Pitfalls to Avoid When Hiring Salespeople For the First Time

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.

Headache in business

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.

Strategic compensation plan

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.

or

  • 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.

My company, Stellacon Solutions helps business owners and executives build stronger, more structured businesses that are well positioned for growth. We offer an initial free consultation where we can discuss your challenges and we’re  always happy to help.
We help business owners solve problems.
For more information contact: Graham Acreman, President | Stellacon Solutions
(613) 263-1010
Email: info@stellaconsolutions.com
Web: www.stellaconsolutions.com

Why Would I Hire a Consultant

Businesses hire consultants for 4 main reasons:

1) They require subject matter expertise that they don’t have in-house.

2) They require additional bandwidth to facilitate an initiative.

Business executives talking

 

3) The business owners and/or management are seeking independent, strategic validation of a course of action they plan to take. In this case it’s about getting a second informed opinion.

4) The owners and/or management are seeking a 3rd party scapegoat for an unpopular course of action they are planning to take (“The consultants recommended this course of action”) or don’t want to take (“The consultants advised against it.”).

Ultimately, consultants are hired on the basis that they are going to provide tangible value from either a financial, operational or political nature.

Need help with your business? Want to increase performance & your bottom line?  Contact us today:
Email: info@stellaconsolutions.com
Web: www.stellaconsolutions.com
Tel: (613) 263-1010

The 4 Core Pillars of Increasing Revenue

When it comes down to it, there are only four core ways to increase your company’s revenue:

  1. Get new customers;
  2. Get your customers to buy more frequently;
  3. Get your customers to increase the average spend per order;
  4. Increase your prices.

Most companies are focused on the first pillar – getting new customers. While no doubt important, this represents just one piece of the big picture. The other three pillars focus on existing customers. The larger your customer base, the more you need to think about it. Every company needs to set it’s own strategy based on it’s goals and corporate philosophy. The key is to make a conscientious decision about each pillar and not ignore them.

 

Look at it this way; if you have 1,000 customers spending $100 per month your annual revenue is $1,200,000. If you increase your customer base (new sales) 10% you will add 100 customers and your total revenue will be $1,320,000. Your overall growth would be 10%.

If you were also able to develop and implement a plan to get 5% of your customers to buy more frequently than once per month, increase the average $100 transaction 5% and increase your prices 2% then your resulting compounded growth would be 23%.

Think about the pillars in terms of your local McDonalds. The average customer may visit once per month and spend $20. If McDonalds increases their prices 2%, gets 5% of their customers to come each week rather than every month (loyalty card) and increases the average transaction to $21.00 (would you like fries with that?) then that combined growth will far exceed the growth from new customers.

Of course, each percentage needs to be massaged for your particular industry but again, the key is give it conscientious thought and then develop and implement a plan. If you want help, call us.

Stellacon Solutions helps business owners and executives achieve their revenue and profit goals. Let us help you.

Visit us: www.stellaconsolutions.com

Contact us: info@stellaconsolutions.com or (613) 263-1010.