On May 8th, Mark Graham and Bobby Lehew recorded a very special episode of the PK podcast with best selling author Daniel Pink. In this episode, we discussed Dan's new book To Sell is Human and the relevance of his research on the promotional products industry. Other topics include the shifting paradigm for sales commission compensation, the myth that extroverts make the best salespeople, how to decommoditize our medium, the threat of internet selling, and more. Daniel H. Pink is the author of five provocative books– including the long-running New York Times bestsellers, A Whole New Mind and Drive. His latest book, To Sell is Human, is a #1 New York Times business bestseller, a #1 Wall Street Journal business bestseller, and a #1 Washington Post nonfiction bestseller. Dan’s books have been translated into 34 languages. He lives in Washington, DC, with his wife and their three children.
The PK Podcast is a conversation featuring guest suppliers, distributors and service providers discussing opportunities, challenges and insights into the promotional products business. The purpose of the podcast is to bring the conversation we are already having at shows and restaurants to a public forum where we can all listen and learn. As a continued commitment to mentor those new in the industry, the podcast will feature a broad spectrum of topics. If you wish to participate in the podcast, please read our editorial guidelines then fill out our form and we’ll be in touch!
Bobby Lehew: Hello, friends. Welcome to the PromoKitchen podcast. If you're a new listener, the PK podcast is a community inspired conversation featuring guest suppliers, distributors, and service providers discussing insights into the $19 billion promotional products business. I'm Bobby Lehew as Mark mentioned, chief branding officer at ROBYN Promotions. I'm joined by Mark, President of RightSleeve and CEO of commonsku. Not only is today's podcast sponsored by our friends at The Book Company but all of our live listeners on this broadcast received a copy of Dan's book courtesy of The Book Company. We at ROBYN have been longtime customers and avid fans of The Book Company and the work they do. I can't recommend them high enough. You can visit their website at thebookco.com and while you're there, check out the cool journals. Awesome company.
Dan Pink is the author of five provocative books including the long‑running "New York Times" bestsellers "A Whole New Mind" and "Drive." His latest book, "To Sell is Human," is the #1 "New York Times" business bestseller, #1 "Wall Street Journal" business bestseller, and a #1 "Washington Post" nonfiction bestseller. Dan's books have been translated in 34 languages. He lives in Washington, D.C. with his wife and their three children.
Welcome, Dan, to the PromoKitchen community.
Dan Pink: Hi, it's great to be in the kitchen!
Mark: [laughs] We'll have to ask you your favorite recipe in a second. But before we get to that, I wanted to say that I've been a fan of yours for quite some time, really have enjoyed your books, "Drive" in particular...
Dan: Thanks a lot.
Mark: ...and "To Sell is Human" really changed my view as a salesperson but also as a business owner. I just wanted to give you that context before we started. But my question for you, Dan, as we start off here is that I'm a small business owner. I've been a small business owner for the last 15 years, and I think I'm fairly representative of a lot of the people on this call, and also in the industry.
I've seen first‑hand how everyone in our organization is now truly engaged in sales. It's not just the sales people. This includes everyone from the account team, to customer service, to production, and it's really amazing to see how everyone's come together to be engaged in sales.
My question to you is, do you see this trend towards building more service‑oriented sales teams as a true viable long‑term reality, in light of how long sales forces have been employed, and aggressive, and extroverted sales tactics for so many decades? Is this just a blip, or is it the real deal?
Dan: I'm pretty convinced it's the real deal. I think it's a really good question, and I think there are so many great insights in the question itself. At a broad level, one of the great insights is our resistance to extrapolate from our own experiences. If you have individual small business owners, individual entrepreneurs, who are experiencing these things, something, whether it's the phenomenon that everybody throughout their organization has some kind of sales function, or ought to have some kind of sales function, or that somehow the terms of the business, or the rules of the road, have shifted a little bit.
There's a tendency for people to think, "Oh, that must just be me," but one of the great things about building this kind of community is that people realize, "Hey, it's not just me," and I think that's really a fact of life right.
Let me unpack this a little bit. This book, "To Sell is Human," has some interesting research. It's of the American workforce, and it shows that people, on average, are spending about 40 percent of their time on the job in what I like to call "non‑sales selling," convincing, persuading, influencing, and that's a lot of time. That's 24 minutes of every hour.
