Many business owners who want to grow their businesses make a decision to hire a salesperson. Unfortunately, if the owner doesn’t have a sales background or if they’ve never hired a salesperson, they often make big mistakes. I’ve seen it happen countless times. These mistakes cost owners significant time and money and cause a lot of frustration – I want to help you avoid that.
Mistake #1 -Assuming That All salespeople Are the Same
Inexperienced owners often believe that all sales people are created equally and all have the same “Sales” skillset.
Let me tell you – there are many different types of salespeople:
Someone selling cell phones at the local mall is a salesperson;
Someone selling credit card processing services is a salesperson;
Someone selling new cars is a salesperson;
Someone selling consulting services is a salesperson;
Someone selling missile defense systems is a salesperson.
Though the above are all salespeople, that doesn’t mean that any one salesperson would be effective in all of these positions. Each one requires a different experience level, educational background and skill-set. Make sure the one you hire has comparable sales experience.
Mistake #2 – Not Taking the Sales Cycle Into Account
A salesperson who is used to making several sales per day is often going to find themselves out of their element if they get into a sales role where they may be only making one sale per week. Or month. Or year. The longer the sales cycle, the more patience is required as is a different skill set. Salespeople cherish the thrill of a sale and if they are used to getting that thrill more often or more quickly it can be a tough adjustment if they find themselves in a sales role with a longer sales cycle.
Mistake #3 – Not Setting Sales Goals
Believe it or not, I’ve seen many instances where a business owner has hired a salesperson and but not set any goals. “I want to grow my business” or “I want to increase sales” is not specific enough. How much do you want to grow your business or how much do you want to increase sales? Specifically. You need a number.
Once you have this number, ask yourself, “What is it going to take to get there?” This is where you start looking at numbers like:
A salesperson should be able to make 500 calls per week;
This should produce 10 appointments per week;
The closing ratio in our industry = 40%
Therefore, based on the above, 10 appointments should turn into 4 sales.
Keep in mind that the numbers above are examples only and need to be customized for your business. Your business model is likely very different.
Carrying on, the question you need to ask yourself is, “Will the number of sales per week produce the growth I’m seeking and will it cover the increased cost of hiring a salesperson in the first place?”
If it won’t, then you need to re-examine the numbers or strategize a different approach.
If it does, you now know what metrics need to be achieved to be successful.
Mistake #4 – Not Paying Your Sales People Strategically
Two things here. First, a business owner is normally going to need to pay a combination of salary and commission. In most cases, you want the salary to be approximately 40 – 60% of the total target compensation and the balance from commission. Be wary of any prospective salesperson who is pushing for a higher percentage.
The other is this – never pay a flat percentage of the sales. Ever. Paying a flat percentage creates little incentive for over-achievers but is a big savior to under achievers. You need to create a commission program that will accelerate commissions as your salesperson first achieves and then exceeds the sales goals. Conversely, it should de-accelerates if they are under-performing. The reality is, if your salesperson is underperforming then they are negatively impacting the business case you developed which is what led to their hiring.
Mistake #5 – Not Effectively Managing Your Salespeople
If you don’t effectively manage your salespeople then you will fail. Your salesperson will spend their time doing what they think they should but this will seldom be in alignment with your business goals and metrics. I can tell you exactly what will happen:
They won’t achieve success, they’ll sense your growing frustration, they’ll get discouraged or fed up and quit.
You’ll get impatient and fed up and end up firing them.
Either way, the whole process just cost you a lot of time, money and grief. The worst part is, it’s totally your fault – you weren’t doing what you should have been doing – managing your salesperson effectively.
Acreman Business Coaching helps business owners and executives build stronger, more structured businesses that are well positioned for growth. Contact us today for a free consultation.
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President, Acreman Business Coaching