Technology, the high costs of field selling, and customer attitudes are changing the way wholesalers sell.
Rogers Hazlehurst Jr., vice-president and sales manager of Beaver Industrial Supply, a distributor of pumps, compressors, abrasives, and other industrial supplies, believes in going the extra mile for a customer. Before making a sales call, Hazlehurst likes to ring up the customer from Beaver's Jacksonville, Fla., office to ask if he can pick up anything on the way out of town.
Such personal attention from field salespeople -- particularly those dealing in commodity products -- may become the exception rather than the rule as companies increasingly rely on the telephone to generate sales. "The sales guy with the balloons and suckers in his pocket isn't making it," says Larry Shay, president of Midwest Safety Products, a $3 million distributor of gloves and safety equipment in Grand Rapids, Mich.
Telephone selling, which has generally played second fiddle to face-to-face selling, is catching on with many companies as a good alternative to field sales. According to a recent report prepared by Arthur Andersen & Co. for the Distribution Research and Education Foundation (DREF), the research arm of the National Association of Wholesaler-Distributors, the ratio of field salespeople to inside telephone salespeople has shifted and will continue to do so. By 1990, notes the DREF report, "Future Trends in Wholesale Distribution," inside telephone salespeople will comprise 50% of the average wholesale distributor's sales force, compared with less than 30% in 1980.
"It's become a lot more difficult to maintain a profitable road force," says John McCaslin, president of J. Fegely & Son Inc., a fourth-generation, closely held industrial distributor based in Pottstown, Pa. (McGraw-Hill's marketing communications department pegged the average cost of an industrial field sales call at $178 in 1981, up from $137 in 1979.) McCaslin began a telephone selling program, with help from AT&T, long before the word "telemarketing" became a buzzword. The telephone, McCaslin reasoned as he watched field expenses soar, could become a useful tool for generating sales as well as for taking orders.
In 1968, McCaslin selected one of his top field salesmen, Earl Jamison, to head up a telephone selling program at Fegely. "I was nervous," recalls Jamison, "I'd been doing eyeball-to-eyeball selling for 15 years." Despite his apprehension, Jamison found he could establish the same rapport with a customer over the phone as in person. By year-end, he had rung up $115,000 selling predominantly to marginal accounts that didn't justify the expense of a field call, as well as to inactive accounts the company wanted to reactivate and to new prospects drawn largely from industry directories.
Today, Jamison supervises four telephone salespeople in Fegely's Phone Power department, as well as the 13 customer-service personnel who support the company's 13-person outside sales force. For the year ended April 1983, Phone Power brought in about $1.4 million from 1,850 active accounts in Pennsylvania, New Jersey, Delaware, and Maryland, and the department reported gross profits nearly five percentage points higher than the outside sales force. Fegely's best telephone producer, who averages 40 to 50 calls in an eight-hour day, sold $447,696 worth of industrial supplies.
Developing an effective inside selling program, says McCaslin, requires commitment from top management that goes far beyond initial development work with the telephone company or seminars on telemarketing. "Telemarketing isn't just how to talk on the phone," emphasizes Peg Fisher, a telephone sales consultant in Racine, Wis., who claims a telephone selling program can easily take three to six months before it starts to pay off. A company has to analyze, for example, which accounts can best be sold by telephone and which demand the hand-holding and personal contact of a field salesperson. Sales results must also be recorded and analyzed. Jamison, as well as Fegely's director of sales, Tom Carr, receive a daily review of each salesperson's call report telling whom they reached and the results of each call.
According to Jamison, personality combined with training in company policy, product lines, and phone selling techniques contribute more to success than previous selling experience. Among Fegely's current Phone Power staff are an ex-customer-service representative, a former warehouse worker, and a truck driver. "We look for people who are enthusiastic, motivated by the opportunity of receiving a commission, and thick-skinned enough to handle dozens of rejections in a day," says Carr. Each is paid a salary, plus a commission based on the profitability of the business for which he or she is responsible. "Just as in field selling," notes Fisher, "the carrot has to be there.'
The local Bell Telephone Co. of Pennsylvania has helped provide the Phone Power department with a foundation in telephone selling techniques, and salespeople periodically attend refresher courses. They also receive product training from factory suppliers. Finally, Carr and Jamison meet weekly with the Phone Power staff to discuss new products and the best way to promote them by telephone. These promotions are followed up with a mailing to all active accounts. The company also coordinates telephone selling and direct mail when developing new accounts. Before the company calls a prospect, it sends a letter with a photograph of the account's salesperson, followed by a phone call and, several days later, a company catalog and brochure.
Although Jamison notes that some customers have to be "sold" on the idea of telephone selling, most accept the idea. "There is a general impatience among people today," notes John Waltersdorf, president of Tristate Electrical Supply Co., a $38 million electrical-products distributor in Hagerstown, Md. "They don't want to wait for the salesman to show up next Wednesday." Adds Fisher: "Today's customers place increasing value upon having information. The person who has access to the most information is the person on the inside." A growing number of companies now have desktop CRT terminals that provide a salesperson with inventory and order status, as well as such information as the customer's sales activity or the contact's nickname.
Despite the increasing prominence of inside selling, few people believe that the field salesperson will become obsolete. In many cases, however, his or her role will change to that of a troubleshooter or consultant, providing technical and business assistance to customers. "Our salesmen used to be order-takers, goodwill guys," says a hardware distributor in Buffalo. "Now they have to be advisers to dealers. They need to know about asset turnover, gross margins, return on investment, inventory control, and merchandising."
Says Tristate's Waltersdorf, "Field salespeople are starting to handle only the accounts that require hand-holding and tenacity to write orders." They have to be experts, handling technical problems, systems applications, and new product demonstrations. At the company's Baltimore branch, a high-technology training and demonstration room with videocassette recorder, television monitors, and other audio-video equipment is being built not only to provide an extra service to customers, but also to keep field and telephone salespeople informed about new products and technology.