Take a group of ten players. The top two will be supermotivated. Superstars will usually take care of themselves. Anybody can coach them. The next four, with the right motivation and direction, will learn to perform up to their potential.
The last two will waste your time. They won’t be with you for long. Our goal is to focus our organizational detail and coaching on the middle six. They are the ones who most need and benefit from your direction, monitoring, and counsel.
Planning for Failure
Many sales managers start the year with an unwinnable hand. Their CFO won’t allow them to hire in advance of a year or to build a bench of salespeople within their firm. Some sales managers don’t even get their sales numbers until after the beginning of the first quarter. Then they have to begin hiring while carrying a full quota from the beginning of the year. And this doesn’t take into account any turnover that might occur during the year.
As a result, sales managers overassign quotas to the sales reps they have in hopes that a certain number will exceed their goals to offset the bottom 20 percent who aren’t going to make it, open territories that they begin the year with, or turnover they may have.
Many managers try to live with the lesser of two evils: (1) let a bad rep continue to work in a territory because at least there is a “body” there, or (2) live with an open territory that they must cover themselves. The most frequently made mistake is not trimming poor performers early enough. Not only does this demotivate the rest of the team, but it also takes the manager away from being a coach.
Some sales executives aggravate their turnover problem simply by increasing quotas every year based on what the analysts or CFO says the sales increase ought to be, with no thought to where the new sales will come from. Will these quotas come from better coverage, new products, new markets, increased prices, better margins, or an increased win ratio?
Without a bottom-up analysis of true potential, raising sales quotas doesn’t raise sales—it usually only raises turnover and discounts. This is one of the great myths of selling. And if sales quotas are increased as a percentage of an individual’s sales quota last year, then the great reward for a job well done, after the sales banquet, is an even greater quota for your best performers. How motivating is that?
While working for Atlanta-based Optio Software, one of our principals, Blake Batley, was asked to relocate to the West Coast to assume the newly created role of western regional director.
His challenge was to revamp the region, which had previously included only one salesperson and had never generated more than $500k in software license revenue.
Instead of managing the business for what was possible, the company was managing the business for the analysts. They put together a first-year plan to find and generate $10 million in the new territory. His tasks included finding office space, furnishing it with everything from chairs to computers, hiring ten new salespeople plus support staff, and getting them trained and up to speed so that they could produce $10 million in the first year of operation.
At the end of that first 12 months, they had a fully equipped office and a full staff. His team produced over $5 million in revenue on the $10 million quota. To everyone in the western regional office, it was considered a huge success. But, according to the analysts, it was a failure.
When financial strategy drives sales strategy, quite often the result is planning for failure. And if this overassignment of individual quotas results in discouragement or increased turnover in the sales force, a complete downward spiral begins.
When financial strategy drives sales strategy, quite often the result is planning for failure.
The solution is to improve our hiring and planning processes—to get the right people in the right jobs before the year begins. One best practice that we've seen in several companies is the hiring of junior salespeople who work either on existing accounts or on farming and marketing activities to learn the business and prepare themselves for territories when they open up. In my experience, we hired a number of these — about one per district — and many of them have turned out to be not only extremely successful sales reps but also vice presidents of sales and CEOs of their own companies. Without them, we would have begun the year behind the curve and would never have been able to catch up. The impact would have affected sales results and eventually shareholder value.
Get a Bench and a Pool
The worst recruiting practice is to wait until you have an opening. This means that you are reacting to the marketplace and only looking through the available candidates in your area. The best practice is to build a bench within your own firm and a pool of candidates in your industry on which you can draw when you have an opening. It may take years to build this network of candidates, but it means proactively going after people and companies that may not be looking for jobs at the moment.
In our firm, it takes us about two years to recruit a principal. And we have the possibility of 100 or more at any one time who may come to work with us in the future. The building of this pool has not been an accident. Every sales manager should have a list of several dozen sales candidates within their contacts or background on which they can draw at any given time.
