Traditional media companies struggle to find the right formula for digital sales. The challenge isn’t really about deciding whether to go with a pure digital only approach v. relying completely on existing legacy sales resources. The decision matrix is much more complex than this binary choice. Publishers need to use their existing sales assets to grow digital revenue. Failing to do so simply isn’t practical for most companies. But publishers also need to bring in more digital expertise and make many important strategic decisions about sales structure.

A new BIA/Kelsey Insight Paper, “Old House vs. New House: Building Optimal Digital Sales Teams,” xamines the challenges involved in building digital teams and finding the optimal sales structure. The report is co-authored by me and Stacey Sedbrook, BIA/Kelsey’s VP of Strategic Sales Consulting, and is the first of several sales-related Insight Papers we will co-author this year.

The report’s executive summary is below and BIA/Kelsey clients can read the full paper by logging into the client portal. The report is also available for purchase.

Traditional media companies struggle with how to build optimal digital sales organizations. The conversation often comes down to a binary choice: should a media organization rely on a digital-only sales force or a multimedia one?

The truth is, it isn’t “either-or.” It’s both. Legacy media companies need to look at segmentation by product, giving legacy sellers inventory that they can easily sell (hint: this tends toward products that are owned and operated by the media company), and leaving more complex and higher value digital sales to digital specialists.

BIA/Kelsey did an analysis using real performance data from a range of local media companies struggling with this sales structure challenge. The message that emerged from this exercise was clear. Yes, digital-only sellers will leave legacy sellers in their dust on a one-to-one comparison. Legacy sellers, however, represent more sales volume and should be a key component in moving organizations from majority legacy revenue to majority digital.

There is a strong body of opinion that legacy sellers are minimally useful in the shift to digital.

“If you are a traditional media company, and you take 20 of your legacy sales reps, maybe one or two will become performers over time,” one senior traditional media sales executive recently told us. “The best approach is to create a separate digital channel, treated as a stand-alone and managed by someone who can work with the core channel. Then use your core channel as a lead source for digital sellers.”

Our experience and analysis show that with the right product segmentation, digital sellers and legacy sellers can complement each other and lead to a better overall outcome than in a digital-only structure.

Traditional media companies need to think more strategically about how to drive digital revenue. While digital specialization is ideal, the investment required to build a digital-only sales force in short order that can drive sufficient sales volume is too high for most traditional media organizations. Therefore legacy sellers will need to play a big role in digital selling, at least in the near term.

Traditional media companies that focus on sales reporting structure, compensation and smart packaging as part of their digital transformation will put themselves in the best position for sustainable success. This Insight Paper examines the arguments for specialization and for using a hybrid approach to digital selling.

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Many traditional media companies struggle with how to build their digital sales organizations. Should they recruit a digital only sales force — and if so, what are the pitfalls and best practices? If an organization chooses an integrated model — how do they beat the trap where 80 percent of existing reps retreat to the comfort zone of selling only legacy products?

In February, BIA/Kelsey will release an Insight Paper that addresses the difficult questions surround building digital sales organizations. “Old House vs. New House — Building Optimal Digital Sales Teams,” is co-authored by BIA/Kelsey analysts Charles Laughlin and Stacey Sedbrook. The title refers to the tension between selling digital products via legacy sales teams (the “Old House”) and moving toward selling digital solely through digital-only sales teams (the “New House”).

Laughlin is author of the BIA/Kelsey Insight Paper, “Sales Transformation: Building a Sustainable Model.” Sedbrook is a veteran sales leader who has built digital teams at a host of marquee media brands, including Gannett, The Dallas Morning News, The Houston Chronicle and the Denver Newspaper Agency.

One of the paper’s key messages is that a binary view of the sales structure challenge — pure digital vs. multimedia sellers — oversimplifies the issue.

Yellow Pages publishers, newspapers and radio broadcasters may each find a different right answer to the channel structure questions. And while most legacy sales reps should be able to sell a simple digital package to their customers, it may be unrealistic to ask them to sell complex integrated digital marketing solutions to larger or more sophisticated advertisers.

“Old House vs.New House — Building Optimal Digital Sales Teams” will include interviews with sales leaders representing a variety of viewpoints.

At one end of the opinion spectrum is the case for a rigid division between old and new, where traditional sellers keep the legacy media house standing while a new team of pure digital reps builds the new digital-only house. Deseret Digital Media CEO Clark Gilbert is an articulate evangelist for this point of view. The other end of the sales structures continuum involves using using existing sales assets and relationships to make the transition from legacy to digital. This is where most traditional media organizations at least begin the transformation process.