I think it's even more prominent in smaller firms for two reasons. Number one, smaller firms are closer to the customer. Number two, smaller firms are less segmented by function. Smaller firms don't have everybody swimming in their own lane because they often don't have the luxury of having lanes, and I think it's a fact of life.
I think what's interesting about it is that the trend seems to hold even when companies grow and scale. Let me give you two quick examples of this. These are small businesses by a different metric, small businesses compared to, say, large public companies.
There's a company I've written about called Atlassian, Australian software company, another company I've written about called Palantir Technologies, and these are companies...Atlassian has $100 million a year in sales, which to me is much more than a small business but, in the grand scheme of things, much smaller than a public company. Palantir has $300 million a year in sales.
These things are at a far greater scope or scale than a traditional small business and yet this company... Let's take Palantir with $300 million a year in sales, you know, that's over a quarter of a billion U.S. dollars in sales, doesn't have any salespeople. When you ask these folks this question, they give answers very much like the one that was embedded in your question, which is, "Well, everybody's in sales and, therefore, no one's in sales."
No one's in sales because everyone's in sales. I really do think that this is becoming a much greater phenomenon especially in smaller firms but even as smaller firms scale and grow larger.
Bobby: Dan, one of the myths that you help dispel in your book is the myth that extroverts make the best salespeople. Your book points out that neither extroverts nor introverts make the best salespeople, rather the ambiverts, those in the middle. What does this mean for those of us who are recruiting and training salespeople? What types of skills do salespeople develop in light of being a better ambivert?
Dan: I think it's important to understand the research and how much this goes against both conventional wisdom and conventional practice. If you look at the numbers, here's what it shows. Extroverts are more likely to get hired in sales jobs. Extroverts are more likely to get promoted in sales jobs. But the link between extroversion and sales performance has always been essentially nonexistent. There's some interesting research from Adam Grant. Here's what he did. He measured the introversion‑extroversion scores of a software sales force, and then he measured how much they sold. So they knew who the introverts are. They knew who the extroverts are. As you said, it turned out that strong introverts weren't very good sales people. No surprise there. But also turned out that strong extroverts, they weren't much better! The people who ended up doing best, as you say, are people who were ambiverts.
This is a term that's been around since the 1920s and it describes people who are somewhat introverted and somewhat extroverted. They're not on one extreme. The reason these folks do better is that they're more...
Go back to the prefix, ambivert. Think about ambidextrousness. They can go left. They can go right. So they know when to push. They know when to shut up. They know when to talk. They know when to hold back. It's really these folks Adam Grant's research shows are the ones who end up being the most effective, because they are more modulated, more that way.
As for the question about hiring, I'm a little bit skeptical of personality assessments as a way to hire just because I don't think that they have a huge amount of predictive value. So I'd hate to say give everybody a test and hire the ambiverts and not the strong introverts or extroverts.
But I don't necessarily think you need to do that for practical reasons. If you look at the distribution of introversion‑extroversion in the population, what it shows is that most of us are ambiverts! A few of us are very strong introverts, a few of us are very strong extroverts, but most of us are kind of in the middle.
I think the real lesson of this research is that, to be effective at sales, you don't have to be a kind of stereotypical back‑slapping, glad‑handing, super gregarious kind of person. The people who do the best at it are the people who are kind of in between, and the way to get better at it is not be more like that super extroverted gregarious guy, but to be a little bit more like yourselves.
Mark: I just wanted to throw in a sub‑point there, Dan. I think it's really interesting. Bobby and I are quite involved as well as a number of other people in PromoKitchen speaking about social media and really exploring the kinds of people that have done really well on social media. This is not a question or a comment so much about social media, but it ties back into your comment about ambiverts, that what we find is that the people that are the most successful today on social media and using it as a sales tactic are those people that are great listeners. They're great at obviously promoting content and promoting themselves, but they're also really amazing at using it as a communication tool.
I know when I'm speaking to a lot of people about trying to figure out these new tools, it's often the ones that are the loud backslapping, good ole boy kind of salespeople that might have done really well a couple of decades ago or maybe even a couple years ago are the ones that are really struggling in this new environment. I just think that is an interesting connection there as we consider some of the new communication and social tools that we have available to us.
Dan: I think it's a great point. I think it's a very insightful point. I think a lot of people look at the social media tools as ways to talk more, but they ought to be ways for us to listen more.
