When to Hire Your First Sales Rep
When to Hire Your First Sales Rep
There are several things you need to consider when you hire your first sales rep. These items will also benefit you as you hire subsequent sales reps and build your sales organization.
1. ROI. How much revenue will the new rep bring in versus the revenue you are currently generating? It’s almost a no brainer. If you believe a dedicated sales rep will sell more than you have been selling, then get out the interview questionnaire, because the return on your investment should be good and you are “almost” ready to hire.
2. Time. How much time are you currently spending in the act of selling? My conference colleague said he spends about 30% of his time selling. In theory, a dedicated sales rep is 100% dedicated to selling. So, you would think that the sales rep could conceivably triple your sales. However, sales people do not spend 100% of their time actually selling. There are other tasks and activities that interfere with their day. Administrative duties, travel time, planning, research, and training are just a few of the items that are not direct selling activities. I read a survey recently that said the average sales rep spends up to 15% of their time with personal email. Nevertheless, a dedicated sales rep should spend more time selling than the business owner was able to. So increased selling time, and therefore revenue, should increase.
3. Sales Process & Training. Do you have a sales process to help the new sales rep be more effective? Chances are that if you are the business owner and have been doing all the selling yourself, you probably do not have a sales process. A sales process defines the steps necessary to successfully close a sale, from Cold Calling to Closing, and of course, the customer retention strategy that follows a sale. A sales process also includes the metrics in which to measure the progress and success of the sales rep. While a sales process defines the steps necessary to make a sale, selling skills help the sales rep with performing each step more successfully. For instance, you not only need to say WHEN to qualify a prospect in the sales process, but also HOW to qualify a prospect the right way. So you need to make sure you provide sales training for your sales reps. True, they should bring these skills with them when they are hired. But every sales rep can use on-going and continuous training throughout their career. Make sure you have a good sales process as well as an on-going sales training program.
4. Technology. To assist with tracking sales information, measuring metrics on sales performance, and managing client/prospect activities, a good CRM (Customer Relationship Management) system, or at minimum a contact manager, should be deployed. While the sales process and sales training discussed earlier will help with effectiveness, a CRM tool will make the sales process, and rep, more efficient.
5. Budget. Can you afford to hire this new employee now? Part of the answer to this question is how much will the new sales rep cost you. And this is answered by the following considerations.
a. Commission. A question that always comes up regarding commissions is if you should pay the new rep 100% commission, and no base (guaranteed) income. I’m always reluctant to do this in the beginning because you’ll get what you pay for. I know of several business owners who did this and wondered why they kept getting a bunch of bad candidates for their sales positions. If they are earning an income entirely based on what they sell, guess how much they’ll earn in their first few months. Close to zero. You have to give them time to ramp up and learn your product, your company, the market, the clients, and more. So help them out. Give them a small base salary plus commission. Then you can reduce their base each quarter until they are earning no base salary after, say, six or twelve months. This gives them something to live on while they are ramping up. It’s all about balancing the base and the commission to suit you and the employee.
b. Interview Process. This almost goes without saying. Make sure you hire the right person. You’ll need a clear, concise job description, an attractive commission structure (see above), and do a good background check. Also make sure you ask good, qualifying questions to ensure you hire the right candidate. Hiring the right candidate will have a direct affect on your budget since replacing a poor choice costs you more than hiring no one at all.
c. Ramp-up Time. This will be the transition time since it will determine how quickly the new sales rep will begin generating enough revenue to pay for himself while giving you some profits. It may require you to sustain sales until the new sales rep can take over. Don’t just turn over sales to the new rep and walk away. Plan for ramp-up and transition time.
d. Retention. Nothing can cost you more than having to re-hire a new sales rep because the prior one didn’t work out. I know some business owners who are stuck in this rut and keep hiring and firing reps over and over again. Not only does this cost a lot in your time, training, etc, but it also is a sure way for you to generate no revenue in the meantime. Make sure you hire the right person (see above), provide incentives, give them the ability to contribute ideas to your business, give them the ability to earn a lot of money, reward them, give them career growth, and more. Make them WANT to continue working for you and EARN the right to.