The report will offer a BIA/Kelsey viewpoint on which models make the most sense for different kinds of organizations.

“Packaging is a big part of success with traditional media reps,” Sedbrook said. “One approach that has been successful is having the legacy team focus on the owned and operated assets – website, email, streaming. These are closely aligned with the brand and easy to bundle.”

Sedbrook says reporting structure is another, perhaps overlooked, critical success factor. “It doesn’t matter if the sales reps are cross media or digital only if they report up to a traditional revenue person,” Sedbrook said. “Digital sellers need to report to somebody with digital expertise.”

Check out this video for an excerpt from a conversation with Sedbrook about some of the paper’s key findings.

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Clark Gilbert is a respected authority on digital transformation — he’s studied it at the Harvard Business School and he’s put his ideas into action at Deseret Digital Media. Today at BIA/Kelsey’s Leading in Local – Interactive Local Media conference in San Francisco, Gilbert offered a checklist of milestones traditional media companies need to hit in order to declare themselves legitimately transformed.

No. 1: The average digital share of total revenue of a U.S. media company is 11 percent, according to Gilbert. “If that is all that it is, you have not transformed your company.” This lead to key indicator No. 2: “[Revenue] should be at least 33 percent from digital.”

Gilbert named three companies other than his own that are hitting that milestone. Forbes, Schibsted Media Group (a European media company) and Atlantic Media Group.

No. 3: Gilbert says a company should generate at least 50 percent of its digital revenue from sources other than display ads. Gilbert uses the term marketplaces. What falls into this bucket? Classifieds, deals, directories, listings, travel and booking. Another key, according to Gilbert, is to hire e-commerce experts, not digital advertising experts, to run these businesses.

No. 4: Gilbert contends a transforming business should be growing digital at by at least 15 percent annually. “If you are in single digits you have not transformed your business.”

Traditional media digital revenue growth has actually moved in the opposite direction, according to data Gilbert shared, showing digital growth declining from 10.9 percent in 2010 to 1.5 percent in 2013. “This is not a good trend line.”

Gilbert talked about the trap many media companies fall into, where they reach a “local peak” of growth through an approach of selling digital via the traditional organization, rather than building a new digital organization to grow the business, which is core to Gilbert’s playbook for digital transformation. At a certain point you can’t grow any more, Gilbert says, and the next move is to accept having to take a temporary step down (in order to change the sales model) in order to achieve sufficient long term growth.

Once disruption hits, less than 10 percent of the companies ever grow again from their peak, Gilbert said. Of those that do return to growth, he contends 100 percent have a separate sales organization to sell digital.

No. 5: Gilbert’s final key metric was 0 percent — the amount of time he says his digital people spend thinking about the traditional business.  “If you are not organized for that, you are not going to be able to adapt to the future.”

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Clark Gilbert is a respected authority on digital transformation — he’s studied it at the Harvard Business School and he’s put his ideas into action at Deseret Digital Media. Today at BIA/Kelsey’s Leading in Local – Interactive Local Media conference in San Francisco, Gilbert offered a checklist of milestones traditional media companies need to hit in order to declare themselves legitimately transformed.

No. 1: The average digital share of total revenue of a U.S. media company is 11 percent, according to Gilbert. “If that is all that it is, you have not transformed your company.” This lead to key indicator No. 2: “[Revenue] should be at least 33 percent from digital.”

Gilbert named three companies other than his own that are hitting that milestone. Forbes, Schibsted Media Group (a European media company) and Atlantic Media Group.

No. 3: Gilbert says a company should generate at least 50 percent of its digital revenue from sources other than display ads. Gilbert uses the term marketplaces. What falls into this bucket? Classifieds, deals, directories, listings, travel and booking. Another key, according to Gilbert, is to hire e-commerce experts, not digital advertising experts, to run these businesses.

No. 4: Gilbert contends a transforming business should be growing digital at by at least 15 percent annually. “If you are in single digits you have not transformed your business.”

Traditional media digital revenue growth has actually moved in the opposite direction, according to data Gilbert shared, showing digital growth declining from 10.9 percent in 2010 to 1.5 percent in 2013. “This is not a good trend line.”

Gilbert talked about the trap many media companies fall into, where they reach a “local peak” of growth through an approach of selling digital via the traditional organization, rather than building a new digital organization to grow the business, which is core to Gilbert’s playbook for digital transformation. At a certain point you can’t grow any more, Gilbert says, and the next move is to accept having to take a temporary step down (in order to change the sales model) in order to achieve sufficient long term growth.

Once disruption hits, less than 10 percent of the companies ever grow again from their peak, Gilbert said. Of those that do return to growth, he contends 100 percent have a separate sales organization to sell digital.