Mark: Anyways, I just wanted to make that point because I was just thinking about the connection. Dan, I want to throw you a bit of a tough question here.
Mark: I know. Well, you're a smart guy so you'll be able to answer it well. My question is, I want to represent the voice of a typical person in this industry. I'm either an owner, salesperson, or I'm an owner myself and I've got a couple of sales people. I totally buy into your argument that you have put forward in "Drive," where you really question this carrot and stick, this whole idea of how financial incentives are not really the be‑all and end‑all when it comes to incenting the modern worker, particularly someone that is engaged in cognitive thinking. I totally buy that. At the same time, I've got five sales people on my payroll, and all of them are coming into my office saying, "Money, money, money. How can I make more money?" After every deal, they're coming after me for commission splits. They're looking at the money at the end of the day because that's what they're really motivated by.
I'm conflicted. On one hand, I go, "I buy it. I understand it. I'm investing in culture and education and all of these other cool, non‑financial things." At the end of the day, I still have a lineup out of my office of people that are saying, "Show me the money. Show me the commission splits." How do I reconcile that and apply that to my day‑to‑day small business reality?
Dan: Great, great question. All right. Let me take a couple steps back to give your listeners a little bit more of the context. When we bring money into the situation, even when we talk about it, what's really important to understand is that the problem with some of these kinds of rewards is not the money, per se. Money just gives us something to latch onto, but it's not the money, per se. Let me just set this out and make it clear. Here is what the research shows very clearly. There's a certain kind of reward that we use in organizations, and sales commissions are in some ways the classic kind of this reward. I call it an if‑then reward. If you do this, then you get that. If you do this, then you get that. It's a controlling, contingent reward.
Here is what the research shows pretty clearly. If‑then rewards are actually effective for certain kinds of tasks, for routine, algorithmic, straightforward kinds of tasks where you're following a recipe. It could be with your head. It could be with your back. You're turning the same screw the same way on an assembly line. You're following a discreet process. You're crunching numbers to get to a specific right answer.
Again, it's very important to understand that if‑then rewards are actually effective for that kind of work. However, if‑then rewards are not effective for more complex creative conceptual work, work that requires more judgment, creativity, discernment and so forth. That's what is really important.
Let's forget about money for a second and focus...The problem isn't the money. The focus is the if‑thenness. Now, here's the thing. If your sales force is doing work, is involved in basically purely transactional sales, where it's a distinct, discreet process, where there isn't a lot of creativity, where there isn't a lot of judgment, then I actually think that the research shows pretty clearly you should use if‑then rewards.
Now, the downside of that is that if your sales process, if what you're selling, if the functions of the sales people are purely routine, algorithmic and transactional, I think you're probably making a big mistake. You're either in the wrong business, or you're in a business with very thin margins, or you're in something where you actually don't need that dedicated sales force.
Leaving aside that strategic question, if the functions that you're trying to motivate are routine, algorithmic functions, if‑then rewards are effective. They're not necessarily the most effective. They're not necessarily the only way to do things, but if you want to be honest and look at the research and the evidence, it shows you can use if‑then rewards for that kind of stuff. That's a big part.
Let me get that out of the way first. Now, let's talk about money. Money matters. The research doesn't say that money doesn't matter. Money matters a heck of a lot, but it matters in a slightly different way. The thing is, is that you've got to pay people enough. If you don't pay people enough, you're not going to get motivation.
Really, in many cases, money is a way for people to assess fairness. Not in every way, but it's a way for people to assess fairness. One of the things that's very clear in the research on the workforce is that if you violate the norm of fairness, you are toast. It's over.
You've got to pay people enough. People have to earn a living. People have to be paid fairly. Those are two fairly important things. Money does matter, and if‑then rewards are effective for one kind of activity and less effective for another kind of activity. Forgive this long‑winded, professorial answer, but I think we've really got to establish that context here.
Let's go in more deeply into the question itself. Suppose you have a sales force that is selling a complicated product, that requires customer service, that requires some degree of customization, that requires a deep understanding for the prospect or customer's business, that has a very long sales cycle. I actually think that you need to challenge, for that kind of work, you need to challenge the orthodoxy of whether you should pay those folks commissions, or whether there's another form of compensation that would work just as well.
The idea is that these if‑then rewards end up narrowing people's focus and shortening their time horizons. What you want for that particular kind of sales is actually a wider focus and a longer time horizon.
