Summary
Sales forces are structured now as they have been for decades, even as some of the software management tools have evolved. A basic redesign is necessary.Those companies using reps will come out of the recession with better balance sheets and more orders because of a continual presence at their customers versus companies that have cut their direct sales forces.
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Analysis
For years sales people representing TI, Fairchild, Maxim and other semiconductor companies have gone to customer's engineering staff to show their latest semiconductors and to try to get the engineers to design them into the next product. A majority of these sales people have some technical background but usually not as much as the engineers they are calling on.
Some semiconductor companies employ a direct sales force and others employ an independent manufacturer's rep force. Some of these rep oriented companies are: NEC, AMD, Spansion, ON and most start ups. Some companies are a hybrid of the two approaches: Intel, Fairchild and others.
When the recession ends those companies using a variable cost of sales rep model will achieve more design wins during the last few years than those using the direct model because the rep model is more stable, with the sales force making less but still working. Direct forces unable to make a budget that companies are unwilling to change as sales plunge suffer morale and lower compensation as the budget gets further away from reality.
Companies such as National are keeping skeleton sales staffs barely able to answer the phone. They are not doing a lot of customer visits.
A new model of "Cloud Selling" is being offered by groups of independent nonexclusive reps that offer hybrid model opportunities.
Unusually these technical product companies have not adapted to the internet world. Their selling model hasn't changed in 30 years. Videoconferencing integrated with the sales call will change the industry dramatically, especially as bandwidths exceed 3mb/sec at the workplace.
Donald Rheault consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
