The salesperson and the surrogate

Creative destruction, comparative advantage, and a blueprint for the future of wine and spirit sales

When salespeople play to their strengths, the whole system benefits

If you compare the top ten largest companies in the United States from 1917 with a list of the top ten today, you quickly recognize that nothing gold can stay. Gone is Bethlehem Steel; AT&T, while still in existence, has been dethroned by companies like Apple and Amazon. These economic permutations are often chalked up to creative destruction, “the incessant product and process innovation mechanism by which new production units replace outdated ones.”¹

Wikipedia provides vivid examples of this phenomenon:

Companies that once revolutionized and dominated new industries—for example, Xerox in copiers or Polaroid in instant photography—have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs. In technology, the cassette tape replaced the 8-track, only to be replaced in turn by the compact disc, which was undercut by downloads to MP3 players, which is now being usurped by web-based streaming services.²

What is conspicuously absent from the definition and examples of creative destruction—which focuses on industrial and technological innovation—is the idea that such evolution can occur in service industries. Compare the aforementioned advances in audio technology over the last 50 years with the lack of changes in how a wine and spirit salesperson performs their job. It is stark and startling. One thing wholly transformed; the other has barely budged.

The nature of wine and spirit sales jobs remains very much the same as it has for decades. The tools salespeople employ—like SevenFifty and CRMs—have evolved, but how reps work has not.

This is a missed opportunity, particularly, because no one truly believes the current system is so great. Reps don’t enjoy the fact that so much of their time is spent ferrying samples by car or foot. Buyers generally don’t need someone holding their hand while they taste; the pandemic has taught us that clients are fully capable of making decisions without a rep being present at the time of tasting.

Everyone spouts that this is a relationship business, but too little service is paid to developing relationships in ways that are different from other distributors!

From where do these issues stem?

1. Salespeople spend far too little time selling, problem-solving, and relationship-building because they have to do mundane things like drive three hours a day or input orders.

2. Additionally, the traditional means of doing business limits reps in their ability to successfully serve more than about 100 accounts.

3. Finally, there seems to be a lack of creativity and/or desire to experiment with new modes of selling.

The concept of comparative advantage—developed by economist David Ricardo two centuries ago—might shine a light on a path forward.³ What is comparative advantage?

Daniel Pearson provides a succinct definition:

[Comparative advantage] explains that neither individuals nor nations should seek self-sufficiency, because not everyone or every country can do everything well. The better approach is for people to specialize in activities at which they are most productive, then trade to obtain other needed goods and services.

It’s not an intuitive concept.⁴ Interestingly, the famous example Ricardo provided involves wine. He pointed out that while both England and Portugal were capable of producing textiles and wine, they were best served by trading with one another; England with its manufacturing was more efficient at producing textiles, while Portugal with its climate was better suited for growing grapes.

Similarly, people possess their own comparative advantage(s); there are things that they are better at than others. The failure of the current model of wine and spirit sales is that reps are viewed as islands of self-sufficiency rather than bastions of specialized knowledge and skills that make them good at what they do.

Reps should be salespeople, not bottle shepherds.

Reps should be problem solvers, not order takers.

Reps should be relationship builders, not general sales meeting hostages.

How does one accomplish this?

Reps need surrogates.

A surrogate could deliver samples in the morning and input orders in the afternoon. Surrogates could and should be shared by multiple reps. Reps, in turn, could handle more accounts, while simultaneously offering better service.⁵ Surrogates permit salespeople focus.

The pandemic proved that salesperson-buyer relationships weren’t strictly a function of face time during a rep’s weekly sampling circuit. That being said, the use of surrogates should not absolve a rep from seeing their customers. They just get to see them in less harried, mechanistic ways.

This model might be wrong, but the one currently employed has never been compared to anything else. The fact is that until companies start testing out new ways of selling, we’ll never know what we’re missing out on.

1. This definition is drawn from the “Creative Destructive” entry by Ricardo J. Caballero in The New Palgrave Dictionary of Economics.

2. It is worth noting that some technologies are seemingly immune to creative destruction. The stubborn persistence of the graphing calculator is but one counter-example.

3. Adam Smith and Robert Torrens had touched on elements of comparative advantage earlier, but it was Ricardo who first fully articulated the concept in 1817.

4. No less than Abraham Lincoln failed to grasp it. Lincoln’s protectionist trade policies, particularly around tariffs, illustrate the President’s trouble understanding comparative advantage. Lincoln has several quotes (mis)attributed to him including, “…but I know this much, when we buy manufactured goods abroad, we get the goods and the foreigner gets the money. When we buy the manufactured goods at home, we get both the goods and the money.” Lincoln's logic didn’t recognize that some countries are better at producing particular goods than others.

5. Does every rep need a surrogate? Likely not. With this model, new or junior reps would work up to them by hitting a certain number of accounts or a predetermined gross annual sales figure.