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| Thursday, 03 February 2011 13:56 |
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Taylored Comments Geeks Managing Sales People by John Christophersen, Senior Consultant One of the most confounding challenges facing IT VAR owners is how to hire and manage salespeople. It’s kind of funny trying to picture a first-class geek – you know, a real Poindexter - reigning in a ‘Gordon Gekko’… The problem is, there are three compelling personality traits most of us look for when we want to hire a sales person: we want the three P’s – Personable, Persuasive & Persistent. These qualities are great when they’re in front of our clients, but not so handy when they are explaining why they missed quota this month! Most of us have heard a myriad of ‘reasons’ (excuses) for missing their numbers – the economy, our prices, we aren’t a good fit, they already have a provider, they prefer brand X, I didn’t have time, I had to write a proposal, they need three quotes, they don’t have budget, perhaps next quarter… I could go on, but you get the point. Many of our new hires’ last good close was you! So, what can we do about it? First, you must manage the activities, not the person. This is even more important in sales than any other position for a couple of reasons. One, they are likely to have a completely different personality than you – I’ve heard hundreds of business owners say they just don’t get sales people. Two, if you don’t manage their activity they are quite likely to fail. The first thing you need to do is figure out how much activity is required for success. To do this, work backwards from a defined number. Let’s say that $80,000/year or $6,667 per month would be reasonable total compensation for a sales position in your area. Next we’ll say that you’ve settled on $2,500/month in salary (This is our standard for a Senior Sales Rep). That leaves $4,200/month needed from commissions. For those of you with calculators - yes, I rounded up: a good habit when figuring sales needs… Now to keep it simple, I’ll use a 10% commission on Gross Profit (GP). Let’s say that a fairly standard deal in your firm is $20,000 with a 25% GP. That leaves $5,000 in GP giving us $500 in commission for that opportunity. Divide the $4,200 commission goal by $500, and you get 9.4 – round up again to 10 deals per month or 2 deals per week (another round up, as there are 4 1/3 weeks per month…). Two deals a week are likely to require 4 proposals per week – you can get close rates closer to 75%, but that calls for a better proposal process - something we’ll cover another time. So, how many appointments to get a proposal? Let’s assume 3 appointments per day will get us there – some will be second and third appointments, so we’ll guess that at least one new appointment per day will be required to hit our number. How many cold calls to get that appointment? Probably 10-25, depending on the skills of the caller. So, if your sales person didn’t hit quota this month, the real question to ask is this – DID YOU MAKE 25 COLD CALLS PER DAY THIS MONTH??? If the answer is no, stop listening to the reasons – you’ve already found it! Most sales people would like to argue this point, but there it is. Hold firm and you’re likely to see success! At least 80% of the ‘didn’t make quota’ conversations I’ve had can be traced directly to a lack of initial activity. If they are calling and not having success, you’ll need to drill into why, but not until they have demonstrated the effort it takes to succeed. Another advantage to you is that now you can implement MBWA – Management By Walking Around. If the hours are between 9 and 11:30 am, or 1:30 and 4:00 pm and your sales person is in the office, they should be on the phone. Have them write proposals and do research outside those hours. Of course, your actual numbers may vary – comp plans frequently pay more than 10%, you might include a margin kicker for exceeding a GP target percentage, etc. The plan should be analyzed to insure that total comp, that is salary plus commissions and bonuses, does not exceed 33% of the GP – the company needs to retain two-thirds or greater of the gross profit to be successful. You’ll need to examine your own data for average sale size, average GP, close rates, etc. And don’t expect to get it 100% right out of the gates – be willing to adjust for changes – including those that success brings! Good luck, and let us know if we can help. Comments (0)
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