HOW TO REMAKE YOUR SALES FORCE The customer used to be king; now he's a dictator demanding that you redesign your selling around him. Your reps will resist like crazy. But do you have any choice?
By Patricia Sellers REPORTER ASSOCIATES Jennifer Reese and Sally Solo

(FORTUNE Magazine) – UNTIL four months ago, David Donaldson sold boilers for Asea Brown Boveri, a $29-billion-a-year Swiss-based industrial equipment manufacturer with rapidly expanding operations in the U.S. After 30 years, Donaldson sure knew boilers, but he didn't know much about the broad range of products offered by ABB's U.S. Power Plant businesses. Customers were frustrated because as many as a dozen ABB salespeople called on them at different times to peddle their particular products. Sometimes representatives even passed each other in customers' lobbies without realizing that they were working for the same company. ABB's bosses decided that this was a poor way to run a sales force. So on January 2, David Donaldson and ABB's 27 other power plant salespeople began new jobs. Mr. Boiler now also sells turbines, generators, and three other product lines. He handles six major accounts, including three big Carolina utilities, instead of a variegated bunch of 35. His charge: Know the customer intimately and sell him the products that help him operate productively. Says Donaldson, 56: ''My job is to make it easy for my customer to do business with us. Maybe you could call me a traffic manager, since I show him where to go in ABB whenever he has any problem.'' From power plant suppliers to packaged goods producers, companies are revamping the way they sell to serve their customers better. They are doing this by reorganizing sales forces around clients, encouraging sales to collaborate with other arms of the company, or uniting salespeople into customer-focused teams. Says ABB's Richard Slember, president of the U.S. Power Plant businesses: ''If you want to be a customer-driven company, you have to design the sales organization from the outside in, around individual buyers rather than around your products.'' The realignments are happening now because clients are reducing their suppliers and centralizing buying to operate more efficiently. Once king, the customer is turning into a dictator. Consider Wal-Mart (see following story), which does the bulk of its purchasing from its headquarters in Bentonville, Arkansas. Last November, David Glass, CEO of the largest U.S. retailer, wrote to manufacturers to inform them that Wal-Mart wanted to forge ''partnerships'' with its vendors, working directly with the principals of its suppliers. HOWEVER DESIRABLE this new alignment of customer and supplier may be, reorganizing a sales operation is complicated -- and painful. Says William Burgess of the Weston Group, a marketing and sales consultancy in Westport, Connecticut: ''Few companies are doing it well. The struggle is creating the right behavior in your employees.'' When one sales rep -- or even a team of them -- starts selling many products, he or she can degenerate into a mere order taker and your brands can turn into commodities. Line managers who lose direct control of their sales forces worry about having their products neglected and resist the change. The ties that bind pay to performance start to fray, and training must be completely rethought.

Even worse, the customer is demanding more attention just when many companies -- including such stalwarts as Apple Computer, IBM, Merck, and Procter & Gamble -- are reducing their sales forces. Concludes John DeVincentis, who directs sales force consulting for McKinsey & Co. across North America: ''There are no clear answers to how to reorganize right. Companies are just starting to experiment.''

