It's a Hobbesian world out there for the sales team charged with selling asset management products. While it's the nature of a successful salesperson to work independently, focused on their own individual goals, they can be taught to work for the common good of the company. In fact, the winning firms will be those that succeed in aligning the interests of the individual external wholesaler with the strategic goals of the entire organization. Of course, there are many factors that go into creating a successful sales organization, but a motivated external wholesaler is certainly one of the most important.
So, what energizes the wholesaler in the field? Compensation is a primary consideration. Recognizing this, firms commonly seek to establish a clearly defined link between income and productivity in the form of sales goals and incentive pay. But money alone may not be enough.
Where things often fall apart is in the process by which sales goals are established, which is often a mystery to all but a handful of executives. Because wholesalers are rarely involved, they too often view the numbers that are produced as arbitrary, unrealistic, or, in the worst cases, oppressive. This impacts the attitude and morale of the sales force, resulting in a situation where the agenda of the wholesaler does not mesh with the agenda of the firm. The external wholesaler will come to internalize his own objectives separate from those of the firm or, worse, view the world as the Greeks did - at the mercy of a capricious god, one who tosses down sales mandates from an Olympus-like perch much as Zeus dispatched his thunderbolts. When it comes to constructing sales goals, the top-down approach most asset management firms rely on raises some serious red flags.
Science versus Art
While there is a veneer of a scientific rigor to the goal-setting process, the end result for most firms is a number that is an artful, if educated, guess. It is based on a range of factors, including a review of market share data, an analysis of past performance, and an often optimistic projection for growth. This number is then divided among the sales channels and promulgated out to the individual territories. It is largely a one-way trip.
This is unfortunate. In practice, many of the factors that most directly impact sales are beyond the control of the distribution organization. These include product and portfolio manager performance, the breadth and sophistication of the product line, shelf space and the market itself. The wholesaler - who is closest to the customer, and who could add valuable insight into the demand side of the equation - is only rarely consulted, and at many firms isn't involved at all. By not providing a mechanism to include input from the wholesaler, management makes it more difficult to get the kind of "buy in" from the field needed to make the sales program a success.
There are two simple steps firms can take to address this issue. First, the current top-down approach should be augmented by input from the field. In short: Ask the wholesaler. Is 10% sales growth an achievable goal? Is it too high, or too low?
With a bottom-up approach, goals are set for the territory, tallied across channels and delivered up the organization to senior management, who can use the information to confirm (or as a reason to re-think) their own estimates.
Naturally, with compensation based on the wholesaler meeting or exceeding certain targets, management will be rightly suspicious of an inclination to set the bar too low. But bear in mind that the wholesaler's input is only one element that goes into the calculation; senior management still has the last word.
A second, and related, step is to commit to revising annual sales goals during the year. Targets set in January may already be unreachable or in the bank by March. A poor start can leave the wholesaler swimming upstream for the rest of the year, leading to a sense of futility and further erosion in performance. On the other hand, a blowout quarter can allow a wholesaler to make a full year's numbers in a just a few months, again potentially undermining interest in selling. Both issues can be easily resolved by readjusting the targets quarterly.
Clearly, a more integrated approach is needed to setting sales goals across the organization. By involving those in the field in the process and proactively managing goals based on intermediate results, asset managers can ensure that sales targets get everyone on the same page and serve as a source of true motivation for wholesalers. At the end of the day, that's good for everyone.
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