Report: Legacy Sales Teams Struggle With Digital Product Sales

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borrell-associates-logoAsk virtually any local media executive about their most prized assets and the salesforce will almost always top the list. Silicon Valley might have the newest products they’re selling, they say, but they have the salespeople with deep local connections needed to bring that product to market.

One minor flaw in the logic: it’s possible they don’t.

A new report from Borrell Associates finds that the legacy sales forces employed by local media companies to sell print advertising often struggle to sell the new line of digital products which often includes software from third-party companies. The study, which includes responses from 322 managers in mostly smaller local media organizations, found that companies with digital sales reps generate four times the digital revenue per rep than those who rely exclusively on traditional-media salespeople.

Overall, the media industry is split about the need to retool their sales forces. According to the report, half of the media executives surveyed said they did not employ a single salesperson focused exclusively on digital products. What’s more, that percentage has actually dropped in recent years in part due to financial difficulties brought on by the recession.

Hesitancy among executives is a function of both financial constraints and the inertia of a still profiting institution, says Greg Harmon, a co-author of the report. Smaller firms often lack the resources needed to train and develop a new sales strategy and often the majority of revenue still comes from print products.

“I’m astonished at the decisiveness in the difference in performance between those with digital reps and those without,” said Harmon. “There’s a self-deceiving perception among a nontrivial amount of executives respondents that digital does not matter to their constituents. But the benefits are just too strong to be ignored.”

Digital-only teams outperform their legacy counterparts by a staggering amount. Companies with digital-only sales reps generated, on average, $216,750 in digital revenue per salesperson compared to under $54,800 for those with a mixed salesforce.

In part, the variation is likely a problem of incentives. Of the companies which did not hire digital-only teams, more than half of the respondents said salespeople were not adequately motivated to sell digital products. Whereas with firms with digital-only teams, that figure was less than 15%.

But the success is also a function of deep knowledge of the products as well. The study found that digital sales reps were far more proficient in explaining digital marketing trends than their counterparts and that they were substantially more consultative in working with an advertiser to understand the digital products.

The reality is that sales organizations with media companies are subject to the same digital displacement as product and distribution. The job of a salesperson varies dramatically between mature and immature industries. In the former, it’s about maintaining relationships and price. In the former, it’s often about demonstrating value — and that takes a substantially different set of skills that extends beyond learned knowledge.

Local media will not disappear, but the integrated structures on which companies have relied for years likely will. The relationship between content and sales operations has already weakened, and as media companies rely more on reselling third-party products for revenue, there will be sound logic to spin off the more profitable sales wing.

“It’s amazing level of difficulty to adjust to shifts that are this fundamental in how technology operates,” said Harmon, speaking about the outlook for local media. “That they survived at all is pretty amazing.”