Recruit the Best Recruiters
The worst recruiting practice is to wait until you have an opening
The next best thing is to build a network of recruiters who are loyal to you. However, a loyal recruiter may be an oxymoron. And if you count on human resources (HR) or advertisements to send you the right candidates, you are abdicating responsibility for your own future.
If you’re counting on recruiters, proceed with caution. Many recruiters try to play both sides of the fence. They may be using you as a net destination and a net supplier at the same time. You need to meet face to face with these recruiters, define your outline, and sell them not only on why your company is a good place for their candidates to come to work but also why you need to have a partnership with them. Make it clear that if they ever recruit from you at the same time they are sending you candidates, that will be the end of the relationship.
You have to be willing to share with selected recruiters the rules of engagement, including your compensation plan, competitive advantages, the direction of your company, and your recruiting process. In this way, they understand how to proceed with you and won’t see it as an unduly lengthy process. The only thing that will keep recruiters loyal to you is the prospect of future business. Once they see your company in trouble and people starting to leave, unless you have a personal relationship with a particular recruiter, they will start to prey on you and take people out of your organization. It’s a double-edged sword they use. Don’t let them use it on you.
If you count on HR or advertisements to send you to the right candidates, you are abdicating responsibility for your own future.
Recruiters to Reps—Solve Two Problems at Once
Another best practice used by some organizations is to hire full-time internal recruiters. Why waste a sales headcount on a recruiter? These people are actually salespeople because they can go into organizations and find people who are not yet looking for a job and pull them out along with their friends.
The only thing that will keep recruiters loyal to you is the prospect of future business.
When I was rebuilding my region, my company had a number of these (most of them were ex-military Recon types.) They made great recruiters, and most of them went on to have successful careers in sales and sales management. It was one of the best investments we ever made. Not because we saved recruiting fees, but because we got top-level talent.
All I ever saw in my recruiting efforts were A and B prospects. I wasted very little time talking to turkeys because of the efforts of these people. We were able to rebuild our region from middle of the pack to number one within a year. This is an excellent investment, but like many best practices, it requires a certain economy of scale to be able to afford a full-time, aggressive internal recruiter who is not just a paper passer.
If you’re recruiting, how do you know what to look for unless you sit down and define what a successful salesperson in your organization looks like? What traits, experience, skills and personality will predict success in your organization and in your industry? Unless you write it down and test it against your current performers—you’re guessing. In the absence of a profile, you’ll be hiring on hope. You will be opportunistic instead of purposeful. People tend to hire on hope and fire on faults—a very expensive habit.
Good Is the Enemy of Great
Not having a reason to not hire somebody is not a reason to hire them. The default is to keep talking or keep looking.
A regional manager I know once hired a guy and fired him within three months. When asked why we hired this person, he replied, “I couldn’t find a reason not to hire him, and he looked better than anyone else I’d seen.” (These are two bad principles that need to be removed.)
One time, one of my sales managers said to me, “We can’t have all ‘A’ players.”
“Why not?” I said. “That’s not true. That’s a bad principle. Throw it out. You can have all ‘A’ players. I’ve done it three times in my life.”
People tend to hire on hope and fire on faults — a very expensive habit.
But you have to be willing to wait for the star, and you have to be willing to spend more time recruiting than fixing problems for salespeople. Championship teams have no weak links. It’s pay me now or pay me later, and I’d rather invest in recruiting than in fixing lost sales.
While at SAP, one of our principals, Jack Barr, met with sales directors from all over the country. He would ask them each to rank their current sales teams—how many A, B, and C players they thought they had.
Their categorizations were always similar. They all defined their sales forces as having some A players, some B players, and some C’s. Their best performers were designated as “A players” even if they really weren’t. In many cases they didn’t really have any A players at all.
When Jack told them that they needed to hire some A’s, they would always say, “We can’t right now—we don’t have the headcount.”
“But if you have four C players right now, who you don’t think will ever be A players, you do have the headcount,” Jack would tell them. “You have room to hire four people.”
