Thursday, August 18, 2016

Do salespeople become obsolete? That’s the question.

If you look to sales experts to give you the answer, you will be disappointed. There are two fractions. One fraction of experts predicts that due to the internet, many sales jobs will disappear in the coming years. There is another fraction which has researched the numbers and comes to the conclusion that the number of people in sales or sales related occupations is surprisingly resilient to the influence of the internet. 

For economists, there is nothing wrong in this contradiction. In economic debates, you find almost always a fraction lead by Nobel laureates having one explanation about what happen or is going to happen in the economy, and another fraction of equally smart people, also lead by other Nobel laureates, coming to a contradictory conclusion  (A statement from Olivier Blanchard the former chief economist of the IMF).

Why is this question relevant?
One of the fundamentals of the philosophy of science is that if something is considered true, the opposite cannot be true at the same time.  We are thus in a philosophical dilemma, having though very real consequences for sales people worrying whether they still have a job in 5 years’ time or for students wondering whether engaging in a sales curriculum at university level will provide sufficient job opportunities after graduation.  For me, this is also a question of professional conscious as I teach “Sales” at two universities in Germany.

It is not a debate about being right or wrong
I could be happy to take side with the fraction of experts having looked at the numbers and having found a surprising resilience of the sales occupation to the influence of the internet. What data have they looked at? They have looked at statistics from the US Bureau of Labor Statistics (BLS). In these statistics, they have found that the number of workers in sales and sales-related occupations has slightly increased over the period from 1999 to 2014.  This statement has to be interpreted with caution. The Standard Occupational Classifications for these statistics have changed twice between 1999 and 2014. It is reported that the classification of sales and sales related occupations has changed with these revisions. So are we sure that we compare apples to apples in this long time series? 

When we listen carefully to the fraction predicting that many sales jobs will disappear over the next few years, they never talk about the obsolescence of the sales occupancy as a whole. They look at a more granular level. On that level, they predict that the number workers in some sub categories of sales and sales related occupations will shrink. They also predict that some sub categories will grow over the same time. I do not know whether the categories used by the fraction of the experts, who predict a disappearance of many sales jobs, can be reconciled with the Standard Occupational Classifications. This fraction’s view is however that the overall number of sales people is expected to shrink. 

I prefer the more granular view as it is well known that looking at data at a highly aggregate level bears the risk to miss underlying trends. This phenomenon is well explained in the book “Granularity of Growth,” written by a group of McKinsey consultants.
Let me illustrate the importance of granularity with an intuitive example.  Take sellers of advertising space. I do not expect the number of this category to shrink anytime soon.  For this category, the type of advertising space they sell changes. Instead of space on pages in newspapers and minutes on TV channels, they now sell space on Internet pages. Take clerks in bookstores as contrast. I think nobody will contest the fact that many bookstores have gone out of business, or their existence is put in danger due to the number of books bought directly via the internet.  The jobs of those clerks, therefore, have already disappeared or are at risk to become even fewer. 

I also prefer this granular view for my professional conscious. I prepare students to be able to fit into sales jobs in the category where the experts expect the number of jobs to grow.

The fraction of experts defending the resilience of the sales occupation also have some more intuitive arguments for their optimism. They rightly observe, that the introduction of a new category of communication (e.g. from Radio to TV) has never lead to the obsolescence of an already existing category. 

This was also true for many years for a new form of sales occupation. When people started to sell over the phone in the B2B environment, there was a general expectation that this would have a negative impact on the number of sales people selling face to face.  For many years, the number of people selling face to face was not negatively impacted by those selling over the phone.  However today, I think it has become difficult to deny the trend that the number of field sales people (face to face) is at best stagnant while the number of inside sales people (phone and internet) is significantly growing.  So we might be faced with a considerable latency before impacts of the Internet become statistically visible. As the example above shows though, on a sufficiently granular level, we have anecdotal evidence that the number of sales jobs is shrinking in certain categories due to the internet.

Instead of debating on a macro level about the evolution of the number of people in sales or sales related occupations, I prefer to look for underlying drivers that could have an impact on specific categories of sales occupations. For this purpose, I have created the AH4RJ customer type. This acronym stands for a customer who appreciates help for rational justification. For this type of customer, sales people can provide value. Sales people operating in this sphere do not need to worry about their jobs becoming obsolete. To the contrary, this is the space where I expect a growing number of jobs.  However, sellers serving customers, who consider they do not need help for a rational justification of their purchasing decision, should carefully watch if their position risks becoming obsolete.

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