US firm Hill and Markes, a 112-year-old janitorial and food service supplier, is as old school as old school gets. Several of its field salespeople have visited customers for 35 years, and until December 2016 its rudimentary e-commerce site lacked even photos of many of its products. Taking orders on a mobile app wasn't in the lexicon.
These days, though, this upstate New York company and its 50-person sales team are forging deeper into online retailing and looking to use more e-commerce-aided sales as field reps retire. The automation wave that has displaced so many workers in manufacturing and data entry is hitting the nation's sales force, particularly among "business-to-business" salespeople who sell to commercial customers.
"At some point, when the client falls in love with the web portal and the company starts using algorithms to cross-sell and up-sell, pretty soon that salesperson is not doing much," said Andy Hoar, a former Forrester Research analyst who now runs a consulting firm, Paradigm B2B, in Chicago. He says customers' preference for online purchasing has only increased in the past three years since he predicted that as many as a million B-to-B salespeople could be cut by 2020.
Software companies have been reducing their reliance on field salespeople for a few years as they sell more cloud-based software. Now, big distribution companies like US Foods Holding Corporation and WW Grainger are trimming their field sales and showroom staffs and dedicating those who remain to their biggest customers. Smaller clients speak with telephone salespeople and digital marketers. In some cases, field reps will see bigger paycheques as they're freed up to go after more lucrative clients. Many others, though, will see their compensation inevitably fall, e-commerce consultants say.
Behind the push to bring sales teams inside are a greater willingness among purchasing managers to buy even expensive items online and new digital analytics tools making it easier to target them. In 2015, Forrester polled B-to-B buyers and found that 53 per cent preferred researching orders on-line to dealing with a salesman, and by a year later it had grown to 68 per cent, Hoar said.
Particularly at risk are salespeople who essentially are order-takers, dropping by companies once a week to see how many industrial fasteners a manufacturer needs. Big distributors are putting their field salespeople on only the top 10 per cent of their customers, who account for 70 per cent or more of their sales and need the most attention, said Jonathan Bein of Boulder, Colorado-based Real Results Marketing. The second 10 per cent of customers account for about 10 per cent of a company's sales, so they and smaller customers can be served remotely, Bein said.
"If I just shed 15 field reps at US$130,000 (NZ$197,000) in total compensation, that's significant," he said. "That's a big improvement in profitability, so it's a real incentive to do this."
Restaurant supply giant US Foods had 4,000 salespeople visiting independent restaurants in 2013, but has invested heavily in its e-commerce operation since then and now counts about 2,700 salespeople. The remaining reps are the better salespeople covering bigger territories - the company's "Michael Jordan" sellers - executive Vice President Jay Kvasnicka told investors in March. While cutting some reps overall, the company has invested some of the savings in a new "team-based selling approach" giving customers access to chefs, restaurant operations consultants and others, spokeswoman Sara Matheu said.
WW Grainger, an industrial and commercial distributor with US$10 billion in annual sales, has cut its local store count to 251 from 390 five years ago in part because of a shift to e-commerce, according to regulatory filings. Meantime, it reassigned a portion of its roughly 3,000-person sales staff to create 400 inside sellers, spokesman Joe Micucci said.
"We didn't necessarily have to have boots on the ground," he said.
In some cases, startups are going without field sales reps at all. Fattmerchant Inc., a four-year-old Orlando, Florida company, is going sans field salespeople as it tries to build its credit card processing business. It uses digital tools like Facebook Inc.'s Lookalike Audience program, where companies give the social media giant a list of current customers and Facebook shoots back a list of similar potential customers mined from among its users.
Where a field rep might average 15 sales a month, its inside salespeople are closing 30, Chief Executive Officer Suneera Madhani said. Its salespeople don't get so-called "residuals" common in the industry - a cut of the follow-up contracts that many companies give - but they make up for it by earning commissions on a higher number of initial sales, Madhani said.
"We're not having to pay a pyramid scheme of the managers, the agents, the sales reps," she said.
No one sees salespeople disappearing overall, and companies will continue to need knowledgeable people to sell complex medical devices and back-office software systems, e-commerce consultants say.
At janitorial supplier Hill and Markes, e-commerce manager Mike Powers says field reps will be used to demonstrate equipment such as new floor scrubbers. Today's customer, he says, "is not interested in you showing up every Tuesday with doughnuts."