6. Long-Term Plan. Is this the start of building a sales force? Will you want to eventually hire a sales manager? Is your first sales rep management material? What’s your timing for growing your sales force? Of course, a lot of these questions will be determined by your revenue growth. However, like a business plan, your sales force plans should be laid out in the beginning so you know if and when you reach key milestones. In other words, don’t just hire your first sales rep and “see how it goes.”
7. Resources. Can your business sustain the growth resulting from the new business you’ll be getting? Can you handle the increased sales that will come in from the new sales rep? Your consulting or professional services are a finite resource and the new business requirements may exceed your capacity to handle the work. Make sure you are staffed appropriately by balancing the newly generated sales with the resources needed to accommodate it.
8. Commitment. How committed are you to bringing on a dedicated, full-time sales rep? Will you really step back and let your new rep sell? Will you trust him to do his job? Trusting him doesn’t mean you just look away and “trust” that the sales will come in. It means you will give him the resources and freedom to succeed. You need to build your sales processes (see above) and use technology (see above) to help the sales rep succeed and to give you the metrics you’ll need to measure their progress. When you measure their performance, you have to use metrics to ensure accuracy and consistency and not rely on your emotions and fear. For instance, I worked for a sales manager once who felt, in spite of me blowing away my numbers and working my tale off, that because he didn’t see me in the office a lot, that I wasn’t working hard enough. He was emotionally involved and relied on his perceptions instead of looking at the facts.
Of course I didn’t go into this level of detail with the business owner who asked me this question. But I highlighted all of them and he felt much more aware of what he needed to do before hiring his first sales rep. If you are at this level of growth in your business, I hope these points help you prepare for what could be a very profitable and successful chapter in your life and business.
Good Luck & Good Selling!
Russ Lombardo
When to Hire Your First Sales Rep - To learn more about this author, visit Russ Lombardo's Website.
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Recently I was speaking at a conference in Vancouver when one of the attendees approached me after my speech with an interesting question. He said he was a technology reseller and was getting very serious about bringing his business to the next level. In order for him to focus more on his business, he needed to get out of the role of selling and completely dedicate himself to running his business. His question was, when should he hire his first sales rep. Interesting question since you would think that if he was ready to move forward, as he said, then the answer was simple – hire the sales rep now. But it’s a bit more complicated than that. So here is what I told him.
There are several things you need to consider when you hire your first sales rep. These items will also benefit you as you hire subsequent sales reps and build your sales organization.
1. ROI. How much revenue will the new rep bring in versus the revenue you are currently generating? It’s almost a no brainer. If you believe a dedicated sales rep will sell more than you have been selling, then get out the interview questionnaire, because the return on your investment should be good and you are “almost” ready to hire.
2. Time. How much time are you currently spending in the act of selling? My conference colleague said he spends about 30% of his time selling. In theory, a dedicated sales rep is 100% dedicated to selling. So, you would think that the sales rep could conceivably triple your sales. However, sales people do not spend 100% of their time actually selling. There are other tasks and activities that interfere with their day. Administrative duties, travel time, planning, research, and training are just a few of the items that are not direct selling activities. I read a survey recently that said the average sales rep spends up to 15% of their time with personal email. Nevertheless, a dedicated sales rep should spend more time selling than the business owner was able to. So increased selling time, and therefore revenue, should increase.
3. Sales Process & Training. Do you have a sales process to help the new sales rep be more effective? Chances are that if you are the business owner and have been doing all the selling yourself, you probably do not have a sales process. A sales process defines the steps necessary to successfully close a sale, from Cold Calling to Closing, and of course, the customer retention strategy that follows a sale. A sales process also includes the metrics in which to measure the progress and success of the sales rep. While a sales process defines the steps necessary to make a sale, selling skills help the sales rep with performing each step more successfully. For instance, you not only need to say WHEN to qualify a prospect in the sales process, but also HOW to qualify a prospect the right way. So you need to make sure you provide sales training for your sales reps. True, they should bring these skills with them when they are hired. But every sales rep can use on-going and continuous training throughout their career. Make sure you have a good sales process as well as an on-going sales training program.
