Monday, August 25, 2008

How do you get sales people to produce

Treat them with respect and give them generous helpings of dignity on giant silver platters. No one else they talk to during the day does this for them. At the very least they deserve this from their employer.

As it turns out if you, the employer, can swallow your ego and bone deep urge to control others and lift your sales people up (even the one's that don't deserve it) you will attract the brightest and the best sales people in your community. Here's another secret you will pay them less than you think and they will work harder than you can imagine. I typically characterize this by saying they will walk through fire for you.

The reason for their commitment is that no one treats sales people with respect and dignity. NO ONE. When you do they know it, value it and appreciate being respected and dignified at work more than you can imagine.

That's the secret. Treat your sales people with respect and dignity. Then watch them work their butts off. By the way, this works with all people in all jobs just the same. That'll be $5,000 for my consulting fee.

Thanks for reading.

Sunday, August 17, 2008

Michael Phelphs

Michael Phelphs, 8 Gold Medals.

After a couple of years Michael's coach went to his mother and told her that they needed to start preparing him for the Olympics. His mother was dumbfounded and resistant as we all would be at such shocking and unlikely news. Coach Bowman at some point in the conversation asked "How are we going to stop it?" He knew they couldn't and it would appear they didn't try. Thank God.

This is one example were no one got in the way of a divinely inspired or installed, OK, God given, gift of talent beyond imagination. The person who usually interferes the most in developing a gift like this is the person with the gift. I think the vast majority of the gifted people out there self destruct unable to cope with being so glaringly talented and obtusely unique. They stand out from the crowd like a white guy at an NAACP convention. It's not comfortable for most of us.

It's hard to deal with. Add, how differently they must see and respond to the world through the filter or attraction of their gift. Think of how many things mean nothing to them that are so important to us. Could you train 8 hours a day and spend the rest of your time eating and playing video games and do this for years and years. Could you do this in pursuit of your favorite thing in the world and ignore everything else?

These folks are odd balls, brilliant, gifted and iconic miss-fits. This makes it all the more incredible that a Michael Phelphs ever arrives at his deserved place of honor and celebration. The weird kid who does nothing but swim and eat gets his due. The world celebrates his gift and his sacrifice of living in his own very different world and finding peace and joy there. I'm sure it's not easy and then there's the swimming and a demanding couch he has to deal with too.

We all have our gifts. How many of us truly honor and exploit them to the point of being truly different and blissful in our unique nature? People like Michael Phelphs remind us that we do have our unique gifts and there are rewards in taking the risk and showing them to the world. We need these reminders, thank-you and congratulations Michael Phelphs.

Thanks for reading.

Saturday, August 16, 2008

How to manage sales people

I am highly motivated to fairly reward the time, talent and effort it takes key sales people and their similarly talented and committed colleagues to do what they do. I am more than willing to pay them a fair value for their results at the time they produce them. But, as is often suggested I am not willing to treat them as if they are anything special in any way that is not directly related to their current production. Certainly, high production sales people are important to any organization but there are great dangers in creating monsters who begin to demand special treatment. This is a fast road to no where littered with bodies and missed sales projections based on these key players continuing to produce.

My focus is always less on individuals and more on the aggregate group. Sales teams always have a bottom 20% a middle 60% and the always focused upon top 20%. The specific individual in each group will change each month. Therefore we cannot predict what specific people will in a specific month with an reliability but we can predict what there group will produce with some accuracy. We can create an environment that lifts the performance of each team and as a result we create improved results for the company. We can never bank or count on specific individuals to deliver our success. This is why I am reluctant to become engaged in any discussion regarding strategies that will only be applied to a selected individual or small group of individuals. Rarely do these ideas or concepts respect or consider the full context of the business issues and most likely will fail to address the root cause of the problem. These solutions generally revolve around getting Joe or Steve to sell more and we will be OK. What happens when Joe and Steve quit or don't sell more?

Selecting certain people based on any criteria and deciding that they are key players then by default leads to a decision that there is another group in the organization that are not key players. This is the fastest most effective way to fragment and destroy any sales team. I see no benefit in creating an elite class in the sales department by management decree based on any criteria. I only see the potential for division, animosity and conflict.

I can assure any manager considering this idea that once appointed to the special class a portion of these people will become unmanageable and their productivity will decline. After all their special now. I think it is best to focus on the results we want to achieve, the opportunity or incentive we can afford, and then design the best possible program. If we’ve done a good job the best people will surface based on their effort and both the company and the sales people will be generously rewarded for doing so. If the people we thought were the best show up great. If not we just avoided a big mistake. I can also assure you there will be surprises in who shows up as top producers. In my experience, I have learned there are no common characteristics in successful sales people. They come in all shapes and sizes and prejudging people can be a huge mistake.