No. 5: Gilbert’s final key metric was 0 percent — the amount of time he says his digital people spend thinking about the traditional business.  “If you are not organized for that, you are not going to be able to adapt to the future.”

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No one media organization has completely solved the challenge of traditional to digital sales transformation — but there is an emerging set of common traits and best practices. On Tuesday, we presented some of these elements on a Local Media Association webinar, “Taming the Local Sales Machine.”

The webinar presentation was based on a talk Jed Williams and I gave in February at the Key Executives Mega-Conference in Las Vegas. The conference was a joint effort of the LMA and the Inland Press Association.

To prepare, Jed and I spoke with several local sellers, including newspapers (given the audience) and pure plays, to find out what was working and not working in local sales transformation.

The result was a set of “Common Traits of Successful Sellers” spelled out in the image below. These traits are not all present in all successful sellers, but most of those getting traction in the local marketplace share most of these traits. If we were to pick one that was an absolute requirement it would be “Leadership Commits.” Without this, transformation efforts are dead in the water.

The webinar also shared a few “Actionable Ideas for Sales Transformation” that we picked up in the course of our interviews. These include methods for enforcing accountability, using data to drive sales efficiency and using sales prep platforms to convince buyers they need to keep pace with their competition. We will summarize all of these findings in a Briefing for BIA/Kelsey clients.

Those who missed the webinar can access a replay on the LMA archive.

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The case for local traditional media companies to transform their sales organizations is pretty clear. For years, BIA/Kelsey has been tracking the secular shift from traditional to digital spend through both its Local Media Forecast and Local Commerce Monitor™. The path to genuine transformation is more challenging, fraught with cultural roadblocks, resource constraints and execution challenge piled upon execution challenge.

There are no clear winners yet among traditional sellers making the digital shift. However, best practices are emerging around recruitment and training, incentives, technology and data, and sales methodology. We’ve been out there talking to sellers to unearth these best practices.

This morning, my BIA/Kelsey colleague Jed Williams and I offered the Why and the How of sales transformation to cap of the “Key Executives Mega-Conference” here in Las Vegas. The show is a joint effort of Inland Press and the Local Media Association attended largely by senior newspaper executives.

Williams made the “Why” case with data. For example, BIA/Kelsey has been observing a long-running shift among all local advertisers and newspaper advertisers in particular from spend on traditional advertising to presence and platform services. Increasingly, what local SMBs want to buy is outside the comfort zone of many traditional sellers.

To illustrate the “How” I summarized the key characteristics of successful digital sellers, based on interviews conducted in recent weeks with both traditional sellers getting traditional in digital sales and pure plays that exemplify how to sell digital only products to SMBs, usually through an exclusively inside sales channel.

We boiled it down to five common success traits. There are others for sure, but these five were pretty consistent among the progressive digital sellers we’ve been interviewing.

Leadership Commits — Beyond Lip Service. This notion is widely acknowledged, but perhaps not widely understood. True commitment takes many forms, including investing personal energy in acquiring expert level knowledge; investing in people and technology; and making tough decisions, about products and people.

They Don’t Let Underperformers Stick Around. Committed digital sellers do not allow legacy reps to default to their comfort zone. The insist that they adapt or leave. Having a systematic process for identifying and “transitioning” underperformers is a critical success factor.

They Gather Data — And Listen to What it Tells Them. Data-driven sales is one of the meta-trends in sales transformation. Extensive data and sophisticated analytics can help sales organizations become vastly more efficient and quickly move past people, products and processes that just aren’t working.

They Use Robust Tools. Local digital sellers almost universally arm their local sellers with robust technology, for CRM, sales prep, and building custom presentations on the fly. A transformed sale organization.

The Measure What Matters. Successful sellers understand the KPIs that drive results, and they manage against these. Measuring the behavior that drives results can be more effective than measuring the results themselves.

BIA/Kelsey will summarize its latest findings around sales best practices in an upcoming report.

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HubSpot SVP Mark Roberge provided four main points to frame best practices in sales training today at BIA/Kelsey’s Leading in Local conference. This was the encore performance after Roberge’s highly rated appearance at the SMB conference in September in Austin.

Roberge is an MIT trained data scientist who transformed HubSpot’s own sales training by bringing science to selling. In other words, the age of big data meets sales force optimization. His outlook is framed from a set of expectations (and their outcomes) when he started.

These expectations and goals were all based on the general principle of achieving predictable and scalable revenue growth. The predictability is a play at being able to replicate what is otherwise a dynamic science with countless variables (individual strengths, corporate cultures, etc.).

