For anyone involved in the sales process, a case before the U.S. Supreme Court hinges on a fascinating question: Is someone who does most of the traditional functions of a salesperson but never actually closes a sale really a salesperson? It's no trivial matter; in fact, it could have big implications regarding the way salespeople are compensated across industries.
What, precisely, is required of salespeople is the key issue in the case of Christopher v. SmithKline Beecham Corp., which was subject of oral arguments in mid-April. By June, the U.S. Supreme Court is expected to rule on whether the work done by pharmaceutical salespeople really counts as "selling." If it does, the industry's 90,000 U.S. workers are exempt from overtime pay. If it's not, the U.S. pharmaceutical industry could face billions in retroactive overtime.
For people in the sales profession, watching the Supreme Court justices joust with attorneys about exactly what constitutes selling provides a window into the way different people value the different parts of what salespeople do each day. At one point during argument on April 16, 2012, Justice Scalia said of the plaintiff salespeople: "They look like salesmen to me," while Chief Justice Roberts commented, after one exchange, that "they don't make sales," presumably because sales calls do not lead to a "binding commitment" from the doctors. Justice Ginsburg, meanwhile, asked one lawyer whether salespeople wanted to be paid overtime for the hours spent on the golf course schmoozing with doctors.
We aren't lawyers, but we are 100% with Justice Scalia on this one. By any reasonable definition, pharmaceutical salespeople are absolutely salespeople. In our view, sales is a complex and multi-step process, and the fact that a salesperson may not participate in one of these steps shouldn't change the basic perception of his role in the value chain. If a person tills the land, sows the seeds, waters the crop, weeds the fields, but has a hired hand harvest the crops, that person is still a farmer. Likewise, if a salesperson explains a product's benefits, provides samples, offers contrasts with competing products, and handles objections, it shouldn't matter how the end customer actually fulfills an order. The salesperson is still a vital link in this process.
Consider this example. Suppose a customer manager from a major computer solutions company in the U.S. coordinates a global sales team of more than a dozen of the company's employees, including product specialists, engineers, and finance people. The team is working to win a multi-million dollar deal with a major banking customer. Team members analyze the bank's needs around the world and propose a solution. Ultimately, it is the sales team member from Belgium who closes the deal at the bank's headquarters in Brussels. If one were to use the narrow view that a person who "sells" must get a "binding commitment," then only the Belgian team member - the person who happened to be there to close the deal - is considered a salesperson. Yet clearly several salespeople contributed to the sale.
Selling can be thought of as sequence of steps. A typical sales process might include the following steps: Generate Leads. Qualify. Analyze Needs. Propose Solutions. Negotiate & Close. Grow the Business. In our view, if a person's primary job is to execute several key steps of a sales process designed to ultimately get a "binding commitment," and the job has significant face-to-face customer interaction, then that person is a salesperson. A salesperson does not need to participate in every step of the sales process, nor does he or she need to be present at the final closing of the deal. You are a judge even if much of the research and some of the writing of the judgment are done by your assistants or clerks. You are a tailor even if someone else does the initial cutting of the pattern and the final hemming.
In the pharmaceutical industry, salespeople primarily influence decision-makers such as doctors, formulary committees, or payers (such as insurance companies). Since doctors do not dispense pharmaceutical products in the U.S., the salesperson's role is to persuade the doctor to write prescriptions when the physician encounters patients that exhibit the appropriate symptoms.
Pharmaceutical salespeople do most steps of the sales process, and that is their primary job. They work largely alone, and the customer interactions are mostly face-to-face. Pharmaceutical companies screen candidates for sales skills and experience when they hire salespeople. They provide extensive training and coaching on selling competencies. They give salespeople data and tools to help them organize and prioritize their call schedule around doctors and decision-makers who affect patients who need the company's products. Pharmaceutical companies measure territory sales results. They give salespeople territory sales objectives, manage their performance versus the objectives, and pay incentives for achieving objectives. Effective salespeople sell more, and successful ones make 25% or more of their pay from performance-linked incentives. Several academic studies have found a link between sales force effort and sales in the pharmaceutical industry.
Today across industries and contexts, we see sales processes split or shared among people in order to optimize efficiency and effectiveness. Gone are the days when sales was done by a traveling salesman who single-handedly completed all the selling steps, delivered the product, collected the money, and made a commission. Most salespeople today do only some steps of the sales process, and most don't deliver product or collect the money. Most are paid bonuses on quota achievement, and not sales commissions. If the ruling goes for the plaintiffs, it will put much of the U.S. sales world's pay practices in disarray, inside and beyond the pharmaceutical industry.
Pharmaceutical salespeople "sell." And we hope that in its ruling, a majority of the U.S. Supreme Court justices will agree.
Copyright (c) 2012 by Harvard Business Publishing. Reprinted with permission.
This blog originally appeared on the Harvard Business Review website: http://blogs.hbr.org/cs/2012/04/what_does_it_mean_to_sell_ask.html.