As a sales manager, you have to be candid with yourself about what level players you really have. You should constantly be recruiting. When you find an A player—or someone who has the potential to become an A player—hire them and replace your C’s.
You can only perform as well as the team you have behind you. If you spend all of your time coaching the C players, helping them sell, you can’t be an effective manager to the rest of your team.
It’s not what you pay a man, but what he costs you that counts.
One of the problems we have in business is that accounting systems don’t measure the cost of a bad hire. Our accounting systems don’t measure lost revenue because it never hit the books in the first place. But the cost is there; it’s just invisible. Not only is it an out-of-pocket cost from lost sales, but also there are huge non-monetary costs that have an impact on the manager.
One thing is sure: Whatever the gap is between what you hire and what you need, the manager pays for in the long run. The costs incurred from hiring mistakes include lost productivity, as well as lost time for the manager and the entire sales team—not only lost sales from the poor production of that one salesperson, but also lost manager’s time that was taken away from other people who could have benefited from good coaching—not to mention other losses such as angry customers, employee morale, and even missed opportunities.
Not having a reason not to hire someone is not a reason to hire them.
What did it cost you to settle for someone who was adequate if you missed the star who would have come along one month later and would have been a quota exceeder for the next 10 years? How much did it cost because you settled for someone who was adequate rather than someone who was exceptional? The principle is—if they aren’t exceptional, they aren’t acceptable.
Whatever the gap is between what you hire and what you need, the manager pays for in the long run. If your new hire is not exceptional, they are not acceptable.
Additionally, you have the out-of-pocket costs of recruiter fees, moving expenses, and training and travel to get someone new up to speed. What is the real cost? Most of the sales managers I talk with estimate the cost of a bad hire at — when they add it all up — a minimum of one to two year’s sales quota. It takes three to six months to figure out if the new hire can do the job; then you may have to give them a probation period of another 90 days; and then it takes another three to six months to hire someone else and get them up to speed again.
Here is an example based on a salesperson with a $1.5 million quota:
| Range | Average | |
| Initial hire period | 1-3 months | 2 months |
| Ramp-up and training time | 3-6 months | 3 months |
| Time to realize poor performance | 6 months | 6 months |
| Time to review and fire | 3-6 months | 5 months |
| Time to hire new rep | 1-3 months | 2 months |
| Total | 18 months | |
| Additional costs | ||
| 18-month sales quota x $1.5 million | $2.25 million | |
| Recruiting fees | $25,000 | |
| Training | $50,000 | |
| Total | $2.325 million |
If our accounting practices required us to take a writeoff or write a check for this amount every time an employee went out the door, this would stop.
In addition to money, the other costs of a bad hire include
• Lost productivity.
• Time and stress.
• Error correction.
• Angry customers.
• Employee morale.
• Wasted support resources.
• Missed opportunities.
• Management reputation.
However, a very successful rep could produce quota for 10 years or more. How much time would you spend on a prospect that size? Why would you spend less time on a rep?
The next best thing is to figure out how much your real costs are so that you can figure out where your time is best spent. It's not only pay me now or pay me later—paying me later is several multiples of the time invested now.
Recruiting and interviewing are two of the most valuable investments sales managers can make of their time. But it has to be proactive, and it has to be in advance of an open territory or you will end up settling for someone who is adequate rather than being able to wait for somebody who is exceptional.
A colleague of ours, Rob Jeppsen, tells a story of when he was the CEO of a young technology company:
“You may only get one good shot at a particular client, and the wrong rep can blow this shot. You could lose the opportunity to do business with the client for years—if ever.
Our firm needed to hire two reps. I had the board putting all kinds of pressure on me to fill the territories ASAP. As important as these territories were to the company, we were unwilling to pay market rates.
I was told that 'good would be good enough. As a result, I hired the best two guys I could find for the right price.
As it turned out, the two I chose were not people I would have hired if I had the option of waiting.These guys could not speak the language of our customers and drove away far more customers than they attracted.
As they struggled to succeed, not only did they cause us to lose real opportunities, [but] they [also] became negative energy sources, complaining about all of the things that were making it impossible for them to sell. This caused significant damage as other employees joined sides of management or salespeople.