Creating a system that welcomes any sales person to ascend to the top at any time and enjoy all the benefits of being on top is the key. A sales person may achieve top ranking in their first month and it lasts for 2 months or it will happen in their 5th year and last 8 years. I don't care who or how long as long as the opportunity is open to all. The important part is that anyone can get there anytime and stay as long as they perform.

The standard must be fair and reasonable. Nothing will kill the program faster than making them dive through flaming hoops hanging over snake pits. The reward must be commensurate with the effort and the skill it takes to achieve the goal. The reward must also be in line with the talent and skill required to accomplish the task in a professional and skilled manner. We can have no preconceived notions as to who can or cannot be in any group at any given time. They must choose for themselves and get there based on their talent and skill. Those who get to the top must earn it on level playing field.

The solution is really very simple, not easy, but simple. First, you must make it financially unappealing to be in the bottom 20%, a new sales person or experienced sales person who falls into this category must be financially encourage to leave or do better. Second, you need to get comfortable with the idea that the middle 60% is going to float between a very average monthly production level, this is who they are, this is what they do. However, it is critically important to establish acceptable average performance levels that are profitable for the company. Yes, Joe could and should do better but, we do make money on his production and he is incredibly consistent. Pay them a living wage, provide an incentive to do better and help them improve their skills, upgrade when you can. Open seats or territories at this level will kill you if you take into account the time it takes to recruit and train a rookie. Better somebody than no body. Hire the replacement get them trained then remove or change the role of the under performer in the middle 60%. Never stop upgrading this segment. Third, put a great big incrementally increasing carrot out there for the top 20% group. Let these people make a lot of money if they generate a lot of sales. You will have to define what a lot is for your business.

Use a sliding commission scale where the more the rep sells the more he or she makes. To encourage sales growth each year raise the break points so they have to sell more to make the same money or add more sales people increasing your capacity. Sales people love it when you don't raise goals or raise them modestly. They will sell more when they realize you are not trying to manipulate and control their behavior.

Why would I terminate a sale person? Having no talent, poor work ethic, poor attendance, a toxic attitude, failure to respond to direction, poor sales vs. minimum standard, poor sales vs. peers, poor sales vs previous performance. Use good judgment - be exceedingly fair, always error on the side of the employee. Treat each case individually and fully documented your actions and the sales persons actions so you stay out of trouble. The rest of the group that is still with the company is watching how you treat these people. Your sales team will work harder for you when the see you are exceedingly fair and reasonable. If it's a tough or fuzzy termination offer a severance in exchange for a release. Usually a couple of weeks salary and a month or two of commission from sales that come in after they depart is plenty to get this done. I think there is a huge ROI on this decision.

This is how the best sales programs in the world are constructed. They built upon human nature and the intrinsic need for all of us to feel a sense of pride from our accomplishments. In this system the sales people chose to be successful and this success breeds, the choice to be more successful. I am confident in the vast majority of the cases you can trust your sale team to response in an unbelievably positive way to this type of program.

We've all heard the joke "If you want to see the dead come back to life, come back here at 5 o'clock." If you want to see a dead sales department come to life, manage by these principles and they'll never go home. I think if you are switching from a fear and intimidation system you can expect a 20% to 30% revenue improvement by changing to this system.

In this program the horse is led to the water hole and he finds it is littered with sugar cubes and the water is delightful to drink.

Thanks for reading.


I've had the good fortune of being involved in several small acquisitions in my career. My company a relatively small business was buying much smaller mom and pop businesses. These are fun because the acquired business is usually not all that sophisticated so there are lots of surprises and opportunities for improvement. This view is from the perspective of the acquiring company. The view is always different from the perspective of the group being acquired. The first company I was with that did these acquisitions was very good at it. I led the integration team and we had some great people, we did our home work and I think for the most part it was a good experience for both sides. This was the result of diligent work in the planning and implementation phases.

My current company is not so good at all this which led me to craft the following email to a family member today. We are acquiring a company and I will be making a trip to one of the facilities on closing day to begin the integration process. I was relating my trip and its purpose in the email. You will note that my very active cynical and sarcastic nature is clearly at the forefront here. It is also pretty entertaining if I do say so myself. If you're language sensitive you may want to pass this post by and check the next one.

Excerpt from my email:

Me: Today is the start of a great new era for our two companies.

Sub Text: You guys are fucked.

Me: We acquired your company because there are so many wonderful synergies that will make both companies better.

Sub Text: You guys are fucked, get your resume’s ready.

