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Understanding the matrix

More than once in my career, I’ve been asked to help sales people to sell a product that just wasn’t as important to them as it was to me. The sales team was talented and motivated, but they still struggled to sell ‘my product’ no matter how much I’d done to ensure they understood the technology. During customer visits with them, I came to realize that the problem wasn’t that they weren’t talking to their customers enough, or that they didn’t know what the technology we were offering did. Instead, they just didn’t really know what questions to ask to discover if this customer really had a need or not. In each of these situations, the sales team was responsible for a wide range of products and part of what is commonly called a ‘matrix sales organization’.

It’s rare that smaller companies even have to worry about the complexity of matrix organizations, but, as soon as your company starts selling multiple products or adapting its offering to multiple markets, organizing a growing salesforce is a critical challenge. Small companies find themselves in pseudo-matrix sales style when they hire representatives in different geographical regions. Managing them will put up some of same roadblocks I encountered. Serious obstacles stand between you and a successful matrix organization, and many companies don’t get the most out of them. With liberties from a famous quote by Winston Churchill: ‘It has been said that a matrix organization is the worse form of selling except all the others that have been tried.’ (Sorry Mr. Churchill….)

In most every large company, the sales department is organized in some sort of a matrix. Here’s how it works: Acme Corporation sells so many different widgets that no sales person could be an expert in all of them. Acme could send a specialist to each customer, who really knows the right questions to ask to close a deal, but the customer is going to wind up meeting dozens of different Acme sales people, maybe one a week, and getting pretty tired of seeing Acme business cards. Plus, it’s embarrassing when the customer asks about a specific product or service and the sales person looks blankly back and states that it’s not his area. It’s not a good way to treat the customer and, likely, a pretty big waste of time for everyone involved.

Instead, Acme can hire product managers for each of their product lines and it becomes their job to train the sales team and go with them to appropriate sales meetings after the individual sales people have identified a lead. It’s called a matrix because the sales people will divide up geographical, or market-based territories, and the product managers will go the other direction, dividing up products or applications. Where the difficulties lie, like almost everything, is in the incentives. Typically, sales people are commissioned on sales volume. If one product, for example, sells for much more money than another, taking only a bit more work to sell, then the lower revenue product is going to have a difficult time getting much mind-share from the sales people.

Good product managers recognize that they have little control over the price and that really, they need to market to set prices anyway, not the sales team, so they have to come up with other ways to motivate sales people. Usually this will be somewhere around that ‘effort’ part mentioned above. If the product manager can make it so easy enough to sell his lower revenue product such that sales doesn’t find it a distraction, then there’s a good chance numbers will increase.

Sales managers and other members of the organization can address this problem as well, by adjusting incentives. Perhaps the lower revenue product is strategically important to the Acme Corporation. Sure they don’t make as much money on each one, but maybe selling that low revenue item might keep an important competitor out of the market. One losing way towards increasing these strategic sales is simply to explain this critical strategic decision to the sales team at a regular sales meeting.

Professional sales people aren’t stupid. Of course, they may very well understand why the company is so keen on this little orphan product, but they are there to earn money and feed their families. No matter how professional or generous a sales engineer might be with her time, when push comes to shove, she’s going to go where the opportunity is—and it’ll be the one that maximizes her commission.

Many options are available, and it will depend on the situation at each company. Incentives might kick in only after a minimum number of the strategic product is sold, or maybe specific sales work as a multiplier for commissions earned on more ‘interesting’ items. Alternatively, an aggressive product manager might be given more leeway to approach customers that normally would be the sales person’s responsibility. In some cases, it makes sense to just raise the price of a related offering and throw in this new feature as a differentiator. Whatever is appropriate, what we’re looking for is some system that takes advantage of the focus of a small company with a tiny offering, while using the reach of a vast network of sales people.

Sales people, whether they work for a small company, a separate division, or a separate representative company, want to be successful. They want to prove to themselves and to everyone else they’re selling better than anyone. The question is, do we all agree what “better” means? Understanding the incentive system, in detail, is the key to making sure the sales team has the same idea of success as the people paying their commissions.

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