Better sales networks

Vlerick Sales Centre Article Summary Series
Better Sales Networks (by Tuba Üstüner and Davis Godes, Harvard Business
Review, July-August 2006)
Summarized By Ellen Croux and Deva Rangarajan, Vlerick Sales Center
Introduction
Social networks are critical in sales. Companies and salespeople can improve
performance significantly by understanding the interplay among the different webs
of customers, leads and colleagues they develop.
The sales process can be represented as four distinct stages, which all require a
different set of abilities and network configuration. If salespeople and managers
understand how networks function, they can pinpoint the most effective network
configuration for each stage of a sale and take the actions necessary to create it and
outshine competitors. In each stage of the sales process, the salesperson’s efforts
come down to two essential and complementary types of network-management
actions: managing the information flow and coordinating the efforts of contacts. This
article offers a framework for systematically managing different social networks, by
matching the network to the task. The article also presents three levers managers
can use to encourage salespeople to integrate the network-based view and make the
best possible use of social networks.
Variation in networks
A social network refers to a person’s set of direct and indirect contacts. Most
managers view a sales network only in terms of direct contacts. However, someone
who knows a lot of people doesn’t necessarily have an effective network. Indirect
contacts can offer a high pay-off, because the more people your direct contact knows,
the more valuable he is in the network.
Another important characteristic is the density of a network. In a sparse network the
associates are widely dispersed which is better for gaining access to unique
information. While in a more dense network, contacts mostly know the same people,
which is more desirable when coordination and consistency are key.

Four distinct stages in the sales process: matching network to task
1. Identifying prospects
This phase depends on the ability of the salesperson to acquire precise and timely
information about opportunities from contacts outside the seller’s organization and
the marketplace at large. The right network strategy can make the process of finding
leads much easier and less time consuming by seeing clearly into prospective firms.
Salespeople looking for new and unique information should cultivate diverse
marketplace networks. Direct contacts will be most beneficial in a sparsely structured
network, when each contact can connect the salesperson to many different indirect
contacts. Effective salespeople rely on leads from non-traditional sources, for
example real-estate agents or prior engineering contacts might be able to provide
new useful information, before other competing parties hear about it.
2. Gaining buy-in and upselling
Once an opportunity is identified, the salesperson needs to map the prospect
organization, find its underlying problem and secure meetings with key decision
makers. To achieve these goals, information must come from within the prospect.
Salespeople will need to convince the initial contacts inside the organization to invest
time in educating them on their firm and to introduce them to other people in the
organization. To become endorsers of a proposal, direct contacts need to be
reassured their reputation won’t be in jeopardy. The salesperson needs to establish
fewer and stronger ties in the prospect network in order to offer this assurance. It is
crucial for the salesperson to map out the prospect organization network and
understand how it works. This way people who have influence can be identified and
a salesperson can devote time and energy to cultivating ties to those individuals who
can help them gain buy-in from the official decision makers.
The upselling approach is similar in most aspects, in order to create more deals with
existing clients, salespeople must focus on building new relationships within their
prospect networks. They must evaluate the nature, structure and shape of the
networks in the target firm to identify brokers. Brokers are people with multiple
diverse contacts inside the organization and salespeople should invest significant
time in building relationships with them.
3. Creating solutions
A salesperson lands an account by developing a solution tailored to the
customer’s unique business problem. Success depends on the ability to identify
where components of the solution reside within the organization and the skill at
mobilizing and coordinating these resources. First, salespeople need to develop
a sparse intra-organizational network, which gives them access to diverse
expertise. Next, the salesperson needs to forge ties among these experts and

create a dense network to maximize the coordination of their efforts in devising
solutions for the prospect’s unique problems.
4. Closing the deal
In this stage, a salesperson’s job is to remove as many of the customer’s
uncertainties as possible. The prospect will want to speak with other customers
who can shed light on the risks, which is why the salesperson needs to provide
references and mobilize contacts in prior sales to complete the deal. There will
be necessity for a network of past customers and outside experts who can serve
as references to help persuade the prospect to buy.
Network-smart sales strategies for managers
1. Sales force structure
Decoupling lead generation or not?
The best way to ensure that your salespeople hear about new opportunities is to
encourage them to build marketplace networks with many diverse contacts.
However, not everyone is naturally talented in identifying new leads. Therefore, an
organization might consider decoupling lead generation from other tasks. Some
people are very good at building diverse ties, while others’ strengths lie in nurturing
fewer but stronger relationships. By allowing these people to focus on what they
excel at, they will gain a lot more experience and become even more effective. On
the other hand, the downside to a decoupled structure is the fact that lead generation
is often tied to reciprocal favours delivered in later stages of the sales process. By
breaking the chain of the “gift economy” a lead generator has no opportunity to
return the favour. This could be remedied by creating a database to track the sources
of each lead, so salespeople would be empowered to satisfy obligations.
How to lighten the load for salespeople?
In the solution stage, a salesperson might justifiably feel overwhelmed and
exhausted trying to cultivate the right networks for creating various customers’
solutions. There are several ways in which managers can lighten the load. First, the
extent to which your firm’s offerings have predictable solution-creation needs should
be considered.
If solutions are rather standardized, a dedicated solution team should be set up for
major accounts, assigning support staff and salespeople on the basis of customers’
requirements. Dedicated teams develop trust and commitment as members become
comfortable working together to complete complex tasks. Establishing formal teams
allows executives at the selling company to evaluate the workings of the networks
of experts within their organization and relieves the burden of intra-organizational
networking from the salesperson.

