The tragedy of sales management is that good (and sometimes great) salespeople are promoted to sales managers, where they often fail. The skills that make up a good salesperson are different from those that embody a good sales manager.
Ironically sales management is a role you can’t study for in school; you mostly learn it on the job, and yet if you want to grow your business you need to master this role – and then be able to manage the person overseeing sales once you have grown beyond doing this job yourself.
A common mistake a new sales manager makes is that they under manage their salespeople because they themselves needed no management to succeed. Being a good sales manager is in knowing what to manage; here are the five fundamentals to give you a good footing: Jeffrey’s 5 Ps of Sales Management.
- Pipeline—is the tracking and measurement of activities and results that the salesperson is responsible for. It’s starts with the monthly sales target your salesperson should hit, and then breaks down further into activities per month: # of proposals, # of face to face appointments, # of property walk-throughs, and # of phone calls. A sales manager’s job is to keep the sales backlog full; he (or she) should never be surprised at what is (or isn’t) coming down the sales pipeline.
- Performance pay–outlines how the salesperson gets paid and thus what they focus their energies on. I have seen all kinds of plans –some disastrous and some decent–the best performance pay plans are very simple and have two attributes:
1) A commission percentage for sales above a certain gross margin (with perhaps two levels of commissions hitting two levels of margins). It can be based on actuals (as built) or estimated, depending on who is doing the estimating.
2) An achievement bonus for reaching and exceeding a high level of cumulative sales. This can be monthly or quarterly though annual is most straightforward and lines up with the actual budget. For example, a very smart contractor I work with in Michigan had 3 salespeople selling around 600 to 700k, until he added the achievement bonus (at an amount higher than 700k) and his sales team immediately started selling up towards the million dollar mark. Salespeople and owners love the achievement bonus–it’s win-win.
No matter how you tweak it, it’s critical that the performance pay reflect the sales volume and gross (or net) profit you are budgeting to hit.
- Pricing–salespeople need consistent pricing systems, for two reasons. If they don’t have confidence in the pricing mechanics then they won’t have confidence in their own performance pay. They need to believe in the system, and it must be relatively straightforward to use. Secondly, they also need the confidence to sell at full price. If they doubt in the pricing it will show through in the mark up they are able to attain and in their tendency to give things away.
Most important for the company, if you don’t get the pricing right, you could sell yourself out of business! (I have seen all to many companies do this; sell work that doesn’t cover their overhead, and then when the growth stops they realize they are out of cash.)
- Profile—the underlying key to sales management success is having salespeople who have the right personality and skill set (get this wrong and no amount of sales management will help). Too many people are promoted into sales because they have the technical smarts, or a pleasant personality that their customers like, or because they have the gift of gab (yikes!) These first two personality traits are nice to have, but the following traits are “must have”:
- A history of successful sales, reflected in a prospective salesperson’s earnings history.
- Personality traits of: self confidence, ambition, thick skin, listening skills, social graces, organizational aptitude, and a reasonable IQ all of which can be ascertained in a professional personality profile. (I have my proven favorite, but you can find many out there)
- Experience with the sales cycle of your particular service (someone who can sell a quick hit $99 item will have trouble with a $25,000 multi appointment item, and vice versa.)
- A good fit for the type of sales position: an account manager won’t make a good business developer, and vice versa.
If you are taking over an existing sales team, you will want to analyze the profile of your team and see what cards you were dealt and develop a subsequent strategy to address their strengths and weaknesses.
- Process–As I have covered in-depth in recent articles in Landscape Management (LM) magazine, the right sales process is critical to success, where the bad (Red Light) leads are filtered out, and the good (Green Light) leads receive the preponderance of the salesperson’s time and energy.
This requires a screening process and a clear understanding of who the company’s target client is, and isn’t. (For more insight, see my related article in LM magazine.
In total, if you get all 5 Ps of Sales Management right your chances of success are greatly multiplied. But get these wrong and no amount of sales management will save you.
