The Hidden Risks of Increasing Internal Sales Headcount
This is a recent Opinion published in Ignites
By Mary Anne Doggett
Almost 50% of asset managers plan to add more internal wholesalers than externals over the next year, according to kasina. Yet many of these firms will sabotage their own efforts to hire the right candidates and retain top talent by sticking to a business-as-usual approach.
Why is the wholesaler hiring process so flawed? In many cases, the root is hiring decisions based on an outdated job description for internal wholesalers.
For time-starved sales managers, the tacit urgency to fill open positions “yesterday” can result in taking shortcuts. Often sales-desk managers hastily source candidates, do a full-court press on interviews and provide the new hires with crash-course onboarding training, often just focusing on product knowledge, followed by on-the-job baptism by fire.
What makes these practices particularly risky is that they do not address how the sales-desk business proposition has changed and the implications that this evolution has for hiring and retaining the right wholesalers.
There are three primary trends that fund firms’ sales managers should factor into the interview process when hiring internal wholesalers:
The internal sales-desk job has fundamentally changed. On average, 85% of calls internals make are not answered by a live advisor; they go to voicemail. Advisors return sales desks’ calls less than 10% of the time, on average. Scheduling appointments for externals is no longer the bread and butter of the internal’s day. Most sobering is the reality that advisors are not willing to spend time with a less than highly skilled internal.
Skills that made internals successful in the past are causing them to fail today. Internals who have adapted their sales approach to ditch the pitch are leaving high-activity-focused internals in the dust. Productivity-oriented, template-based sales presentations, e-mails and voicemails are no longer effective. Successful internals are now more strategic. They are savvier marketers and understand that customization, not volume, drives sales.
Career-path options continue to shrink. Fund firms that hire more internals but fewer externals create a bottleneck for tenured internals in reaching their primary goal — graduating to the field. Sales-desk managers are running out of options to keep internal reps motivated. That means the loss of some rising stars, lured either by more money or more near-term opportunities. Probably the biggest unrecognized cost for fund firms is the capacity drain on the sales-desk manager’s time as a result of the continuous need to source, interview and train internals.
This evolved business proposition for the internal sales desk dictates changes in strategy and tactics to make sure that any investment in resources pays off. How can fund firms keep tenured internals motivated and ensure that all internals acquire more advanced skills to successfully develop relationships and meet advisors’ high expectations?
Segment the job to create a competency-based (rather than tenure-based) career path for internals. Firms can motivate internals by creating segmented roles within the sales desk based on skill. These levels add stature. Sales managers can also define specific competencies for internals that can be adjusted over time to reflect changes in the business proposition. Ideally, the compensation gap for the most senior internals compared to externals will narrow. These changes will make the job of the internal challenging enough to reduce tenured turnover.
Prioritize the high-leverage components of the sales-desk manager’s job. Sales-desk managers have the greatest impact when they have the time and capacity to coach the more senior players and help them reach their next level of effectiveness.
This is counter to what typically happens today, when most of the sales-desk manager’s time is spent getting new talent up to speed and keeping the low-end performers from compliance disasters. Sales-desk managers largely become firefighters who have no time to develop and execute strategy.
Instead, they should be playing to the strengths of their better players and creating scale with a higher level of skill. Senior managers need to help sales-desk managers take some lower-leverage tasks off their plates.
Address the gap in skill development and metrics. Internals get most of their training as new hires and are then left learning how to improve on the job. Many are not formally tasked to learn advanced selling or strategic skills. Some firms are providing deeper technical knowledge, which is a great start. But often this technical training competes with becoming better at sales and relationship management. Having more technical information does not directly connect to more advanced selling skills.
Some progressive asset managers have instilled processes where wholesalers need to reapply for their jobs based on core competencies and today’s evolving requirements, not tenure. They are incorporating measures that go way beyond tracking the number of dials and quality calls to include metrics such as contact-to-close ratios, prospect conversion ratio, Web meeting engagement and pipeline management.
It takes time and leadership for managers to execute these suggested changes. As a starting point, fund firms will get the most near-term impact from two initiatives:
- Training high-end performers in advanced skills following the 80/20 rule; and
- Establishing a competency-based development program for different stages of an internal’s career.
In the end, sales desks can capture the real opportunity that comes with adding more people by integrating strategy and tactics that can help the internal sales force grow professionally and to minimize the high cost of turnover.