Problem
As a student in the College of Business at the University of Illinois, Pooja Gupta wanted a job that would offer interesting challenges, give opportunities for professional growth, and value her enthusiasm. She found what she wanted with Ferguson. Ferguson was actively recruiting on college campuses to find the brightest and best candidates for its sales jobs-so, in a way, the job found her.
Gupta knew that motivated young people often find the best opportunities in fast-growing companies. She didn't expect, however, that her fast-growing company would be a wholesaler of plumbing supplies, pipes, valves, and fittings. To the contrary, she'd heard that many wholesalers were declining. But that didn't apply to Ferguson. For decades it has doubled in size about every five years-and now it's the largest U.S. distributor of plumbing products. And in a business that serves such a wide variety of customer types-large industrial firms, city waterworks, commercial builders and subcontractors, kitchen and bath dealers, and final consumers-you don't get that kind of growth without an effective sales force.
It's Ferguson's sales force that gets the initial orders with new customers, builds the relationships that instill customer loyalty, and provides the customer service support that Ferguson emphasizes. Its sales reps understand their customer's business problems and how Ferguson's products, e-commerce, and state-of-the-art logistics systems can help solve them. This expertise and focus on customer needs make Ferguson salespeople trusted partners.
An effective sales force like the one at Ferguson doesn't just happen. Someone needs to figure out the promotion jobs that require personal selling and then get the right people on the job. That is why Ferguson's marketing managers work closely with sales managers.
Ferguson carries more than a million products, provides service centers at 1,400 locations, and has divisions that specialize in different customer segments. It would be futile for sales reps to try to be experts in everything. Instead, sales managers carefully match each salesperson to particular territories, customers, and product lines. Gupta, for example, helps contractors in the Virginia market figure out how to satisfy the needs of final consumers for whom they are building or remodeling homes. She knows the current fashions for kitchen and bath renovations, how to reduce "behind-the-wall" plumbing installation costs for a big new apartment building, and the advantages and limitations of hundreds of brands from companies such as Kohler, Elkay, Moen, and Jacuzzi.
Ferguson's salespeople have very different days depending on the types of customers they serve. Some Ferguson salespeople work with cities and huge waterworks contractors on infrastructure projects such as updating water purification facilities. And salespeople for Ferguson's Integrated Systems Division (ISD) are really selling a big-business idea rather than "pipe." They show top executives at customer firms why they should invest millions of dollars in a full-service supply relationship where Ferguson does all the purchasing and warehousing for entire manufacturing facilities. Other salespeople work as inside sales reps. They don't meet with customers face-to-face, but instead communicate with customers on the phone, by e-mail, and via social media. These technical experts require a different skill set than the sales clerks who work in one of Ferguson's self-service Xpress outlets, where they primarily take customer orders, find the product in the warehouse, and ring up sales.
To recruit talented people for these varied jobs, Ferguson's sales managers use a wide variety of methods. For example, the "Careers" section of Ferguson's website collects job applicant profiles on an ongoing basis. When a position opens up, qualified candidates are notified. And Ferguson actively recruits on college campuses, typically hiring hundreds of graduates every year. After a pre-interview on campus, select candidates go to a regional office and meet a number of managers from that area.
After the best people are selected, Ferguson provides sales training to make them even better. Of course, the training is different for different people. For example, most new college recruits go through a 10- to a 12-month training program that rotates them through a range of jobs, from working in the warehouse learning shipping and logistics, to counter sales that helps them learn about products and Ferguson systems, and a stint in inside sales. The training utilizes a range of training methods, from self-study online modules to role-playing, to working in the field with experienced managers who help them build professional problem-solving skills as well as technical knowledge.
Even experienced sales reps need ongoing training on new strategies or policies. When Ferguson's management saw an opportunity to enhance customer loyalty, a training program was developed and implemented with Ferguson's 23,000 associates. They participated in face-to-face and online courses covering topics such as "the difference between customer satisfaction and loyalty" and "how to earn loyal customers." Ferguson estimated the return on investment for the training program at more than 400 percent.
To be sure that each salesperson is highly motivated, Ferguson's sales managers make certain that sales compensation arrangements and benefits reward salespeople for producing needed results. For example, the evaluation considers how well individuals work within a team-because in the customer service culture at Ferguson, great teamwork is critical. Ferguson's experienced reps continue to help contractors, builders, and home buyers choose the right supplies and fuel Ferguson's growth.
Answer the following question after reviewing the Ferguson case study above.
The case does not mention how the sales force is compensated-salary, commission, or some combination. Assume they are compensated by a straight (100 percent) salary and the company changes to a straight (100 percent) commission compensation. How might this affect how the salespeople behave? What behaviors might become more common? What behaviors might become less common?