Linda Richardson interviews Mike Ahearne, PhD, C.T Bauer Chair in Marketing at the University of Houston, Executive Director of the Sales Excellence Institute, and Principal at ZS Associates.
There was a time when sales leaders had little regard for research. Gut feel ruled. In today’s competitive marketplace sales leaders often turn to sales research as a key component of their decision-making. But there is a whole side of cutting edge sales and marketing research that does not appear anywhere on their radar. Mike Ahearne is dedicated to changing that. He is taking academic research from the ivory tower to your bottom line.
Mike Ahearne, PhD, MBA, Chaired Professor of Marketing in the Bauer College of Business at the University of Houston, and Executive Director of the Sales Excellence Institute, and his colleague Tom Steenburgh, PhD, Professor of the Darden School of Business, conceived and implemented the Thought Leadership on the Sales Profession Conference.
After two decades of attending segregated academic and practitioner conferences Mike and Tom recognized an opportunity to create an event that would bring together leading academics (university professors) and high-level practitioners (consultants and sales leaders) from around the world. By closing this gap and joining forces they could leverage the best of both worlds. Academics would bring the rigor and sophistication of their research and innovations to practitioners and report their findings in terms practitioners would value and understand. Practitioners would provide feedback and insights to increase the relevance of the research and help direct it to high priorities. Most importantly sales organizations would benefit from the combined thinking and broadened perspectives.
This union was not easy to pull off. Academics were excited to share their work with practitioners but initially nervous about their ability to make their state-of-the-art research sound relevant and interesting to practitioners. The practitioners, many of whom never heard the academic perspective, worried that their research would be critiqued and challenged as soft by the academic.
The first conference was hosted by Harvard University in 2012. I was privileged to participate in the second conference at Columbia University, 2014. In addition to more traditional keynote talks, presentations at this event took on a number of innovative formats. These included point counterpoint sessions where consultants and academics engaged in debates on hot topics as well as numerous TED style talks by academics followed by panels of practitioners providing feedback and discussing potential impact on practice. These sessions were very valuable with the 100 academics gaining insight into sales problems they should tackle and practitioners gaining a new appreciation of the value and application of academic research. The win for the 150 sales executives was a broader perspective and new ways, resources, and tools to make decisions and solve their problems.
It was two days of insights and innovations. The research in all sessions was conducted with real sales organizations, the gold standard of research. I asked Mike to identify two of the sessions what would illustrate the synergy of academics and practitioners. He selected Customer Delight and Sales Force Compensation:
Customer Delight: The Debate
The debate made for a lively session. On one side was Nick Toman from CEB presenting his work on CEB’s new ideas on Customer Delight/Effortless Experience. On the other side was Dr. Roland Rust, University of Maryland, luminary in the field of customer satisfaction. The debate centered on the question of delighting vs. satisfying basic customer needs, a topic that many academics have spent their careers researching.
Nick presented CEB’s perspective that focusing on delighting customers is not optimal since achieving customer delight often leads to decreased profitability. He argued that companies should be more concerned with satisfying the base needs of customers in order to achieve optimal outcomes. Roland presented research aimed at dispelling this by pointing out that satisfaction (which deals with satisfying base needs) and delight (which requires an element of surprise that the customer did not expect) are on two different spectrums–being high on a satisfaction scale does not mean the customer is delighted—a customer can be highly satisfied but not delighted. He further pointed out that although delight often leads to increased customer expectations, it also raises the expectations of the competition and gains market share. Roland concluded that firms should be using inexpensive, interpersonal ways to delight customers.
Sales Force Compensation (Three Sessions: What Works/What Doesn’t)
Mike introduced this session and described to the group how companies continue to struggle with compensation and most decisions are based on gut feel because there is so little solid research on the topic. The research presented in TED style format by the academics in this session all involved field experiments (treatment vs. control studies) executed in leading sales organizations. These field experiments are considered the “gold standard” for research and are not common since companies are often reluctant to experiment with compensation.
Is Cash King?
Dr. George John, University of Minnesota, Carlson School of Management, answered the question, “Is Cash King?” He focused on the impact of giving away cash vs. non-cash prizes in incentive programs. Based on a field compensation experiment with a major corporation, one of his main findings was that non-cash prizes have a stronger impact on a salesperson’s performance because these prizes are more memorable than cash (which tends to be used to pay bills).
Reward Effort or Results
Dr. Ian Larkin, UCLA, Anderson School of Management, dealt with the question of incentivizing salespeople on inputs (like sales activities and product knowledge) vs. the outcomes themselves (like total sales or market share). He made an analogy to education where many children perform better when given quizzes throughout the year as opposed to just final exams. By conducting a field experiment in a large sales organization, he was able to test the two approaches and found that sales performance significantly increased when input incentives were also included in the compensation system. He further found that these input incentives were most useful for new salespeople.
Rewards, Penalties, Gifts
Dr. Doug Chung, Harvard University, conducted a field experiment with the sales force of a major corporation that showed that incentives used as penalties outweigh the effect of incentives used as windfalls. There were three conditions in his study: Reward (a bonus given at the end of the week if sales exceeded quota), Punishment (a bonus given at the start of the week but taken away if sales did not meet quota), and Gift (the control condition where a bonus given at the start of the week that was not dependent upon performance). Surprisingly, the punishment condition induced the greatest level of performance and increased firm profits by 21% verses a control condition.
A panel of sales leaders and consultants reacted to these three presentations and provided excellent feedback and suggestions to the academics such as new ideas for creative approaches that can be researched in the future as well as a discussion of possible barriers they may face in implementing these methods in their sales organizations.
One of the biggest challenges has been taking academic research and making it more usable on the line. Mike recommends two academic journals that aim to accomplish this:
The Journal Personal Selling and Sales Management—for every article that is written in this journal, authors are required to write a one-page Executive Summary to explain the value of findings and impact on practice.
The Journal of Marketing—the journal for top-end marketing, sales, and sales management articles that typically features at least one article on sales force management in each edition.
The Thought Leadership on the Sales Profession Conference is unique in bringing together academics and practitioners. The conference features an open call for papers where researchers are asked to submit their ideas in a short presentation format. These submissions are screened by a high level group of sales executives and leading academics. This process is quite different from the pay for podium trends that we are all too often seeing at events in our field where consultants sponsor an event in return for presentation opportunities.
Mike’s vision is to bridge the gap between academia and practice in the sales area by creating opportunities for the two groups to interact and share ideas. In addition to the obvious benefits this has for sales organizations looking to improve practice, formalizing sales knowledge is an important step in integrating sales education into the curriculums of leading business schools around the world. This is a vision I subscribe to.
To contact Mike Ahearne and learn more about the research and the 2016 Conference at Stanford University go to email@example.com