Ultimately, good was not good enough, and it took us nearly 18 months to fully recover.”
Proactive Sourcing
Another way to be proactive and get ahead of the curve is to nurture your network—take care of your people — and keep in contact with the salespeople who have been successful for you in the past. When you get your next sales management job, those people could be your pool. I know a lot of sales managers who have put themselves out of business because they not only didn’t nurture the network, they burned bridges.
Another source is to cultivate professional organizations. That dead time during trade shows and conferences can be well spent getting to know the competitive salespeople who always assemble there.
A very successful rep could produce quota for 10 years or more. How much would you spend on a prospect that size?
It can be dangerous to recruit from clients, but there are times when clients can be a good source of candidates without destroying the relationship. You also can consider rehires—good people who have left you. Maybe the grass is greener for a reason; maybe it’s the stuff they are spreading around over there. Good people can come back if you keep the door open.
Most managers, in their interviewing process, consider only two dimensions—performance and personality. If this is as deep as you look, you’re not going deep enough.
There are a number of reasons salespeople fail and one of the biggest ones isn’t a lack of confidence or commitment. It’s character. And most interviewers fail to ask enough questions in this area.
In our management training course, we teach people how to drill down to character issues in addition to performance. We teach them to ask questions they wouldn’t normally ask otherwise.
During one of our management training classes, one manager said, “I’m not comfortable asking these personal questions.” The most recent exercise we had done in class was to study why employees fail. When we looked at the chart paper around the room, the irony was that 80 percent of their failures had to do with character issues, yet they weren’t interviewing in that area.
What skills, experience, intelligence level, behavior traits, etc. will predict success? The answer is unique to you and your organization.
Your Sales Process Should Drive Your Talent Profile
The first step is to define your best-practices sales cycle— the template for an ideal sale in your industry segment. Then the next step is to work backwards to the activities, information, and strategies needed for each phase of your sales cycle.
FIGURE 4–1 Best-practice sales cycle competency model.
Then work into the skills, competencies, behaviors, and experience needed to effectively execute each of these activities for each of the roles on your sales team (see Figure 4–1). The last step is to create the interview questions that help you to discover these traits—or their absence—and compare them to your profile.
One of the best books in this area is Don Clifton and Marcus Buckingham’s book «Now, Discover Your Strengths». This is an excellent approach to identifying the characteristics that predict success.
When we used Don’s company in the past, we did a study of our most successful reps — hunters in the high-tech software industry — and were able to identify the most important traits to look for. In our profile, the “must haves” were that sales reps be competitive, have big egos that result in drive and ambition, and have the courage to overcome obstacles and initiate action from a blank piece of paper every day. We found that being smart also was critical. Such people make things happen rather than watch and wonder.
Other traits were either “like to haves” or fell in the category of “compensating strengths and weaknesses.” However, if we didn’t have the four “must haves,” we knew that the person probably was not going to be successful and that the cost of hiring such a person was going to be high. We have found this to be true, by the way, of most hunters in most organizations. The four “must have” traits are necessary for competitive evaluation hunters, as we described in Hope Is Not A Strategy.
Hiring Assessments
To find out whether or not people have these traits, a number of companies offer assessments or surveys. Basic intelligence tests and personality style assessments are fundamental and inexpensive for first-tier screening. For complex sales of big-ticket items to committees in competitive situations, however, much more is needed.
One of the best people at defining selection profiles is Ross Rich of Chicago-based Selection Strategies, Inc. He not only knows what to look for, but he also has created a structured two-hour phone interview that listens to what the candidate says and also to what he or she doesn’t say. Although these processes are not 100 percent perfect, they do help to raise red flags for your finalists. This phone interview and interpretation are fairly extensive, so most companies use them for finalists only, but they will show you the weak spots—where you should drill down deeper—before you make the expensive decision to hire a candidate.