Dan: I think you're going to challenge the conventional wisdom. I'm not saying that you don't do it. What I'm saying is that this idea that sales commissions are a universal elixir for all issues is just not true, and that the really smart companies challenge the orthodoxy. An alternative way to do this would be something like the following. First of all, hire great people. That's one of the things that gets overlooked in this conversation all the time. We have this false notion that if we have some kind of carefully calibrated incentive system, we can plug any kind of input, any kind of person into it, and they will behave as we expect in a very predictable fashion, which is fundamentally not true.
Hire great people. Hire great people. Hire great people. If what you're selling is complex, what you're selling involves customization, what you're selling involves getting a deep understanding of the customer's or prospect's business, what you're selling has a very long sales cycle, I think there's an argument for doing this. Pay people healthy base salaries and then offer some amount of variable pay, perhaps even tied to company performance.
Let me give you an example of how that might‑let me give you an example, a real‑life example of how this would work.
Again, sorry, guys, for the long answer, but it's an important question.
Let me tell you about a UK company called Red Gate Software. Red Gate Software, again, seems to fit this profile that I'm describing. They have a complex product. They're selling to a business customer. The product requires some degree of customization in order for it to work properly. Their sales cycles are reasonably long. The people who are doing the selling have to have a very, very good understanding of the prospect's business, et cetera, et cetera.
Red Gate had sales commissions and their CEO found out that many of the people in the sales force were gaming the compensation system. They were trying to configure it so that it worked better for them rather than for the company. The company then made the sales compensation structure more complicated, to which the salespeople responded by just upping their behavior.
You ended up with this race between a very complex commission system ‑‑ a commission system getting more complex each day ‑‑ and a sales force trying even harder to try to game it. Finally the CEO, and this is a private company, not a huge company, said, "All right, I'm going to eliminate sales commissions for our sales force, I'm going to raise base salaries, and I'm going to institute some kind of profit sharing."
What happened there? Well, a handful of salespeople quit, no question about that. But what ultimately happened is that sales went up. As the CEO Neil Davidson explains it, the reason they went up is for a host of factors. Number one, people were more collaborative. That is, if individual salespeople have individual incentives, then why should I ever help you? In fact I should try to poach from you. That's actually a more rational approach. This was there was much greater collaboration, which led to better solutions for customers.
Number two, customers liked it better! Customers like the idea that the salespeople weren't trying to ring up a big total to get a commission, but were actually trying to provide insights to help them on their business. The other thing which your question goes to, the other thing that ended up, is that Neil and his leadership team ended up with a lot more time on their hands. Because, as you're suggesting, they ended up spending a lot less time litigating the commission systems, figuring out how to split commissions, hearing grievances, "Oh, I got screwed on that and he got too much of an advantage on that." That freed up their time to do other things.
My point is that, again, just to try to wrap up this very large package here, go back to first principles. If the task itself is simple, mechanical, and algorithmic, if‑then rewards are not necessarily a bad idea. But if the task is more complicated, more creative, more conceptual, if‑then rewards, the science is very clear, don't work very well.
But the conclusion from that is not that you don't pay people. The conclusion from that is that you have a compensation system that pays people well and that pays people fairly and that doesn't distort their behavior. The way to do that in a sales context isn't necessarily to eliminate commissions wholesale and say we're never going to do it again. But to challenge the orthodoxy that commissions are the only way to motivate salespeople.
Bobby: Mark, Dan just answered why the struggles exist in our industry for program selling versus transactional selling and layering that traditional commission structure over those two big parts of our business.
Dan: But that's a really, really important point, and it's not just sales. Here's the thing. The trouble is that there's nuance, and we tend to not like nuance. We like simple solutions. We don't like any degree of complexity. We want to be able to come up with an easy, three‑step answer to apply. This is true more broadly in the workplace. If‑then rewards were effective when people ‑‑ forget about sales ‑‑ when people were doing much more mechanical, algorithmic work. When they were turning a screw the same way on an assembly line, when they were adding up columns of figures. What's happened is that the legacy of using those kinds of motivators for those kinds of tasks has stayed with us even though we're doing fewer and fewer of those kinds of tasks.
Mark: Yeah, it's exactly like what Seth Godin talks about with the whole old factory culture and how that doesn't really exist anymore. But some people still seem to hold onto that, so it's very interesting.