If your offerings are complex and customized in an unpredictable way, consider an
ad-hoc approach to team development, in which support people are tapped as
needed. Managers can create an intranet listing of employees’ areas of expertise and
former work experiences so that salespeople assembling ad-hoc teams can easily
find the most appropriate members. Instead of spending time finding internal
experts, the salesperson can direct his efforts toward developing marketplace or
customer networks. An added benefit is the possibility for managers to learn valuable
information about support people’s response rates to these requests and their speed
in answering. Another useful approach would be to create groups that cut across
functional areas. This way, members of different practical areas become part of an
informal, relatively sparse network.
How to maintain a network of prior clients?
In the last stage of the sales process, when creating and maintaining a network of
prior clients that can act as references, the difficulty lies in the fact that prior
customers might be reluctant to help rival firms make better purchasing decisions. A
sales manager can help salespeople by creating an organizational structure that will
motivate past clients to help. The optimal way to achieve this is to assist those clients
in building their own valuable personal network. Therefore salespeople must be able
to evaluate a contact’s personality type as well as her networks. It might also be
useful to create a team that manages and nurtures the reference pool to ensure
efficient application of previous clients. A centralized structure minimizes the chances
that any contact’s privacy will be violated or his time wasted, and it thus helps
prevent burnout, a common complaint among references.
2. Compensation
A well-designed compensation plan will improve your salespeople’s network
management skills and maximize the flow of resources from networks. Since building
the right kind of networks to foster leads is a time-consuming endeavour, a sales
manager should consider offering explicit incentives for lead generation. Although
this is an indirect approach to network building, it serves two important purposes:
increased immediate benefits to salespeople from investment in their marketplace
networks & statement to the sales force about the importance the company places
on lead generation. A system of financial incentives can also induce a salesperson to
take the time to log each lead and all its associated information. Capturing detailed
data is extremely valuable for companies, because it allows managers to ensure that
salespeople are developing high-quality leads and insures that when a salesperson
leaves, the lead doesn’t disappear.
Compensating the employees for supporting the sales force in creating solutions and
closing deals, motivates creation of effective intra-organizational networks. To
discourage support people from aiding only projects that seem easy to sell,
compensation should be based on how many sales efforts are supported, rather than
on how many solutions the support people help create. In addition, when support
people feel like they’re doing all the work while the salesperson reaps all
the benefits, the approach of paying a commission could help ease their resentment.

Some salespeople are inclined to hoard their most valuable reference sources to
ensure that the contacts are available to them when needed. There are two solutions
to counterbalance that inclination, paying salespeople a small incentive for every
name added to a reference pool or give recognition to the originator of a contact who
eventually facilitates a closed deal.
3. Skills development
Senior managers must ensure that the network-based view of sales becomes
integrated into the organizational culture so that salespeople can readily learn
network skills.
- Network-friendly activities should be supported throughout the organization
- Training is critical to transforming the firm into a network-aware organization.
- Hiring and promotion decisions should be based on network skills
Online networks present an intriguing new skills development tool for people who
aren’t naturally gifted at networking. This new technology is especially interesting if
the lead generation is not decoupled from the remainder of the sales process.
Salespeople must be taught how to evaluate their own and other people’s networks;
it is a crucial skill to secure buy-in at prospective clients.
The intent of this article is to urge managers to give their salespeople the skills, tools
and foresight to evaluate factors such as the extent of a contact’s connections in a
prospect firm, whether the contacts are connected to one another, and how well the
salesperson is positioned to make use of key influencers and decision makers.
Conclusion
Cultivating networks is not an easy task, but the people who make the investment
will reap tremendous advantages. Companies looking for better results can make
changes to their sales force structures, compensation plans, and training programs
to institutionalize the network view of sales. Another important element of a healthy
customer network, is recognizing that networks need maintaining. Managers should
ensure that communications always add some sort of value.

Better sales networks

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Better sales networks