Anthropologist Gregory Bateson wrote about the difference between map and territory in his 1972 book, "Steps to an Ecology of Mind." By this he meant that the maps we hold in our minds, while often useful, can in no way be expected to reflect the complexity of the real-world territory they are designed to represent.

Asset management firms seeking to boost wholesaler productivity face a similar challenge trying to isolate the sales contributions made by a given individual or sales team from the sales potential of a territory. In a recent study conducted by our firm, we found that fully 87% of sales managers do not know the percent of assets coming in through a territory that results from the efforts of their wholesalers.

Without that basic understanding, it is impossible to effectively measure the productivity of the sales force, or to accurately gauge the impact of the marketing effort on the firm's ability to collect new assets.

As the industry moves more toward packaged products, which are typically selected by research analysts at the home office with little or no input from wholesalers, the ability to differentiate the value added by the wholesaler from sales potential inherent to a territory is more important than ever before. A better understanding of this relationship can lead to a much more efficient allocation of sales and marketing resources and, ultimately, a dramatic increase in inflows for asset management firms.

Everyone has heard the stories about how a firm replaces a top-performing wholesaler in a top-performing territory with a relative newcomer only to see inflows double. Or how a firm loses a quality wholesaler and waits to replace him, only to see the territory's sales increase in the meantime. Or even more pointedly, how a territory with no wholesaler at all consistently outperforms one in which a wholesaler has been entrenched for many years.

As entertaining as these stories may be, they provide little in the way of direction for a sales manager seeking to maximize productivity. Management by anecdote is really tantamount to no management at all. Firms must instead move quickly to adopt a more analytical approach to separate the role played by the wholesaler from that of the territory.

This new strategy should start with the admission that the model asset management firms currently employ to evaluate wholesaling success is ineffective. Rather than territory gross sales, the current yardstick, firms need to move toward adviser-level metrics. Understanding the potential of the adviser relationships will in turn provide a clearer picture of the sales opportunity inherent in the territory. Marketing initiatives can be built around this data, and wholesalers can then be compensated based on their ability to capture that potential, rather than on arbitrarily established gross sales goals.

Because the productivity level of different territories is variable, firms cannot rely on quantitative measures alone to manage the performance of their wholesalers. By placing more emphasis on behavioral analysis than in the past, firms will be able to better assess skills and adopt a proactive approach to understand wholesaling impact.

One way to do this is by expanding the definition around "behavior" and institutionalizing its capture through a new set of metrics. Actions such as adviser meetings, onsite visits, phone calls and even CRM use can be measured and analyzed against sales productivity. Once institutionalized, this data can be leveraged to improve the wholesaling team. Among the ways this can be accomplished are:

* Revising compensation models to ensure that they are aligned with the new evaluation scheme.

* Focusing training programs to address desired behaviors.

* Making smarter decisions about wholesaler staffing and retention.

Ultimately, the question is one of productivity and the ability to scale. Consider a team of 50 external wholesalers covering 50 territories. What if each was 20% more productive? What would that mean for the firm? The average wholesaler brings in about $100 million in annual sales. A 20% bump to $120 million would mean $1 billion in new assets for the firm. All this is achieved with no additional personnel.

The alternative-allocating marketing and wholesaling resources on the basis of anecdotal evidence-is a formula for chronic underperformance. As it stands now, a poor wholesaler in a good region can look like a star, and may be compensated accordingly. Conversely, a great wholesaler in a fallow region will likely under perform. If his compensation also lags as a result, he may decide to leave, weakening the group as a whole. Without knowledge of the territory, management is unable to make this very important distinction.

Today's asset management industry is too competitive-and new assets are too hard to come by-to allow this situation to continue. Understanding the difference between the map and territory is an important first step to making a change.

(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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