As we mentioned, most people look at personality and performance, but there are potential flaws in both these areas. First of all, it’s hard to judge past performance. How quotas are set differs from company to company. Thus, when a résumé says, “I made quota at this other company,” what does that really mean?
One of our principals, Joe Southworth, tells a story of when he was a sales manager at a large software company:
“There was a candidate who I really wanted to hire. He looked great on paper—he had blown away his quota the previous year. I went into the VP of sales’ office, excited about this new candidate, and told him about how he had exceeded his quota last year.
‘Has he made quota every year for the last three years?’ the VP asked me.
‘Well, he’s been selling for 10 years,’ I said.
‘But does that mean he has 10 years of experience or one year of experience 10 times?’ he asked. ‘We’re looking for consistency and improvement. What you really want to know is, is he getting better every year or is he just doing the same thing year in, year out.’”
Two better questions to ask in assessing past performances of salespeople are
1. How did you compare to your peers?
2. Which percentile was your sales performance in each year?
You also should get specifics on how they overcame challenges. Take the groomed references they give you and ask for referrals to other, unsolicited references and teammates who may have worked with the candidate on deals. Their perspective on the rep’s contribution and competency is usually very enlightening. Often their silence or faint praise speaks volumes.
Another important question to ask is what percentage of the reps at your past employer made quota every year? Many salespeople made their quota from 1995 to 2000 because they were reacting to demand in a hot market. If you didn’t make quota, you were considered a failure. In other companies, only 50 percent of the salespeople made it every year. Having this metric gives you some sort of a benchmark to compare quotas.
Different industries also have different sales rhythms — the size and number of deals in a year. Some salespeople are used to a deal a day, some one per week, some one per month, and with some organizations, it’s only one deal per year. Knowing what percentage of their business came from repeat orders vs. new name or competitive sales can indicate whether they are a hunter or a farmer.
Another challenge is taking transactional salespeople and putting them in a long sales cycle. Some salespeople are better at more frequent sales rhythms, whereas others are better at working on bigger deals over long periods of time.
Are Great Salespeople Born or Made?
I am often asked if great selling ability is something that people are born with or whether training is necessary. Without a doubt, there are great intuitive salespeople with innate abilities (see Figure 4–2).
Dave Sample, a long-time client of ours, now at Blackboard, summed up the problem like this: “Heroics don’t scale.” Yes, there are people who can do this intuitively, but there aren’t enough of them. You have to find them and you have to grow them.
Not only that, but intuitive salespeople are unconscious about their competence. If your sales model is different from their experience, they may not be able to adapt because often they are good but don’t know why.
So both hiring and training are important. But what can we change in a person, and what is in a person that is too difficult or time-consuming to try to change?
The nature versus nurture question has been the subject of many stories over the years, as in the movies Wall Street and The Firm, for example. In both stories, the main character was tempted to actions outside their basic principles, with grave consequences, only to find their true character in the end.
In Figure 4–2, it can be seen that there are things in a person’s DNA and in their early development—intelligence, personality, core values—that are very hard to change. And a person may change behavior a little for a little while. But if that change is at odds with the person’s inner fiber, eventually, they will snap back or be ineffective because their heart is really not in their actions. Thus these inner core traits are what you should really focus on in your hiring. In my experience, people usually have to bring these things with them.
The next layer out—goals, habits, and principles — are drivers of action and daily choices. If these are to be changed in a person, they need to be changed within the first 90 days of when the person is hired. The company may set a goal or principle for a person on the outer ring of the figure, but if that goal or principle is not owned in the person’s heart, the result is usually a weak or false effort and ultimately, replacement.
Heroics don’t scale.There are people who do this intuitively, but there aren’t enough of them. You have to find them and you have to grow them.
Knowledge, skills, experience, and attitude are the things that enable a person to accomplish his or her goals or job. Obviously, these can be trained and managed by rewards. The rest of the figure includes the many areas management can address to direct short-term behaviors.
Notice how far inside we have placed habits. This is where the subconscious overrides the conscious. Changing organizational behavior often means changing individual behavior, which often takes time and consistency.