Me: We look forward to learning in great detail all the wonderful things you are doing so we can learn from you and improve both businesses.

Sub Text: You guys are fucked, you will soon be doing everything our way even if your way was better.

Me: We of course are a much larger company so you can look forward to all the benefits of our size.

Sub Text: You guys are fucked, we bought you so you are meaningless.

Me: We will bring knowledge and efficiencies to the business that will allow us to grow and prosper together

Sub Text: You guys are fucked, you will make less money and our private equity partners are now a little closer to becoming much richer than they already are. Doesn’t that make us feel all warm and fuzzy?

Maybe it would be more efficient just to send an email telling them they”re fucked and save the trip. Honestly, we are well intentioned we just don't plan and execute very well because we are going in too many directions at the same time. Welcome to the new economy.

Thanks for reading.

Wednesday, August 13, 2008

Horn tooting allowed, it's my f/#@%ing blog

I've written recently about the difficult economy and the impact on our home values. Of course this has impacted our businesses as well. I don't know many people who are not struggling mightily to sell the same amount of product this year as last. I am proud to announce that I can personally claim and document improved sales at our company year over year as of July. No I did not sell my soul to the least not for this result. But if you have a ski-in, ski-out chalet near the gondola in Vail to trade I'll give it some thought.

In fact, based on our July YTD numbers all the graphs I use to track our progress are going in the right direction. This is a rare occurrence indeed. There are always one or two out of the 8 that are going the wrong way. Sales are up but commission expense is up more or God forbid sales are down and commissions are up, stuff like that. You know the game. But this July is different. Sales revenue and rep productivity are up and costs are down. We're a little short of a totally impossible, alcohol induced, altered universe, delusional CEO budget, which I don't count, but all things considered we're in very good shape.

Now if I only worked for a guy who understood what a phenomenal achievement this is. Well, at least we know. You'll see my adds on, genus sales guy available, unreasonable rates, impossible demands, incredible results. Call me we'll talk. 1-800-NOW-SOLD. I bet somebody really has that number. It would be fun to call. Probably some down on their luck real estate agent in Vegas whose ready to drive his Ferrari off a cliff.

It's fun to be so friggin good.

Thanks for reading.

Tuesday, August 12, 2008

The economy II

What's the answer to our economic problems? We are seeing one encouraging development in the price of crude oil and gasoline. The bubble in commodity pricing appears to be bleeding off some of its pressure. This will help us all cover our obligations and hold tight to our undervalued homes for a while longer. We can hope that a bit more money flowing into the till at Kmart rather than into the gas tank will support more economic activity that will provide a broader benefit to the wage earners in the US and around the world.

But we are still left with the pesky problem of a owning a severely depreciated housing asset. An asset that we have pinned a lot of hope to. Regardless of our personal status, own it free and clear or mortgaged to the rafters we're frozen in place. We're shocked at the decline and unwilling to acknowledge the loss by immortalizing numbers in a closing document which becomes a public record. "Can you believe what Lester sold his house for? If he'd just hung on we could get more for ours." We can hang on a little longer until things get better. Who wants to upset the neighbors and lose a lot of money at the same time?

Here is my prediction, things will get better when:

  1. The foreclosure inventory stops growing.
  2. Big money investors start buying single family homes at deeply depressed prices in really nice neighborhoods and renting them for a song.
  3. People with mobility and reliable incomes, maybe they have been foreclosed on, or did not own a home, or sold at a loss to escape a bad mortgage but they start renting these homes.
  4. Other investors will see this activity and begin to buy single family homes at not so deeply depressed prices and renting them out too.
  5. Home prices will begin to rise responding to this demand.
  6. Individual buyers and small investors not wanting to miss out on the housing bargains will enter the market.
  7. Home prices will begin to rise more rapidly.
  8. At this point people like you and me will wonder when to sell? Do I sell at a small loss, hold out for a small profit or sit tight and wait for the big score?
The answer to question 8 will depend on personal income growth and the financial resources available to your prospective buyers at the time. The answer will be different in different segments of the the housing market and in different parts of the country. I am thinking if you have a $5 million house you don't have much to worry about. If you have a $500,000 house your potential buyers may be somewhat scarce. There will always be a market for the "starter" home that part of the American dream isn't going to die any time soon.

As we see this recovery in the housing market we will see a broader based improvement in the over-all economic environment. Housing drives pretty much everything in this country.

So, my guess is 5 to 10 years for all this to shake out. We have 5 to 10 years to think about whether to sell at a small loss or hold out for a profit. My advise for you is don't even think about the payments you'll be making between now and then. You have to live somewhere and hopefully you like the place you chose. I know I do.

