The story of Motorola Land Mobile Products Sector (LMPS), which successfully transitioned some sales representatives into SAMs, says a great deal about strategic account manager professional development and what else needs to occur if such training is going to be effective.
Motorola LMPS sells radios, mobile phones, and other communications devices to huge numbers of customers. In 1993, LMPS had 2,000+ sales reps serving 200,000 accounts. It was not uncommon for one sales rep to serve 250 accounts.
Problems started to develop with LMPS' market approach. Because they were spread so thin, reps were driven by their more needy customers to do service work. And the more service work they did, the fewer products they sold. LMPS found itself suffering from low sales productivity, high customer dissatisfaction, and increasing costs of sales. The situation became even more pressing when LMPS, through market research, validated what it had long suspected—roughly 20 percent of its customers were providing nearly 80 percent of its revenue.
LMPS began redesigning the way it approached its market. It first set up a dealer organization to serve the 80 percent of the customer base that generated 20 percent of its revenues. Then it reassigned most of the field salespeople. LMPS then identified its largest accounts (which it called "focused accounts") and assigned more than half its remaining salesforce to account teams dedicated to serving these accounts. The goal was that each representative/account manager would serve no more than six customers. These salespeople, who on average had been in their positions 10 years, almost overnight went from having hundreds of customers to just six. And here the challenges began to arise.
Before its restructuring, LMPS had defined sales rep productivity by each rep's total quarter-to-quarter sales activity. LMPS tracked rep performance by counting the number of appointments they set, the calls they made, the radios they sold, etc. Not surprisingly, reps thought their security depended on serving high numbers of customers. Given its strategic marketing shift, though, LMPS quickly changed all of its productivity measures. LMPS first changed its rep performance measures to the salesperson's knowledge of each customer and results per customer.
This shift and the new performance measures put the reps in totally unfamiliar positions. They knew how to get sales from a large number of customers by fulfilling short-term needs. They had never, however, been asked to design and implement a plan to penetrate a strategic account. LMPS corporate knew this. It also knew that if the sales reps were going to succeed, LMPS would have to help change the salespeople's old business model.
In a corporation famous for its commitment to learning, LMPS designed a training program that, among other things, taught reps how to conduct a situation appraisal, including how to: (1) conduct industry analyses, (2) do account analyses, and (3) write account plans. LMPS then told the salespeople to research their customers and their customers' industries. The problem was that many of the LMPS sales reps were not getting it. They didn't understand why they should spend two days in the library doing research and analysis. And their phones weren't ringing, which was the largest and most unsettling change of all.
LMPS had to show the representatives the possibilities of working intensely on just a few customers. As part of the initial account management training, LMPS distinguished between the old tactical and new strategic selling styles. For example, instead of selling 50 replacement radios at the request of a large customer's radio buyer, LMPS urged the rep to analyze the customer's entire communications plan. In many cases this was not easy because radio buyers didn't care about their firm's communications plan. They were simply following someone's orders to buy 50 new radios.
New account managers quickly realized that they would have to move the sale up in the customer organization to accomplish their goals. They simultaneously realized that they knew little about how to market to vice presidents. The account managers read books and studied strategic account management models, but it was hard for them to apply those models. As the reps continued to struggle, Motorola decided to approach the salespeople's transition more systematically.
First, LMPS created a business team to help transition the reps from hundreds of customers to only six accounts. After learning how IBM and Hewlett Packard had converted their salesforces, the team interviewed successful account managers from both IBM and HP. The team finally selected as LMPS' model for strategic account management the one that the Hewlett Packard rep had used to penetrate Motorola. The team found it very powerful that Motorola was one of HP's strategic accounts because LMPS people could see HP's presence at Motorola and could talk to the Motorola buyers about how HP was serving them.
The Motorola training design simulated instances where the reps had to make choices that could either net them short-term gains or long-term opportunities.
The LMPS team also concluded that it would be necessary to create some experiential/simulation training to help the reps really understand strategic account management. This training focused on showing the reps their own future and what they could accomplish if they redefined their jobs. To build the simulation cases, LMPS interviewed a few LMPS reps that were very good at strategic account management. Five simulated accounts were developed based on five actual Motorola customers. The Motorola training design intended to simulate instances where the reps had to make choices that could either net them short-term gains or long-term opportunities.
The training started with a three-day workshop in which each day—or "round"—stood for a year in the customer relationship. Trainees received presales and sales indicators to help them better understand their assigned relationship. Trainees did all the activities they would really do to manage the accounts, such as phone calls, negotiations, resource allocation, etc. Account teams underwent this training together so that the program could also act as a team builder. In each round, different but appropriate things happened in the customer relationships. At the end of each round, trainers provided feedback on how trainees' prior decision making had impacted the upcoming year with these customers.
The LMPS sales reps came in cocky the first day. They thought they could beat the simulations using their existing sales skills. In the first round, they sold all the radios they could. They usually achieved good revenue figures and mediocre profitability. In the second round, they lost their shirts because their short-term decisions in year one had eliminated most opportunities for year two. By lunchtime in round two, many reps were angry at the entire idea of the simulation. For some LMPS representatives, though, the simulations and focus on the customers' long-term needs provided a kind of conversion experience. They began to understand both the need for strategic account management and how they could use the approach to prosper. Not everyone, however, could redefine his job; some reps didn't make it.
After the workshop, the reps who graduated to becoming SAMs were given planning tools to use on the job. They used the repeatable sales process: (1) conducting a situation appraisal, (2) developing an account strategy, (3) implementing the action plan around that strategy, and (4) looking ahead to develop other strategies for growing the business. Each quarter they returned to account-review workshops in which they did account planning and reviewed their top three focused accounts before their peers. LMPS also conducted quarterly war-gaming workshops, in which account managers compared their account plans against those of the competition. One year after the first account managers completed the first three-day workshop, they returned for a follow-up simulation, during which account managers used actual customer evaluations as input for the fourth-year simulation.
The example we gave earlier about the Motorola LMPS rep who could have sold 50 replacement radios or conduct an analysis of the customer's whole communications plan (in search of larger opportunities) was real. After the account manager went through the training and returned to analyze that account's communications plan, she and two team members held a meeting with three VP-level customer contacts and the plant general manager to report their findings. When she was done, the most senior customer VP said, "There are four people in this room who really know our business and three of them are from Motorola." The meeting resulted in a $500,000 order. The customer has since installed Motorola systems in seven additional plants.
These results were not atypical. Since the LMPS simulation training was introduced, the productivity of LMPS representatives has tripled, and both customer and employee satisfaction ratings have shown exceptional improvement.
The point here is not simply to present a creative way to turn sales representatives into SAMs. Instead, Motorola LMPS, having started the transition, quickly realized that training the reps was only one part of the puzzle. Before it finally succeeded, LMPS systematically grappled with a number of variables: performance measurements, team building, compensation, the need to demonstrate new business models and approaches to very experienced salespeople, and sales manager coaching after the program.
Before it finally succeeded, LMPS systematically grappled with a number of variables: performance measurements, team building, compensation, the need to demonstrate new business models and approaches to very experienced salespeople, and sales manager coaching after the program.
LMPS quickly learned training alone wouldn't allow the reps to succeed. Motorola LMPS carefully addressed the human-resource support that needed to be changed if their account managers were going to succeed. And succeed they did.