Take Hyatt Hotels, for example. In the summer of 1990, Hyatt decided to reorganize the selling of its hotels in Hawaii -- and learned just how difficult change is. The company employs 650 reps to market rooms in bulk to travel agents, meeting planners, and corporations. Each used to pitch the hotel he or she worked for. Some customers were called too often -- 62 salespeople pestered the American Bankers Association -- and the best prospects usually lived nowhere near the rep's territory. Says Darryl Hartley- Leonard, 48, Hyatt Hotels' president: ''Looking back, I think, How could we have been so bloody dumb?'' So Hyatt directed the managers of its properties to shift their salespeople from offices in Maui and Waikiki to central selling offices in Chicago and Omaha, where the corporate office assigned them specific customers to target. Not surprisingly, the troops resented being wrenched from the tropics and tossed into the tundra. Recalls Hartley-Leonard: ''The rebellion was so great that we had to back away for a year.'' The hotel managers resisted even more than the reps. ''We had always said to our people that Hyatt is decentralized, and you, the general manager of the hotel, run your own show,'' explains Hartley-Leonard. ''Now we're taking away your sales force and making the corporate office responsible for your success or failure.'' To convince folks in the field that customers prefer more centralized selling, senior vice president of sales Jim Evans corralled 15 sales managers, allocated some ten customers to each, and instructed them, ''Don't worry about how much you sell. Profile the customer's corporate culture and learn how he makes decisions.'' The customers told the managers that they were centralizing their buying and wanted to work with fewer, more sophisticated suppliers. When the sales managers brought back this word, Hyatt was able to move about 75 of its best reps into a centralized selling force. It's hard to know how successful Hyatt's new structure will be, but the signs are good. Bookings in Hawaii are up 25% in the first 90 days of 1992 vs. the same period last year. Once you win over supervisors, you must go after the troops and persuade them to change. The attributes that make for successful selling today include not just an ability to build trust with a customer but also a willingness to collaborate with other people to get that customer what he needs. Does Duke/ Fluor Daniel, one of David Donaldson's boiler clients, need a turbine? Donaldson gets a former turbine salesmen at ABB to accompany him on the customer visit. But collaboration gives rise to perplexing difficulties. Who is responsible for the sale, and how should the people on the team be rewarded? ''Compensation is the biggest issue among our clients,'' says Diane Sanchez Heiman, president of Miller Heiman sales consultants. She adds, ''I don't know anyone who has figured out how to pay people who collaborate on sales.'' Companies are just beginning to test new formulas. This year Eastman Kodak starts evaluating its reps on how well they coordinate with co-workers to help a customer. V. N. ''Andy'' Anderson, president of G.D. Searle, Monsanto's drug-manufacturing subsidiary, says his company plans to give salespeople bonuses based partly on ''assists,'' much as a basketball coach credits players for feeding the teammate who actually scores. IF THE RELATIONSHIP with a customer is to be a marriage instead of a one- night stand, a company must encourage coordination, especially between sales and other departments. Procter & Gamble has been most innovative in this regard. In the late 1980s, the Cincinnati powerhouse combined some of its U.S. sales forces in order to reduce the slew of people calling on retailers. To overcome P&G's reputation for being arrogant and dictatorial with customers, management assigned employees from other areas of the company -- marketing, finance, distribution, operations -- to coordinate with sales and work with key buyers to help them solve problems. For example, Kroger wanted to cut the cost of warehousing Pampers, and Eckerd Drugs needed help planning new-product introductions. But the payoff from collaboration has been mixed. Says Walter Williams of sales consultancy Neo Inc.: ''It's been tough getting the Procter people to work with each other. Even though the strategy has been successful financially, morale has suffered. Procter has lost a lot of good salespeople.'' Customers are not altogether thrilled either; some complain that the P&G salespeople demand too much of their time digging for information to solve merchandising problems. Adds Williams: ''Some customers say, 'I don't want to work the way you tell me. I'm going to tell you how I want to buy.' '' Despite difficulties, Procter management remains committed to the partnerships. Planting a crop of executives in Arkansas to work every day with Wal-Mart certainly helped Procter get more of its products on that retailer's shelves. Wal-Mart is now P&G's largest account, bigger than its total business in every country outside the U.S. except Germany. So inspired, other vendors, such as Kraft General Foods and James River, flew south too. Though Wal-Mart managers want to deal face to face with customers in Bentonville, apparently they are feeling a bit claustrophobic. Wal-Mart recently sent a letter to suppliers that said, ''We desire to have the most efficient and most direct relationship possible. It is not necessary or desirable to move people from your company into northwest Arkansas.'' Thus, Black & Decker manages its special Wal-Mart team out of its headquarters in Towson, Maryland. A year ago the company's $750-million-a-year U.S. Power Tool business set up Wal-Mart and Home Depot divisions to cater specifically to those fast-growing accounts. In each, a vice president oversees a group composed of salespeople, a marketer, an information systems expert, a sales forecaster, and a financial analyst. The team can be rallied to create a promotion, such as a specially designed package containing a drill and drill bits, for the retailer. The result: Black & Decker sales to Wal-Mart were up over 10% last year, and those to Home Depot climbed almost 40%. SUCCESSFUL collaboration requires a new type of sales training -- and that poses another challenge. Says Joe Durrett, senior vice president of sales at Kraft General Foods: ''The biggest difficulty is changing attitudes. You must reengineer what you have because there are no experienced salespeople you can bring into the company who relate to this team approach.'' Indeed, KGF usually hires from outside only for entry-level positions. Owned by Philip Morris, KGF is the sultan of the supermarket shelf, producing about 10% of the nation's branded foods. Yet it is a victim of lese majesty from more powerful retailers, which force the company to spend enormous amounts of money to promote its products in the stores. Hoping that improved customer relations would break this costly hammerlock, KGF two years ago began setting up ''account business teams'' that cater to Pathmark, Winn- Dixie, and more than 300 other key customers. The members of each team keep their product specialties, but they gather at mandatory meetings once a month to customize product mixes and promotions for their particular customer.

To train the drummers to become selling partners with their customers, Durrett set up a program called Navigator in which each team pretends to work for a KGF clone, Pathfinder Foods. Pathfinder sells to three hypothetical customers -- a traditional supermarket chain, a discounter, and a distributor to independent grocers. Trainers ask early on, ''Which retailer has a competitive advantage in today's market?'' Everyone falls into the trap of trying to guess, and no one gets it right. The correct answer: Whatever a customer's competitive strategy, every team is supposed to tailor a plan that will help him outsell his competition. The lesson: Love thy customer, and he will love you -- or at least stop holding you up at gunpoint when you want extra shelf space. Assiduous corporate courtship can pay off for large customers, but no company has time or money to give everyone the full treatment. So sales managers must find other cost-efficient ways to serve the smaller fry. Enter the telephone. Apple Computer, which recently laid off 15% of its sales organization as part of companywide cost cutting, figures to economize by letting its fingers do the walking. In December a small corps of telephone pitchpersons started soliciting business from some 350 computer dealers in places like Rapid City, South Dakota, and Goleta, California, normally too remote for reps to reach. Says Mike Dionne, Apple USA's senior vice president of sales, a bit nervously: ''This is a big deal for us because we always believed in face-to-face selling.'' Union Pacific Railroad, renowned for good sales and service, put its 20,000 smallest accounts on telephone hookups a few years ago. Today its Omaha-based phone folks talk to customers much more often than reps ever visited them. Client satisfaction has picked up steam, and today 84% of Union Pacific's customers rate its sales and marketing ''very effective,'' compared with 67% before the switch. As Union Pacific and other companies are finding out, doing more for customers is crucial, particularly in a difficult, super-competitive era. The hotshot sales rep of this decade will be a facilitator, not a pitchman, an expert on the customer's total business who coordinates with colleagues to make buying easy and efficient.