Bobby: Something else very specific to our industry, Dan. We're in the process of decommoditizing our medium, shifting gears a little bit. We're decommoditizing our medium, what we sell in the eyes of our clients. I think there was something critical for our industry in your topic on the experience frame. You discussed a distinction between material purchases, the product we buy, versus the experiential purchases, a purchase that one lives through or experiences. An example you cite is the BMW versus that hike on Canada's west coast trail.
In our industry, we sell a tangible product, but in reality we're selling a mechanism for an emotional transaction to occur. An example, you speak all the time. Those organizations that you speak at, we will sell a speaker's gift to them. You get the speaker's gift, so that moment is what we're selling.
However, do you have suggestions for us on how we frame this sell to our customers and more experiential terms and how to move them to that experience as exposed to that product?
Dan: Yeah. It's actually a hard thing to do. Again, if you go to the science of it, and this is really in some ways about repeat customers more than anything else. It's about taking the longer view. The research is pretty clear that, as you say, that there's a difference between material purchases and experiential purchases. What the research shows pretty clearly is that people end up being much more satisfied, deriving much greater satisfaction, from experiential purchases rather than material purchases. The truth is that sometimes we're still selling stuff. What you have to do is you have to look for ways...it's like, why is my stuff, whether it's a speaker gift, whether it's an automobile, whether it's a garden hose, how do you change the frame around that, the context around that, to think about that as an element in an experience rather than simply a free‑standing item itself.
That's actually a pretty sophisticated cognitive move, but I think that it's really important. The research is pretty clear that framing a sale in these experiential terms is more likely to lead to these satisfied customers and repeat business. What you have to do, I think, and it's a difficult thing to do, it requires practice, is take a step back if you're selling a product, if you're selling a physical item, and say, how is this item part of the buyer, the prospect's experience? Talk about the experience of using it, of actually integrating that product into one's life, rather than about the collection of atoms that is the product itself.
I wish there were a simple, easy algorithm to follow to do that. I think it's a matter of stopping, taking a step back, and giving it a try. Stopping, taking a step back and giving it another try, and having it become a more instinctive part of your repertoire. The truth is that good salespeople have always done this in a way that's subconscious. The evidence now is bearing out that it works really well.
Bobby: For those listening that haven't read through, the five "why's" can probably help you get to that experiential versus product.
Dan: Sure, sure, yeah.
Mark: Dan, I just wanted to do a quick time check. We're at about 2:25 right now. Are you OK for one more question before we jump into a couple audience member questions? I just want to make sure you're OK with that.
Dan: Sure thing.
Mark: OK, cool. I mean hey, we could stay here all day. I've got a question about the impact of the Internet on our business. I know that this is something that is top of people's minds within this industry. I think a lot of us...Sorry. I'll start again. I am curious to get your perspective on how this industry could be disrupted by technology in the next 5 to 10 years, and I'll give you a little bit of context. If you look at the travel business, a lot of people would draw parallels between the travel business and the promotional products business. In that there are suppliers, there are distributors, and there are end users that are looking to purchase what is deemed to be a commodity.
In the old days, you could go from one travel agent to the other and look at the best price on a flight from Chicago to New York and boom, there you go. As we saw with Travelocity and Expedia, almost overnight they completely disrupted that market and put travel agents out of business with the exception of the people at the very high end.
Do you see the promotional products industry, an industry almost the same size and very similar in terms of makeup, going the same way? The one thing I will say is that so far it's not really going the same way. The Internet businesses so far or at the present are certainly gaining ground. But they're certainly not the majority, they certainly don't make up the majority of the industry.
I'm curious in the next 5 to 10 years. Are we a sitting time bomb, or if we apply all the principles in your book we'll be fine?
Dan: I think the answer to that question like the answer to just about every question in life is it depends. It could go either way. It really goes to one of the distinctions that you guys were drawing earlier on, which is, are you...To me, it's the difference between selling something that's a commodity and selling something that's not a commodity. If you're selling commodity products, then I think that you have a problem, that the Internet could actually eat your lunch. If all you're doing is saying, we are in the business of putting custom lettering on pencils so it says 'Welcome to Acme Conference 2013' on pencils, that's pretty much a commodity. In that case, people are going to be shopping for the lowest price for that commodity. They might be able to get it from an Internet vendor because that Internet vendor might have greater economies of scale, has less overhead than a traditional company.
