I recently delivered a Web presentation to much of the team at Corporate Visions. (It’s pretty smart of their executive team to have outside experts present.) I chose to speak to them about ESR’s view of the current state of sales training, conclusions we’ve drawn from that view, and imperatives that are required for sales leaders and trainers to increase sales effectiveness going forward.
During the Q&A, Joe Terry, president of Corporate Visions, asked me why the sales training industry is so fragmented—why there is no clear industry leader. This is a subject that always seems to come up whenever investors who are considering funding the acquisition of one training company by another come to ESR for advice. Journalists are fond of asking this question, as well.
My reply? Here are a few of the reasons why there is no dominant player in the sales training space:
1. The barrier to entry is minimal. Anyone can set up a Website and call themselves a sales trainer. And they do. Unlike other professions, there isn’t a certifying authority, an exam to pass, or any minimum requirements for experience, knowledge, or competence.
Contrast sales training and practicing law from a storefront—another fragmented industry. In fact, law firms are considerably more so, with Baker & McKenzie topping the list at 3,300 or so lawyers. Here’s a fact: Fifty percent of the 1.14 million lawyers in the U.S. are practicing alone. There aren’t nearly that many sales trainers.
Contrast being a sales trainer to being an auto mechanic, a plumber, a hairdresser, a pilot, a teacher, or an accountant. Those professions all require certification or a license from some regulating body. Not so for sales training. Barrier to entry? Zip.
I’m not suggesting that one-person training firms don’t deliver value. Many do, but many, many more don’t. I read the articles and blog posts. There is a lot of wrong information being dispensed out there, and it continues to inhibit real progress from being made in the area of sales effectiveness.
So, you’ve got a situation where there are many hundreds of sales training firms, some with one or two people, all going after their piece of the same pie. And the pie is getting smaller, not larger, as more corporations are bringing sales training in house and/or reducing sales training budgets.
2. The job just isn’t getting done. Buyers of sales training, unlike buyers of most other critical business products and services, tend to depend more on gut feel, tapping into their business network, going with whom they know, and name recognition rather than a formal evaluation approach to select a vendor. That often leads to selecting the wrong provider. And that leads to the customer not getting what they need.
So instead of a vendor having many repeat customers for five, 10, or 20 years each, we find companies regularly switching vendors, seeking one they believe can finally get the job done. I’ll be the first to acknowledge that many vendors, small and large, do have long-term clients, but let the fragmentation of the industry speak for itself.
3. Companies don’t invest enough in sales effectiveness. Companies, in general, aren’t investing enough in a strategic approach to sales performance improvement, including training. Some large percentage of sales leaders are still—after all the research that has proven that this is the wrong approach—looking for the easy way out.
That often takes the form of nothing more than a day or so of training a year for their salespeople, just so they can check the box. It’s hard for a sales training company to build a substantial and ongoing revenue stream from that.
What does this mean for buyers of sales training? They’ve got much more work to do to find a partner with whom they can collaborate in a long-term relationship, which would be profitable for both. It would be so much easier if there were only 10 $100 million players and a bunch (not hundreds) of smaller ones. But that’s not going to happen anytime soon.
Dave Stein is the author of “How Winners Sell” and CEO and founder of ES Research Group in West Tisbury, MA. In addition, he delivers keynote speeches and workshops on sales performance.
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