You can be comforted knowing this post comes with the Lester Sez guarantee firmly established when my kids were little. If I don't know anything about the question at hand I will gleefully make something up. You be the judge on this post.

Thanks for reading.

Sunday, August 3, 2008

The economy

I haven't written anything about the economy to date but I think it's time. I am motivated by the knowledge that our esteemed leader told our board of directors last week that his business is well positioned to benefit from the current economic difficulties. Now being the CCBW (Chief Cook and Bottle Washer) of Sales & Marketing I should take this as high praise. Or since you folks don't know what we sell you might assume one of two things. We sell crack cocaine or our CEO is on crack cocaine.

I will tell you that we are weathering the storm better than most and I do have my bosses wild optimism and willingness to throw money at nearly any idea as helpful ingredients in this out come. These factors, some intelligent choices, dedicated managers, a decent product and committed sales people and we do have a good chance of coming through this in reasonably good shape if it doesn't go on too long. Yep there's the rub. How long will it last???

I think we are in this for the long haul in terms of today's email driven nano time culture. The window for me is less than 10 years but more than 5 years. The next question what is the measure? It's housing. It's not getting the balance sheets of every financial entity in the world healthy. It's not bailing out the worst case home owners, that's a drop in the bucket. There is not enough money in the world to reinstate the lost equity and net worth for the millions of people who have been severely hurt world wide. We love our quick fixes but there isn't one here. They can bail out the investment bankers that caused this and the Banks, GM and Ford, toss in private equity owned Chrysler, that would be interesting, but there is no bailout for us. This will not end until millions of John Q. Public home owners are made whole. Which means values must begin to approach pre-crash levels. If that's possible in view of other pressures.

Two and a half years ago I felt lucky sell a home and leave one of the most depressed area in the US. I also felt lucky to purchase a home in one of the most sizzling hot real estate markets in the country. I had a choice to lease or buy. The market was softening a bit and I saw this as an opportunity to buy (best not to take investment advice from Lester). The home was part of my retirement plan. It was a lucky break for me to find a great job in a good real estate market, save my money for my fast approaching elder years and hopefully pocket some profits from my home.

The house part is a full blown disaster. To date I've lost my 20% down payment and if I could attract an offer for my home here my sense is I would need to bring another 10% to 20% of the original value to closing to satisfy my mortgage holder. That's a 30% to 40% loss on a beautiful home in a highly desirable resort community in 2.5 years. If I am able to sell this home within the next 5 years for what I paid for it I will consider myself a very lucky man.

People have lost money on their homes in the past. The great depression comes to mind but the level of home ownership by the masses was less then. There are also the examples of urban blight driven by the abandonment of the cities in favor of the suburbs. We also have localized housing declines driven by natural disasters like Katrina or isolated environmental disasters like Love Canal years ago. We've never seen anything like what we have across the US now.

My sense is many people are thinking the housing problem is limited to just the housing market. I think the growth and vitality of the economy is closely tied to our mobility. Our economy is driven by people wanting bigger, better and more. The inability to trade up severely limits the fuel that feeds our economic engine. People can't sell a house to buy a bigger one in the same city or sell a house to take a better job and buy a bigger house in a new city. This hurts our economy. The business in the new city is deprived of needed talent and skill the local builder loses the opportunity to build a new housing unit creating down stream job losses literally around the world. The movement of people fuels every segment of the US and world economy in some way. It's less than it was now, a lot less.

Part of the answer to this is for the speculators to return to the housing sector. But they are waiting for the bottom which will be indicated by a reduction in the foreclosure rates. Unfortunately, high energy costs are putting greater pressure on mobility and consuming discretionary income further suppressing economic activity. Less economic activity leads to higher unemployment and lower personal incomes feeding less economic activity which will feed more foreclosures. This is not a good cycle and I don't believe there is anything that any one can "DO" about it. It must run its course and this is going to take a long time.

Enough for today, more later.

Thanks for reading.

Friday, August 1, 2008

I am boring

I am mono dimensional if you haven't noticed I talk, think and spend a lot of time at work. The challenge to solve the complex business issues I deal with is really consuming for me. I am always in hot pursuit of some answer to some puzzle. I ruminate on this stuff constantly. Thank God for the people who love me and understand this is how I'm built.

I read a story today about a study in Europe that indicates people who do this have a 40% less chance of suffering from dementia in their later years. Now my only worries are a mishap related to my alligator wrestling hobby, or the remote possibility of suffering an unfortunate naked hang gliding accident. Oh yea, and that little problem of being boring and mono dimensional.

I know because I read USA Today.

Thanks for reading.