Update: If you’re interested in more info on this topic, I recently ran a webinar you can watch here.

When I started in the industry as a desk strategist, it quickly became obvious that being at the center of the ‘information flows’ was a big advantage. When you were talking to the smartest people all day, you not only shared your views and perspective, but inevitably picked up some great insights as well. That give and take was the core aspect of being at the center of the information vortex.

Today, I find myself in a similar situation. I spend most of my day talking to some of the smartest people in the industry.  Individuals who have been tasked with thinking about what their firm should look like in the future, and charting a path towards that outcome. Some of them are existing clients, some are prospective clients, some are partners. Some are other vendors, and some are just interesting industry folks. When I ask them what they think the future of sales and the role of salespeople looks like, I usually get a polarized response, depending on the individual. Either the person I’m talking to thinks they’re never going away ‘because relationships matter more than anything’ or they can’t wait to see them disappear ‘because what do they do other than take clients to steak dinners and Yankee games?’

I’m here to argue that, as almost all things in life, the truth is in the middle, and in ways that aren’t immediately obvious. I’ve been sharing this view in my conversations, but I thought it would be helpful to share it more broadly for feedback and discussion.

First, let me be clear with my conclusion: salespeople aren’t going anywhere. There may be less, but the role that a good salesperson fills is still essential, and I don’t see that changing. There will be less. The tools and technology they use will evolve. But they will still exist.

Why do I think that? Let’s discuss. 

First, let’s start with the core issue: the buy side (and corporates on the banking side, for that matter) must be sold to. They are overwhelmed with information, and the challenge is always establishing yourself as a trusted partner, then cutting through the noise when it matters to have a timely conversation. It’s not unusual for a buy side PM to get over 1,000 emails a day. I can’t imagine how many calls they get. Do people still do voicemail blasts? (spoiler: unfortunately, yes). How do you get noticed in that noise? That is the role of a salesperson: to have the right conversation, with the right client, at the right time.

That being said, the role of a salesperson is changing. There is one major factor driving that change: margins. The economics and margins of the industry have been under pressure for a long time, but some of those pressures have been managed through previous technological and industry changes, just as the electronification of execution. One of our bulge bracket clients shared that their US Equity desk went from 300+ sales traders ~15 years ago to around ten now. That’s a lot of scale, which drives a lot of margin. But the margin keeps compressing. Trading is out of juice to squeeze, so the business is looking to the client coverage side. 

Thematically, sales and client coverage needs to scale. 

You hear it when managers talk about “doing more with less” or “efficiency being a focus” – what they are really asking is, how do I scale my client coverage efforts?

So let me come back to my conclusion I shared earlier. I don’t think the role of a salesperson is going away, but I will add to that: I don’t think the role of a salesperson is going away, but it is going to evolve in order to drive scale. What does that mean? Fewer people, doing less low value tasks and more high value tasks, with the assistance of technology. 

How will that happen?

• Technological drivers: this is going to be the biggest driver of change, and likely in ways that aren’t clear today. It would have been hard to appreciate the ways that electronic trading changed execution over 20 years (outside of broad themes), and the same will likely be true on the client-facing side. That aside, the shift will likely come in two dimensions:
  • More client data and insight: we’ve always been big advocates of increasing client engagement data to drive a data driven sales organization. In order to do that, firms will need to begin capturing more client data (shameless plug: email engagement data is the best, high scale, repeatable data set for this purpose). The more of it that can be gathered automatically/passively, the better (manual entry is never a good bet). What are clients reading? What are they attending? Who are they talking to? Who has the strongest relationship? These are the foundations of client insight. 
  • More automated workflows: the other way to drive scale is to cut out operational activities that consume time (thus freeing up that time to focus on high value activities). Look for the automation of contact detail updates, CRM entry, client onboarding, client interest/subscription updates, portal access, garden leave management, and all the other administrative issues that salespeople lose time to on a daily basis.
• Compensation drivers: one of the other changes will be the value that good salespeople can drive to clients. Cutting through the noise is important because it’s how a salesperson serves the client. They are highlighting timely information, events, or market dynamics. Every client wants personalized service. You are helping them outperform. With the ‘juniorization’ of sales coverage over the last few years, clients are realizing that they have to explicitly pay for sales coverage if they want to keep the great ones (or else you’re getting the new grad). I’m seeing broker voting systems and commission allocation providers start to explicitly include sales coverage (which historically was excluded). It turns out that the buy side really values great sales coverage that helps them drive returns (especially when they might lose it).
• Industry drivers: as more of the operational workflows of a salesperson get automated (i.e. no more setting up meetings with the analyst), they will be able to focus on higher value activities. Deep dive conversations with clients, refreshing views on investment style/mandate, prospecting new clients, etc. which will ultimately drive more revenue. That revenue will support the expansion of margins. 
• Relationships and trust still matters: I’ll wrap this all up by highlighting what won’t change – relationships, and the trust that flow from them, are still important. I want to know who is recommending something to me, and I want to trust their judgment, opinion, and intelligence. I’m sure ChatGPT could recommend some great articles this morning, but do I trust it over someone that has been covering me for ten years? Probably not yet (and not for a while, if ever)

So, do I think salespeople are going away? No. But it’s not because I think “relationships are everything” or that some of what they do today can’t be automated. I genuinely believe that great sales coverage is a deeply valued service from the buy side. What will change is that the low value parts of the role will be automated, and the high value parts of the role will be augmented with technology and processes. That will ultimately lead to fewer people in the role, but those that remain will be able to accomplish much more. 

Evolution, not revolution.

I do think there is room for sales to change in other non-linear ways. I was recently talking to a client about how they could separate out client coverage (and an account level), with individual contact engagement (across the client). The idea of having a senior salesperson managing key relationships and the macro account relationship, with a junior ‘success manager’ engaging at the individual contact level. It’s the way software firms have operated for 10+ years, but that’s a topic for another thought piece.

The shift to a data driven sales organization is well underway, and as always, we’re here to share what we’re seeing on that transition, and would love to be helpful in building the client data and insight foundation with your team and firm.

Don’t hesitate to reach out if you have any questions, thanks,

Blair

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The Evolving Role of Salespeople in the Capital Markets 

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