The Sales Manager’s Most Important Decision By Barry Shamis, President, Selecting Winners	<< Back
Imagine this situation. You are competing against two other firms for the same piece of business. One firm is the 900-pound guerilla in your market and the other is a competitor of about the same size. You have the best technology, the big company has the most market share and brand recognition and the third competitor has the lowest price. Who gets the business? The answer is extremely predictable. The company that gets the business is the one with the best salespeople. Good salespeople win more deals regardless of the circumstances. Are you going to win the next time you find yourself in this position? The best opportunity you have to impact the productivity of your organization is every time you make a hiring decision. Good hiring decisions propel you to success. And, all the managing, coaching, systems, training and technology CANNOT help you recover from a hiring mistake. Over and over again we see examples of companies with inferior products, over-priced products and poor reputations win the business. Why? Because they have the best salespeople. The enterprise software market is as competitive a market as you are going to find. If you want the edge in this battle, upgrade your sales force and you have the best chance of succeeding. Most sales organizations suffer from the 80-20 rule. You get 80% of your revenue from 20% of your salespeople. This applies to hiring as well. For years I have listened to sales managers talk about hiring five and keeping one good person. This is a terrifically costly way to do business. Let’s translate some of the costs so you can see just how much this flawed strategy is costing you. Here’s an example: You hire John to sell in your Seattle office. After a month it doesn’t look good. After 90 days it is really bad. At six months you give up and let John go. This problem is even worse when you have very long sales cycles as we see in the software world. This all too familiar scenario happens time and time again. Unfortunately, you get lulled into believing that all you lost was six months of salary and benefits. Nothing could be further from the truth. In addition to salary and benefits you lost six full months of sales opportunities, management time, administrative costs and training costs. And six months in the software world is a lifetime! And these are just the obvious costs. Some of the hidden costs you may not have considered are vacancy costs, replacement costs, customer costs, separation costs and employee morale costs. The final cost is loss of competitive edge. Just think of all the deals you lost because you were outsold. (Visit www.salesrephire.com to use the Real Cost Calculator to determine your real exposure) Let’s look at a salesperson with a $60,000 base salary and an annual quota of $1,000,000. Salary and benefits for six months cost $39,000. It cost you $10,000 to recruit the person. You spent $5000 on training classes and materials. And those are just the hard dollar costs. Your soft costs begin with lost opportunity. If John had been successful, how much revenue would he have generated? You have to add 50% of your annual quota to the total for lost opportunity. (Cost $500,000) How about your time? Would you have been more productive using your time working with someone who was generating revenue? (Cost 15% of your annual compensation ($45,000) Make sure you add separation and administrative costs. (Cost = $6000) And the two real intangibles in this equation are employee morale and customer cost. Your good employees resent having a non-performer on the staff. It makes them look bad and they have to work harder as a result. And, there is cost with your customers as well. They have to deal with a sub-par person, which can sour the relationship. (Cost: What is the cost of one lost customer?) Your cost of one hiring mistake is roughly $605,000 without counting the cost of low employee morale or lost customers. And here is the really sad part, if you do make this hiring mistake; you have to do it all over again doubling all the numbers! How does $1,210,000 for each hiring mistake sound? Now you can see why the “hire a bunch and keep a few” staffing strategy is a mistake. The good news is you are on your way to fixing the situation as we speak. The first step in upgrading your sales force is to recognize the problem. Next, you have to put a great recruiting and hiring process in place that gives you the highest probability of hiring top talent. A great way to get started is to invest in your education. The more you know about recruiting and hiring good sales people, the better chance you have of building a winning sales team. Reading books and attending workshops will help you expand your knowledge base. If you are not expanding your knowledge base, when you compete against someone who is, the outcome is fairly certain. You have to start by knowing what you are looking for. This sounds so simple but is at the heart of most hiring mistakes. Begin by outlining your sales cycle. Understanding the mechanics of your sales cycle is crucial to understanding the type of person who will be successful. Just because a person was successful at another job does not mean they will be successful on your job. At each step of your sales cycle, what behaviors are necessary for success? The answer to this question is the key to building an effective performance-based success profile. Build a list of all the behaviors necessary for success on the job. Here is an example of how this works. Do you sell your software product to senior executives? If so, the ability to establish credibility at the executive level is critical to success on you job. Here is a list of behaviors we have found to be essential in selling enterprise software: Executive Credibility Business Acumen Customer Focus Strategic Thinking Competitive Awareness Leadership These are the behaviors that separate the top salespeople from those just collecting a paycheck. Imagine if you could field an entire salesforce that exhibit these behaviors! Now the question that I am sure is swimming through your mind is, “How do I figure out if the person sitting across the desk from me behaves this way. Let me start by saying if you rely on gut feel, interview behavior and the person’s track record you are doomed to fail. That’s right, these typical measures are not the best way to predict success on your job. There is a more reliable and much easier way to get the information you need. Simply get examples from the person’s experience where they had an opportunity to demonstrate these behaviors. And find out what they did. Here’s an example. Requirement: Executive credibility. You would ask: Who was the most senior executive you met with during the ABC sales cycle? At what point in the sales cycle did you meet with this person? How did you get the appointment? How did you prepare for the meeting? What goals did you set for the meeting? What did you do to get the person’s attention at the beginning of the meeting? How did you know you had succeeded in getting your point across? Hopefully you can see from this line of questioning that if the person knows how to establish credibility at the executive level their answers will be full of examples. This is just one example of many that you should get during the interview. Once you realize the economic impact recruiting and hiring has on your business, you’re ready to take the steps necessary to get on track. You just can’t leave your recruiting and hiring to chance. Recruiting and hiring top sales talent has to be your top priority. Barry Shamis is the President of Selecting Winners and the author of the best-selling program, How To Hire The Perfect Salesperson. You can subscribe to Barry’s highly acclaimed newsletter, The Sales Hire Score at: www.PerfectSalesperson.com. You can contact Barry Shamis at shamis@selectingwinners.com.
<< Back

For Information related to jobs in Software Sales, or jobs in Software Pre-Sales, OR jobs in Software Sales Management, visit: http://www.softwaresalesjobs.com - Hiring Managers from software companies large and small use this site to hire their software sales teams.

The Sales Manager’s Most Important Decision