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By Sarah Ruby

Sloan Fellow Jonathan Solomon has renewed sympathy for sales managers—particularly those he used to employ. That’s because he took a Business School elective titled Building and Managing Professional Sales Organizations, a class that simulates the world of selling portable ultrasound devices.

“I used to crush the VP of sales for not giving me accurate forecasting,” said Solomon, Sloan ’07, who ran a technology and warehousing logistics company based in the United Kingdom before coming to Stanford. “I could not understand why he was so far off.”

Solomon has a better idea now that he’s taken the sales class taught by marketing Professor James Lattin and Lecturer Mark Leslie, cofounder of Veritas Software. Together they developed a computer-based game meant to teach sales firsthand.

“They made it clear that there is no magic [to forecasting], that it is a very complex and difficult thing,” Solomon said.  The game lets students learn by doing.

“It occurred to us that we couldn’t simply lecture the students about how hard forecasting is—they’d nod their heads but they wouldn’t really get it,” Lattin said.

A typical day in the internet-based game goes like this:

Solomon and his classmates log on and assume the persona of Taylor Richardson, a new sales rep facing down a $2 million annual quota. Students typically simulate a fiscal quarter per sitting, allocating 600 hours to a variety of sales-related tasks such as qualifying leads and showing off the inventory. As they divide their time they make decisions: Should they run extra demonstrations for the large hospital account? Or would they be better off working on several smaller deals?

The art of the game is to hit on an eager client. As in life, it’s difficult to tell who those clients are. Deals fall through with no explanation. Students throw hundreds of hours at big clients only to lose them. The computer decides which deals close and which fall through, and Lattin and Leslie post the results in class. As in a real sales organization, the best reps are celebrated with fictional oversized checks and trips to tropical paradise.

“There were a lot of students who objected to this idea that they couldn’t find the key [to the game],” Lattin said. But it’s “not about [finding a] secret, it’s about the process you use to deal with what comes at you.”

That’s not to say there isn’t science to selling. Some customers, particularly large ones, won’t be rushed no matter how many times Richardson demonstrates the device. The trick is to spend enough time on each account to keep up the relationship and devote the rest to developing other leads.

After a few simulated years as sales reps, the students are promoted to managers. Now they log on to find an entirely new set of tasks ready to gobble up their hours. They manage a team of sales reps responsible for bringing in more than $12 million in sales annually, and some are better salespeople than others. Richardson must figure out if working with an inferior sales rep is preferable to the hassle of looking for his or her replacement. What if the new hire is just as bad?

Solomon, who said he was a far better manager than sales rep, described his strategy this way: “Manage people the way they need to be managed, and when they don’t work, can them.”

His classmates came to the same conclusion. “You’d be surprised how quickly people start pulling the trigger [on poor performers],” Lattin said.

Sales managers also have to forecast sales based on information from individual sales reps. This poses a problem—some reps are overly optimistic; others believe in under-promising and over-delivering. None of this helps the sales manager, whose job depends on accurate forecasts.

The most successful Richardsons learn to ignore their reps’ own forecasts and rely instead on what kind of deals the sales team has in the pipeline. How many big deals are in the works? Historically, how many big deals end up closing? Likewise, how many small- and medium-sized deals is each sales rep working on? How many close, statistically?

“Good forecasters look at the pipeline quantitatively,” said Jeffrey Yuwono, MBA ’07, who also took the class. He doubts he would have internalized this lesson through hypothetical discussion. “It’s just one of those things you have to go through and try for yourself,” said Yuwono, who plans to start his own online gaming business.

“What it did give me is a bunch of tools,” he said. “I can look at the sales team in a completely different light.”

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Also on Stanford Knowledgebase:

  1. Startups Need a Special Learning Curve for Sales
  2. Students Design Products for People in Developing Countries
  3. Eliminating Sales Quotas May Stimulate Profits

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