hybrid wholesaling

Creating a Business Continuity Plan for Wholesaling

Posted by Mike McLaughlin on Nov 15, 2010, in Thoughts , tagged with , , ,

A few weeks ago I met with a sales exec from a fast-growing fund firm.  The wholesaling organization has been extremely successful and close-knit over the last few years with almost no voluntary turnover among externals.

As the conversation moved toward planning for 2011, the exec said, “I suspect next year might be the first time we see some people leave.”  This struck a chord with me and got me wondering:  how well do wholesaling teams plan for discontinuity and turnover?

I think the answer is not very well, primarily because things are managed reactively.  Consider the questions that need to be addressed if an external wholesaler leaves:

  • Do we need to replace the wholesaler?
  • How fast can we get a replacement in place?
  • Should we replace the wholesaler from inside the firm?  From another territory?  From the internal sales team?
  • Should we replace the wholesaler from outside the firm?  Who are good candidates?
  • How should the internal wholesaler’s job change in the short-term?
  • How does this impact our territory sales projections?  Our national projections?  Profits?
  • How do we communicate the changes to our clients?
  • How do we communicate the changes to the rest of the team and firm?

Basically, the importance of each field wholesaler makes a transition very complicated.  And concrete answers to all of the above questions are rarely defined in advance.

I’d argue you can and need to plan for turnover.  Three straightforward steps we advocate:

  1. Devise a Tiered Action Plan. The impact of and reaction to a top wholesaler leaving is different than when a rookie external washes out.  Identifying a roadmap for what will happen when various types of wholesalers leave unexpectedly makes the change that much easier to handle.

  2. Continuously Recruit. Hiring is hard.  It takes time, and there are so many variables to consider before an offer can be extended.  Sales managers should not just be meeting potential wholesalers but formally interviewing them even when there is not a clear open position.

  3. Incorporate Turnover into Annual Planning. While sales plans often model good/bad/expected scenarios, rarely are organizational setbacks included into those models.  “Well, our results really suffered when we lost Jim and Pam” is an explanation for underperformance that should be accounted for in advance.

With many firms in the midst of 2011 planning, the time is right to bring business continuity plans to wholesaling teams.

Hybrid Wholesaling Evangelism Needs a Break

Posted by Mike McLaughlin on Oct 08, 2010, in Thoughts , tagged with

Cerulli Associates recently released a report on wholesaling, citing the following as a central finding:

Hybrid wholesalers average approximately 50% of the production of a traditional field-wholesaler for 40% of the cost, but work best as complementary resources.

A press release for the report indicated that these numbers make a compelling case for the integration of hybrids within sales teams.  To that I say:  maybe.

Consider the efficiency results cited by Cerulli.  Taking the data at face value – 50% production at 40% of the cost, on average – even moderate variability means firms have a reasonable probability of actually seeing reduced sales effectiveness. We’ve done a lot of this research in the past.  Sometimes hybrid wholesaling doesn’t pan out.

Sure, firms need to consider if, and how, to use the myriad sales role definitions that exist between a pure internal and a pure external.  There’s real opportunity there.  But there’s no need to evangelize hybrid strategies.  The discussion should be about the thoughtful and detailed analysis needed for firms to decide what approach is right for them.

Hybrid wholesaling has been around a long time.  And it’s not right for everyone.