Some of these initial assumptions were affirmed over time and others were debunked, but with equally valuable learnings.

— Hire sales people with the same methodology
— Train them in the same way
— Provide them with the same quality of leads
— Have them work the sales leads using the same process

The right person for every company is different Roberge admits. He espouses a few criteria to define, score and analyze. At hubspot he statistically examined all of the factors of successful reps and mapped them back to how they performed in initial interviews.

He found there were 5 consistent attributes: Coachability, curiosity, work ethnic, prior success, and intelligence. So for HubSpot and its unique variables and sales environment, these factors became central hiring criteria. The key is to determine what these are within each organization then apply.

A longstanding sales paradigm Roberge debunked is having new reps shadow seasoned reps. Bad idea he says, as it’s a great way to pass along bad habits. Every good rep does a few things very well and everything else mediocre. This will do more harm than good in a shadowing process.

Conversely, he recommends training all sales people with a similar process that allows them to be more consultative to prospects. And the secret sauce is forcing them to know the product, live the product, use the product. etc.. This will help them know the prospects’ pain points.

“That’s where sales needs to get”, he said, “to be the thought leaders in the space.”

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Businesses today have access to far more information on the products and services they buy, a long-term trend that is having a profound impact on local sales, making its success much more dependent on science than art. Selling increasingly is about being deeply knowledgeable about how digital media can help businesses acquire and grow customers.

“Articulating two or three value propositions is not enough,” said Warren Kay, BIA/Kelsey’s Executive in Residence. “Sellers need to convey much more information.”

Kay, speaking at BIA/Kelsey’s Leading in Local conference, outlined how the process of sales transformation permeates every aspect of the local online ecosystem and the program for the event, which runs through Thursday at the Hyatt Regency Embarcadero Center.

Kay noted presentations from Hubspot and LinkedIn coming on the event’s second day as critical sessions for those looking for insight on the massive changes. Both companies have content marketing at the center of their sales process, something Kay says will be increasingly central to selling to SMBs.

Kay noted some core principals running through the conversation about sales transformation. The first is that buyers are more informed, therefore sellers must be more informed. In addition, sales must leverage technology to become more effective and efficient. This involves content marketing, which produces a stream of inbound leads. And it involves increasingly sophisticated tools and technologies, mostly based in the cloud, that provide data to drive the sales process. This enables more understanding of what works, and what doesn’t, driving even greater efficiency. Kay told the audience to expect more on these sales-related themes throughout the conference.

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BIA/Kelsey has just published a Briefing that examines HubsSpot Sales SVP Mark Roberge’s presentation at last month’s Leading in Local: SMB Digital Marketing even in Austin, TX.

By all accounts, the 15-minute presentation was a clinic in how a local/SMB sales force needs to operate in today’s environment. The session went into detail on how HubSpot runs its sales organizations, while also exposing some of the big ideas driving sales transformation. This is a must read for anyone involved in local/SMB sales.

Key Takeaways

* The sales process has essentially flipped, with buyers approaching sellers having already traveled far down the path toward a purchase decision. Effective content marketing is therefore critical to winning the customer.

* Outbound selling is far too inefficient to be a sustainable model in local/SMB sales. Driving high volumes of quality inbound leads and then managing them efficiently is key to winning in modern local/SMB sales.

* Consistency is king. Sales organizations must have a consistent process for recruiting, training and managing the sales force. Otherwise success will be more random than repeatable.

Roberge will be expanding on his talk in Austin with a keynote address at BIA/Kelsey’s upcoming Leading in Local: Interactive Local Media conference in San Francisco.

Summary: In September 2013, BIA/Kelsey held its “Leading in Local: SMB Digital Marketing” conference in Austin, Texas. At the event, HubSpot SVP of Sales and Services Mark Roberge gave a compelling view inside his company’s cutting-edge sales and lead generation process; the latter driven by sophisticated content marketing. His core message was that the process of selling must be driven by data and analysis, so that success is repeatable and predictable. This scientific approach creates a much more efficient and effective sales organization. The notion of using robust data to drive sales efficiency is a breakthrough idea that makes it possible to attack the often intimidating local/SMB opportunity with a smaller sales organization than once thought necessary.

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Last week we held a big 3 day conference in Austin on the changing world of SMB digital marketing. It was an awesome turnout, solid speaker lineup and lots of takeaways. Check out our session-by-session blog coverage.

To stay true to our new found love of analyst roundtables, we did one yesterday to unpack some of the takeaways across our analyst team. This one is an audio podcast and is embedded below.

Stay tuned for more audio and video coverage of all of the areas we’re covering.

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