4. Technology. To assist with tracking sales information, measuring metrics on sales performance, and managing client/prospect activities, a good CRM (Customer Relationship Management) system, or at minimum a contact manager, should be deployed. While the sales process and sales training discussed earlier will help with effectiveness, a CRM tool will make the sales process, and rep, more efficient.
5. Budget. Can you afford to hire this new employee now? Part of the answer to this question is how much will the new sales rep cost you. And this is answered by the following considerations.
a. Commission. A question that always comes up regarding commissions is if you should pay the new rep 100% commission, and no base (guaranteed) income. I’m always reluctant to do this in the beginning because you’ll get what you pay for. I know of several business owners who did this and wondered why they kept getting a bunch of bad candidates for their sales positions. If they are earning an income entirely based on what they sell, guess how much they’ll earn in their first few months. Close to zero. You have to give them time to ramp up and learn your product, your company, the market, the clients, and more. So help them out. Give them a small base salary plus commission. Then you can reduce their base each quarter until they are earning no base salary after, say, six or twelve months. This gives them something to live on while they are ramping up. It’s all about balancing the base and the commission to suit you and the employee.
b. Interview Process. This almost goes without saying. Make sure you hire the right person. You’ll need a clear, concise job description, an attractive commission structure (see above), and do a good background check. Also make sure you ask good, qualifying questions to ensure you hire the right candidate. Hiring the right candidate will have a direct affect on your budget since replacing a poor choice costs you more than hiring no one at all.
c. Ramp-up Time. This will be the transition time since it will determine how quickly the new sales rep will begin generating enough revenue to pay for himself while giving you some profits. It may require you to sustain sales until the new sales rep can take over. Don’t just turn over sales to the new rep and walk away. Plan for ramp-up and transition time.
d. Retention. Nothing can cost you more than having to re-hire a new sales rep because the prior one didn’t work out. I know some business owners who are stuck in this rut and keep hiring and firing reps over and over again. Not only does this cost a lot in your time, training, etc, but it also is a sure way for you to generate no revenue in the meantime. Make sure you hire the right person (see above), provide incentives, give them the ability to contribute ideas to your business, give them the ability to earn a lot of money, reward them, give them career growth, and more. Make them WANT to continue working for you and EARN the right to.
6. Long-Term Plan. Is this the start of building a sales force? Will you want to eventually hire a sales manager? Is your first sales rep management material? What’s your timing for growing your sales force? Of course, a lot of these questions will be determined by your revenue growth. However, like a business plan, your sales force plans should be laid out in the beginning so you know if and when you reach key milestones. In other words, don’t just hire your first sales rep and “see how it goes.”
7. Resources. Can your business sustain the growth resulting from the new business you’ll be getting? Can you handle the increased sales that will come in from the new sales rep? Your consulting or professional services are a finite resource and the new business requirements may exceed your capacity to handle the work. Make sure you are staffed appropriately by balancing the newly generated sales with the resources needed to accommodate it.
8. Commitment. How committed are you to bringing on a dedicated, full-time sales rep? Will you really step back and let your new rep sell? Will you trust him to do his job? Trusting him doesn’t mean you just look away and “trust” that the sales will come in. It means you will give him the resources and freedom to succeed. You need to build your sales processes (see above) and use technology (see above) to help the sales rep succeed and to give you the metrics you’ll need to measure their progress. When you measure their performance, you have to use metrics to ensure accuracy and consistency and not rely on your emotions and fear. For instance, I worked for a sales manager once who felt, in spite of me blowing away my numbers and working my tale off, that because he didn’t see me in the office a lot, that I wasn’t working hard enough. He was emotionally involved and relied on his perceptions instead of looking at the facts.
Of course I didn’t go into this level of detail with the business owner who asked me this question. But I highlighted all of them and he felt much more aware of what he needed to do before hiring his first sales rep. If you are at this level of growth in your business, I hope these points help you prepare for what could be a very profitable and successful chapter in your life and business.
Good Luck & Good Selling!
Russ Lombardo
When to Hire Your First Sales Rep - To learn more about this author, visit Russ Lombardo's Website.
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very relevant o title & helpful
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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