Sales Manager's Dilemma: Short-Term Revenue vs. Long-Term Value

Introduction: The Sales Manager's Balancing Act

Building efficient sales teams is a difficult challenge for any modern sales manager. Managing those teams in a way that contributes to both short-term goals and long-term strategy implementation is ultimately more difficult still. This paper examines how to fine-tune management techniques for sales forces in contemporary business environments in order to achieve a workable balance between the conflicting interests of short-term revenue objectives and the implementation of long-term corporate strategies — primarily through the creation of sustainable customer value.

In this context, the paper analyses reward and motivation systems adopted by leading companies with the purpose of resolving their sales teams' permanent dilemma: delivering short-term revenue and profitable results while simultaneously implementing corporate strategies and building longer-term customer value.

In rapidly changing business environments in this digital era, companies review and revise their strategies very frequently. At the same time, sales departments are often among the least-affected by those revisions, even though sales people are the ones who carry new strategy directly to customers. This situation is particularly difficult when a company's sales force is geographically dispersed — for example, across Europe. Such dispersion, on one hand, enables the building of closer and more trustworthy relationships with customers, which facilitates long-term customer value creation. On the other hand, a remote sales force structure adds considerable complexity to the management process, especially in the areas of performance management, reward, and motivation. The goal of this research is to determine the right mix of HR and sales management techniques in those areas so that the short-term versus long-term dilemma can be effectively resolved.

Why This Topic Matters: Theoretical and Practical Importance

The area of strategic sales force management is particularly interesting and important in the contemporary business environment from the standpoint of both short-term revenue and long-term value creation.

Based on twelve years of experience in sales across different roles, culminating in a position as Director of Sales for the EEMEA region at one of the largest global computer hardware manufacturers, the author is confident that building efficient sales teams is the ultimate challenge for any manufacturing, distribution, or service organisation. Few companies actually measure sales teams by balancing the criteria of short-term revenue results and long-term customer value creation. That is where many organisations make management mistakes, undervaluing the importance of long-term objectives for their sales teams. Overlooking or underestimating the contribution of corporate sales departments to strategic customer value creation may lead to deteriorating corporate performance over the long run.

Many sales managers struggle to design strategic goals within their sales departments that achieve a balanced approach — securing short-term results while ensuring long-term value is not sacrificed. In this area, reward and motivation systems are often treated as a kind of "legacy we have to live with," when in fact they can be an important and active part of a sales manager's strategy. To create productive sales departments, companies must not only build the right team; they must also ensure that the right internal policies are implemented to properly motivate and reward not only results, but also the behaviours that lead to those results — behaviours that address both short- and long-term goals. Designing such policies is ultimately far more challenging than simply setting revenue targets.

Strategic changes frequently require changes in a company's HR tools and procedures, and these changes inevitably spill over into sales management. One of the most difficult managerial tasks is to design effective performance management techniques that ensure sales people focus not only on short-term revenues, but also nurture and develop long-term partnerships with the company's customers. The modern shift toward more remote sales force management only adds to the overall complexity of the issue.

Literature Review: Key Frameworks and Findings

The initial literature review confirmed both the importance of and increasing academic interest in this subject. There are multiple dimensions related to sales management in organisations. For example, Harvard Business Review offers regular coverage of strategic sales management, discussing how to reduce the disconnect between the sales force and corporate strategy.

One framework that features prominently in this literature is the distinction between Behaviour Control (BC) and Outcome Control (OC) systems. The OC approach concentrates a sales manager's efforts on extracting revenue numbers — the outcome — from sales people. This indisputably shifts the focus of sales people toward customers and away from their managers' guidance. This is the principal weakness of OC systems. Companies adopting the BC approach, by contrast, concentrate the entire sales management concept on developing, motivating, and rewarding the behaviours that lead to those outcomes. The BC type of management ensures that employees are more management-oriented in their daily work — that is, they listen to and implement what their managers want from them. Scholars argue that the BC approach secures a company's long-term success, while OC systems concentrate only on short-term results.

In Rethinking the Sales Force, Neil Rackham and John DeVincentis write convincingly about the need for sales forces to change alongside rapidly changing markets, and about how they can successfully adapt. The book takes a thorough look at what it takes to sell in today's environment. The concept of a two-tier sales force reflects the separation between long-term strategic objectives and short-term revenue goals, and the book offers numerous strategies and corporate examples focused on how the sales force can create value — rather than simply communicating it to customers.

Also valuable is Sales Management by Robert J. Calvin. Calvin argues that securing balanced, workable solutions for sales forces — delivering short-term goals while ensuring long-term strategy implementation — is the ultimate challenge for any sales manager. He contends that it can only be achieved through the implementation of a complete sales management cycle: hiring the best people, training and coaching them, deploying the sales force effectively, motivating team members, automating performance tracking, and finally designing compensation plans that reward both the behaviours and the results the company wants to achieve.