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.


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