local media insider
Case Study

How Source Media re-organized sales into "hunters and gatherers"

Unhappy with new sales numbers? This initiative has paid-off in developing a consistent source of new customers.

Alisa Cromer
Posted

Sites: KCRG.om.  3 to 4 million UV’s, 10 million pageviews;  Gazetteonlinecom:, 350,000 UV's; plus IowaPrepSports.com and CorridorCareers.com
Market: Eastern Iowa
Company: Source Media Group (formerly Gazette Communications)
Key Executives: Chris Edwards, Vice President of Sales and Customer Care

Summary: Source Media was one of the earliest  and most aggressive  local media companies to organize content around "digital first" principles. Its second sales reorganization re-addressed compensation and job descriptions in fundamental ways. After losing about 20% of the sales force, and adding four new media agnostic "hunters," the strategy is now achieving new business targets, including 18 new contracts a month from a "hunter-only" team, with no account disputes.

Challenge:  By August 2010, Edwards initiative to  integrate the print, broadcast and online sales forces had resulted in a 60% year over year revenue growth.  But by early 2011, the growth rates was still not enough to meet aggressive targets. Even with all the changes, Edwards was  “wildly frustrated” by by the inability of his team to generate significant new business. 

The goal was five new accounts (not including call ins, which were handled by account managers) a month per sales rep, a target matched up with  bonuses in the new compensation plan. By the third quarter 2011, only 25 new accounts had been acquired by the entire team in a six month period.

Edwards says, his first reaction to the poor results was to throw a tantrum - "I went crazy and screamed at people" - that drove 18 new sales the next month. But clearly a new approach to the problem was needed.

Strategy

1. Hunters and gatherers

Edwards solution was to split the group into  two teams, loosely modeled on "hunters and gathers."   The legacy team would focus on managing accounts and building market-share-per-customer, while  a new four person acquisition team would only sell new business (defined as an account that is not a call in, and which has not run in six months) with the goal of bringing in 25 to 40 new accounts per month. After 30 days, these accounts were turned over to the strategic team. 

The first hire for the new team was a legacy rep with an interest in sales management. The next three hires were sales professionals, who like Edwards, came from outside the media industry. 

One new twist here is that instead of digital only sellers, the acquisition team is media agnostic, able to sell all products, including TV, the daily deal and inserts.

And they don't have product goals. "They go to market with the idea that  'all I want is to help your business.'"  Edwards says in 2012 the company may eliminate product goals entirely, which will also transform how product managers go about development. "You will have to no keep (new) products relevant or you are out of a job." 

2. Account managers for small accounts

The third tier in the sales structure is a team of Account Managers - formerly the classifieds department - who now handle a rage of  smaller accounts, including "transactional accounts and bars and restaurants."  They can not "get out of the chair" and go see accounts if they need to. Picking up cash from clients has been eliminated in favor of credit cards and billing. COS for this tea, has declined from 80% to 60% since these changes were made.

Strategic teams are encouraged - and sometimes requred - to turn over the smaller, high maintenance accounts to account managers and focus on larger ones.

3. Compensation

Another key initiative was moving the entire sales team (with the exception of the account managers)  to a commission-only basis.  Business development specialists earn 33% on sales they bring in,  for four months, and have a six month draw to get up to speed.  So after the account is turned over to a different rep, "hunters" are still incented to help the transition work. Both sales reps also are able to include common accounts in their revenue goals.

Since there is, essentially, a double commission for four months,  the accounts can have a cost of sale of 50% for that time period. However, a 2% increase in business pays for the program over a two year period; since once a significant number of new businesses have been acquired, their cost per sale in the second year is much lower. Put another way, every 1% increase in new buinsess lowers the cost of sale by 1.5% in year two. 

Edwards said he was most concerned about the reps reaction when creating the straight commission percentage. "What I said was if you make this years target of a five percent lift, you will make more money than on the old plan.  Commission rates work out to be  10 to 15 percent, a little higher in print.

Spiffs on the whole contract for hunters doesn't work, Edwards says, because a lot of these sales start out with a "toe in water" sale, such as a group deal, and work upward from there. But since two reps split almost 50% for four months, "you have two very interested parties" growing the business. 

Edwards expects the strategic sellers to handle 40 to 60 accounts before the model starts breaking down.  "My hope is they will be so busy they won't have time to prospect."

4. Performance evaluations

To get rid of the casual complainers that often poison the team, Edwards made another rule: 50 percent of the annual performance evaluation is based on attitudel It does not affect compensation,  though he hasn't ruled it out. Sales representatives have to demonstrate the ability to sell all legacy media and to sell online before legacy, and to participate in team meetings on new products.

"We've had plenty of time to talk around the water cooler about the state of the industry, those days are over."

Results

Edwards predicted the compensation change combined with the reorganizaiton would cost the company five of its fifteen reps.  Ultimately only three left.

The reps are paid "whichever is better" between the old and new plan for three months. By March, nine of 12 reps were on the new plan. 

But most important, the number of new contracts immediately jumped from nine the first month to 18 the second month.  The hunters also help out by selling even legacy accounts if a sales blitz is not making the numbers. 

Lessons learned:

1. Investing in new business

No matter how the sales organization is arranged, it has to be able to create more new business horse-power. That usually means additional sales people who are "starting from scratch." 

2. Media agnostic hunters

In this model of hiring "hunters" new business sales representatives are not purely selling digital products. Additionally, they are fully integrated with the legacy teams, since the latter ultimately will handle these accounts. That makes them truly media agnostic in how they bring customers into the organization.

3. Compensation

A key to the model is paying double commissions for four months, essentially incenting the team handling the new account to work together to fully develop the revenues. 

4. Longer term focus

To adopt this plan takes a longer term focus, both on the value of the accounts over at least two years, and on the reality of sustaining new business growth over time.  The more pure "hunters" model will continue to fuel new business organically since accounts are turned over.  Also, it ensures that "high-potential" accounts are worked more thoroughly. Edwards says that one of the time consuming commitments he has made as a manage is to go through the account lists, identify high value accounts and make sure they are adequately managed. 

We like the seriousness of the approach, and the willingness to "blow-up" an existing model that isn't working with one that is more intelligent and integrated.

Thanks to Chris Edwards for once again sharing his expertise and experience at Source Media with our members.  

Alisa Cromer

The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and  MediaExecsTech,  developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine,  to showcases perspectives from around the  world on new topic each month, translated from and to the top five languages in the world.


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