthen them. While there’s certainly nothing wrong with that, there is another approach that could also be taken: isolating that person’s strengths and placing them where they’ll do the most good. Ideally a sales manager would utilize both of these approaches: putting salespeople in positions where their strengths will most benefit the company and result in successes for the sales reps, and at the same time coach and mentor them to beef up their weaker characteristics.
Applying Comparative Advantage to Sales Management
Taking a step back, a sales manager will see in applying the above method of operation that every time a new person is added to the sales force, the overall dynamic of the sales force changes. For example, a new rep is added on and, after a short time, the sales manager can see that the new rep excels at closing. The sales manager then puts that rep onto closing deals that others have found and nurtured. What does that mean for the rest of the team? It means that other reps who are weaker on closing that have had to do so simply for the lack of a strong closer can be placed where they are stronger, and the closing can be left to the new rep. It can even mean that the sales manager, who has had to step in numerous times for closes, can revert back to being more of a sales manager: mentoring and coaching.
This is the application of comparative advantage in sales; it means monitoring the whole team as to strengths and weaknesses, and making adjustments that factually optimize the whole sales force. This would be an ongoing process as new reps come on and as others become stronger in different areas.
CRM Solution Requirement
For the full application of comparative advantage in sales management, a flexible, intuitive and highly visual CRM solution is required. A sales manager needs to be able to look over the sales pipeline of the sales force and rapidly assess which reps are stronger and at what stages of the sales process. Without such a CRM application, such evaluation will be based mostly on instinct and guesswork. While those are fine qualities, especially for a sales manager, they won’t allow that manager to operate with the precision needed in today’s highly competitive market and sales environment.
A company today needs the strongest sales force possible. For sales management, the application of comparative advantage can go a long way in bringing that about.
The ideal CRM solution for applying comparative advantage can be found here.