A Sense for sales professionals

I received a call yesterday, and from it I accepted an invitation to present on the topic of ‘expanding your brewery’ in San Diego at the Brewing Summit in a few months. I’ll have some simple mathematical techniques to share from the engineering toolkit. There is a more useful space for mathematics in this business.

The world I am in has a key component in fighting the good fight…our sales colleagues. What they go through in trying to grow sales in their assigned areas makes me appreciate that it has not been my bailiwick. US beer store shelves are loaded with beer varieties, bars with more tap handles than ever, and breweries struggling to get their beers on shelves and on draught because there is so much competition for finite space. Beer sales professionals may be the epitome of low-pressure selling professionals; they know how reckless it is to risk upsetting the gate-keepers who control placement of their products. And they know how important it is to connect with those in the chain who may not have made the decision to make a spot for the beer…but who are the people who ultimately face the customer. 

Considering how many suppliers, solution providers, packaging material vendors who visit us on the production (brewing and packaging) side, the other side of sales is actually is our bailiwick - often in a naturally antagonistic framework.

Of the technical sales professionals I work with, I’ve probably learned most in working with equipment sales professionals. You respect their innate wellspring of resilience. Beer equipment and system sales people are sometimes like addicted gamblers, in that at some level they know they will lose most of the time, but they are excited by the outside chance of winning. Packaging lines, brewhouses, tanks, pumps, services, etc. I certainly am uncomfortable when I see professionals share two qualities that compete with each other: understanding and empathy for the customer on one hand, and on the other hand, the need to overcome their customer’s hesitation to buy via their own rational workings and timeframe. Talking the brewery into buying, emphasis on “into”, makes makes you feel a bit like a victim…not a customer. But it takes just one person vying for the supply to be the aggressor, and his/her competitors can't afford to lose to that one person. I wish I could say that people really appreciate low-pressure selling so much, that avoiding high-pressure approaches is optimal. But that’s not reality. In a perfect world, the decision maker makes the decision to buy, instead of having a solution sold. But that is not how things are.

The tables have turned in negotiating power. So much information is available via the internet that by the time we reach out to a sales professional, we have studied videos, read reviews, kicked the tires of different solution providers…without them even knowing it. (Who doesn’t invest time in looking at cars online prior to stepping foot in a car dealership these days?). Saavy business professionals have known forever that you have to get right on the size of your sales team. It applies to equipment suppliers and to beer sales pros.

Every company needs sales professionals. And here is where simple math helps to evaluate if the sales force is the right size…. a straightforward break-even analysis. If we know the cost of the sales professional, the gross margin of the brewery, and the overall sales revenue, we can readily compute the the amount a salesperson must sell to cover costs of employing that professional. If we can estimate incremental sales (potential) of a new sales professional joining the team, and separately estimate the percentage of sales of beers that would occur as a future trend if there was no sales force (as academic/hypothetical determination as can be), we can use a simple iterative calculation and realize the three-year (or four-year) ROI on sales staff. Ignoring what the variables are, except to note that “C” is the cost of an additional sales pro, it looks like this functionally:

[A + (A x K1) + (A x K2)… - C] + C

...with the output as a percentage. If you get ROI between 50-100%, your company is "optimally resourced"…but if ROI is above 100% then the sales team is too small, and below 50%…well, it’s too large. And this computation is also the place where the role of the brewery engineer has ended, and that of the COO has begun.

But no matter what, let's not forget that the sales team is the most important part of living to fight another day.