I think that the solution to that is not to be in the commodity business. Forgive me for using a management consultant‑y phrase, but to move up the value chain and offer promotional products that are much more surprising, much more awesome, much more unique, much more customized, and try to give people something that they didn't know that they were missing.
If you're in the business of selling pencils with the name of the conference on it, I think you're in big trouble. I would rather buy from an Internet company at a lower price than from someone doing the exact same thing at a higher price. What I think you need to do is you need to be able to understand your customer's business inside and out, understand what is going to be the perfect promotional product for that particular company or that particular industry, offer a suite of products that no one else has, and constantly push the boundaries of what promotional products are. I think in that case you're going to be perfectly insulated from pressure from the Internet.
Mark: It's like, Dan, you've taken a page right out of the textbook of all the modern sales theories that have been applied in this industry, so you're absolutely bang on, and it's certainly music to a lot of the people's ears on this call that have struggled with these issues, but I think many people have come out the other side and are certainly...
Dan: Again, as you say, it's not brain surgery here. The thing is if you're selling a commodity product, a commodity of any kind, it could be a commodity service, a non‑contested divorce, a commodity product, engraved pencils, if you're in any kind of commodity, if you're selling a commodity, then you're inevitably competing on price, and competing on price over the long‑haul is a downward death spiral.
Bobby: We should probably take some questions.
Mark: Yeah. There are a couple of great questions here that if we maybe spend a couple of minutes on. A great question here, that's coming from someone who's asking about the concept of elasticity in today's workers, so the idea of flexibility, and here's the question. This particular person says, "The idea that today's workers need elasticity in order to succeed makes sense to me at least for mid‑to‑senior positions, but not all of my employees appear to be intellectually or emotionally capable, or perhaps interested in improving their elasticity. They appear to want to play a specialized role, and that's all."
"I am trying to create an entrepreneurial culture, so what do I do with employees who can't become elastic? Can a company succeed in today's sales‑oriented world with elastic and nonelastic employees, or should I fire the non‑elastic workers?" I have not listed this person's name, [laughs] but I'll say it's from anonymous.
Dan: It's actually a good question. You probably should say his or her name, so that the people working there can start putting their resumes on Monster.
Dan: No, it's a really good question, although I'd like to push back a little bit on the premise. I think that a lot of people have the capacity to become a little bit more elastic than they are right now, and I would actually even double‑down on that and say that a lot of people have the desire to be a little bit more elastic than they are right now. What's, I think, standing in the way is the know‑how of how to begin, and also the fear that they'll screw it up and it'll harm them. I think the way to mitigate that is two‑fold. One, I think that you should be looking for some degree of elasticity when you hire, Mr. or Ms. X, and that should be one of the criteria you look at when you bring people on, so you're not forced to provide it entirely on your own.
Recognizing, as you say, that people arrive at this at different levels of development, different levels of elasticity on their own, the way to bring people along is not to say, "OK, this person is completely segmented, this person only knows how to do one thing, but I can offer a couple of simple interventions as elastic as Gumby in being able to stretch across any boundary whatsoever."
I think that's a fool's errand, but I think what you can do, and something that we discount in management and leadership all the time, is important to small wins. I think there's almost always something that you can do, there's almost always a case...it's almost always true that you can do one small thing to get people to be a little bit more elastic.
I think there's always one small thing you can do in any kind of problem. Maybe you have someone who is in accounting, and you want to make that person a little bit more elastic, and that person is a dedicated accountant, but that person has kind of accountant‑blinders on.
Maybe one small think you can do is to say, "Listen, Fred, or Jane, JosÈ, Maria, whatever your name is," maybe you should have that person work one day, one day, taking calls from customers, to get them a little bit out of their comfort zone, to loosen them up a little bit.
I think small steps like that can start getting people...if you have somebody who's a really good, dedicated performer, I think you want to keep them around, and getting some small steps and small wins can begin to limber them up a little bit. I think you'd be surprised by how...that people are actually more willing to do this than you expect.
Their lack of willingness is actually a fear of failure and the consequences of failure, so if you can somehow make them understand and say, "Listen, I'm not setting you up for a fall. I'm not trying to make you do things that you stink at. What we're going to try to do is we're going to take one step out of your comfort zone to limber you up a little bit and see how you do," and I think people end up surprising themselves and surprising their bosses.
Mark: Bobby, do you want to ask one of the other ones here?
Bobby: Yeah. You know, Roger Burnett, fellow chef Roger Burnett, had a great question earlier. It was, "If more people are selling, should all that participate in the sales process have some variable pay component to their compensation?"
Dan: It's an interesting point, and I think the answer, as always, it depends. I think there is something for some amount of variable pay. Remember, profit sharing is variable pay. It's variable pay keyed to how the company is doing, and I think that those are generally good ideas because it's fair. If everybody contributed to the company making profits, then everybody deserves some piece of the action. The challenge of providing individual incentives, not that they're uniformly bad, but that they come with some downsides, and they require a whole apparatus to enforce. They require a whole kind of administrative arm to figure, to monitor, to tally, to litigate, to enforce.
That's why profit sharing is a little bit simpler, a little more elegant, and pretty fair.
Mark: Dan, he'll kill me if I don't ask the question. Craig Morantz is on the call. Hey, Craig. Craig's got a lot of questions here, but I wanted to hone in on one. The question here is, Craig believes the traditional field sales model is set to die with marketing automation and Internet shopping experience that is now available. Are you seeing company's sales costs going down and their marketing costs increasing via the Internet?
Dan: It's an interesting, and again, I guess... [laughs] I'm not trying to be evasive here, but I think the answer is, "Yes and no." It really depends on what's being sold. Again, if you're selling something that is a little bit more of the commodity side of the spectrum, then you might not need that field sales force, and you might want to save money by not having all these folks out in the field. On the other hand, if you're doing something that is higher‑end, where you're moving down the spectrum of not even selling products, but selling experiences and selling insights, then I think there's a lot to be said for maintaining a field sales force.
It's much more of a kind of consultant's model, or at some level, even an engineering model, where you actually have your people much closer to the customer, understanding your customer's business inside and out. To try to save costs for that kind of business, where you're providing insights, where you're helping the customer understand its own business, I think the cutting of field force then is actually kind of dangerous.
It's a way of saying, "It depends," because it depends on what kind of business you're in, and what you see is you see a mix of things. You see companies that are in more commodity businesses pulling back their field forces, but you also see companies that aren't in commodity businesses doing that, because they love the short‑term boosts that the cost‑savings get them. They just haven't reckoned with what's going to happen six months out, two years out.
Mark: I'll just quickly say, Dan, and also Craig, on the call, that at my company, RIGHTSLEEVE, we, for many years, had been very focused on the Internet in terms of selling the products and having a well‑maintained and updated site that focused on all of the cool products that we could sell. We did some analysis over the last year, and we looked at all of our very best customers, the ones that were defined by the loyalty, revenue, healthy margins, and very few of them were using the site as a resource, and the people that we found that were coming through the site were small, individual, price‑shopping type orders.
What we found is we were starting to just simply refer those people to some of the larger Internet competitors in the space, and when we'd redesigned our site completely to focus on case studies, focus on content, focus on ideas, because that's really what makes us the most money.
That's interesting in that, in our case, we've always invested in that account and sales force, and certainly invest in the Internet, but not at the expense of growing and maintaining a really good team in house that can provide amazing solutions.
We'll see what happens.
Dan: I think that's a good way to look at it. I think it's a really good way to look at it. It's just a matter of, you've got to get, again, we tend to think very much on either/or, and in most case the solution is both/and.
Bobby: Right. Dan, thanks for joining us. We probably need to wrap up. We really appreciate you taking the time to spend with us here today with the PromoKitchen community. As a reminder, no one makes money off PromoKitchen, we're 100 percent tribal, 100 percent volunteer led. There are two special members of the tribe we'd like to thank who put a lot of sweat equity and talent into making this possible. Tee Hamilton with Aye Creative has provided all the design work for PK and Charity Gibson of GreenBananasPromo.com has led our social media efforts. Thank you both for your contributions.
If you have any questions or comments, you can reach us at firstname.lastname@example.org or on Twitter @promokitchen. From all the chefs at PromoKitchen, thank you guys for allowing us an opportunity to serve you. Dan, we really appreciate you taking the time.
Dan: It was a pleasure, you guys. It was great talking with you.
Mark: Thank you, Dan, thank you everyone. This was a real highlight. We'll look forward to speaking with everyone soon.