Scott Rosen fired his entire sales force in an effort to save his company. Was it a smart move?
Scott Rosen fired his entire sales force in an effort to save his company. Was it a smart move?
Firing your whole sales team to help save your company sounds like a drastic measure, but business owner Scott Rosen saw it as the only way he could grow his business. In " A Sales Force of One," Inc senior writer Susan Greco recounts his experience and the lessons he learned from his strategy. Here Inc 500 CEOs and sales experts share their thoughts. Read what the experts have to say and then weigh in with your own thoughts by taking our on-line poll.
John D. Hawkins is president of Employer Services Corporation, a professional employer organization based in Buffalo, NY, and a two-time Inc 500 winner (#72 in 2001 and #211 in 2002).
"The first thing that jumped out at me is that Scott spent a significant amount of time trying different strategies to fix the problem before understanding why things went in the wrong direction in the first place.
"Sales can decrease for a number of reasons. He seemed to assume it was his salespeople. But there are a lot of reasons sales can go bad. He may have had the wrong salespeople. He may have had the right people but incented them wrong -- maybe they didn't have skin in the game. It could have been his sales process changed over time. It could have been the product he was selling, the type of recruiting that he was performing, was no longer in demand, so their sales pitch was falling on deaf ears. It may have been a combination of all of the above. If I were Scott, the first thing I would have done would have been to analyze exactly what had happened and why -- then applied the applicable solution.
"It also occurred to me that he may have, to a certain extent, abandoned his CEO job in search of a sales solution. I say, from experience, that that would be a mistake. In the past, my partner and I would get dragged into the day-to-day operations and forget about our core focus and strategic direction. We've been doing the majority of sales since inception. We have tried two part-time salespeople in the past, which did not work out. Today we use a "sales report" card that measures pipeline activity, target account size, closes, etc. and gives weightings to different areas of the sales process. Frankly it gives salespeople an overall grade based on what I believe they need to be successful."
J. McCurry is CEO of AquickDelivery, a courier-delivery service based in Atlanta, Ga. His company was #314 on the 2002 Inc 500 list.
"After reading your story, I commiserate with Scott Rosen. In fact, I think that Scott's course of action was correct. I have a good friend in the same industry, and he has experienced similar declines in demand for his service. You cannot support your sales people if a change in the economy switches the whole paradigm that your business model was build upon, and it becomes impossible for you to generate sales profitably."
Pamela E. Munn is CEO of All Star Consulting, Inc., based in San Francisco, Calif. Her company was #429 Inc 500 2002.
"What he did, I believe, was good for the wrong reasons. He niche business was hot and then died. Perhaps he could have kept his sales force and broadened the types of people he represented. As president it is his job to be looking at a more global picture, and I believe he let everyone down. "
Verne Harnish, founder and CEO of a Gazelles, Inc., a co-op corporate university providing organizational and business development tools to fast-growth companies based in Ashburn, Va.
"In essence, two things are going on as a result of the economy -- and his situation is typical of what I'm seeing all over the place:
Anthony Parinello is author of Selling to VITO, the Very Important Top Officer. His latest book is Secrets of VITO, Think and Sell like a CEO.
"Some leaders choose to delegate their sales activity - - and in so doing run the risk of cheating their organizations out of a great deal of selling 'impact.' Scott, you decided to project your 'best practices' into your sales process personally and by doing so, you gave up the power, control and authority that comes with your position! There really is a middle ground whereby leaders of organizations can be in the sales process without becoming the sales process. Here are a few secrets I'd like to share:
" Secret #1: CEOs who know how to sell know who their ideal prospects are. CEOs who effectively manage their sales process hate wasting time, so they make sure that their sales team targets the people and groups most likely to quickly buy from them. Wasted time in the sales process adds to the cost of sales and extends the critical time-to-revenue benchmark. Scott, your 'Field of Dreams' tactics didn't work! Instead you could have asked a hand picked, short list of your best existing customers to help you re-invent your product, service and solution to match the current needs and initiatives of your marketplace. Whenever the majority of your customers stop (or slowdown) buying from you, it's time to look at the conditions that exist beyond any economic woes. The shortest time to revenue is to rebuild your offering through your best customer's eyes (this way you've got a built in demand). Without changing what you're selling to match what your market is currently buying you proved the fact that making more cold-calls will only backfire and bring greater rejection to the doorstep of your sales team not greater sales revenue.
"CEOs who know how to sell have no qualms about supporting the sales effort by calling the prospects organization's top person to find out - quickly -- whether there's a potential fit. That means you must be willing to do the same. Pick up the phone and sell to the top in concert with your team gives the 'air support' that your ground troops really need. Identify all the sales currently in your forecast that are taking too long to bring to closure. Pick up the phone and call your peer in the buying organization, you'll quickly find out what's taking so long and what you need to do to put some grease on the gears!
" Secret #2: CEOs who effectively support their sales teams model the ideal sales process personally and consistently. Who plays the role of a model salesperson better than the head of the company? No one! Scott, it appears that your sales model was designed with "cherry picking" in mind during good times. You waited much too long to 'retool' your sales process. The best sales process is one that that has a healthy mix of chasing new prospects and growing high margin, add-on business from existing clients. In robust economic times a good mix looks like 75/25 (new prospects to add-ons from existing customers) in your particular situation with revenues declining rapidly that ratio may have needed to be 'flip-flopped.' Yes, you need to sell -- but you don't need to sell everyone.
" Secret #3: CEOs who support their sales process personally monitor changes in their marketplace and know what their competition is up to! Sure, this is extra work. But it pays off - and if you're the head of the organization, it's already part of your job description. Learn how other organizations are motivating their own sales teams. Err on the side of caution! It's never a good idea to change a compensation plan in the middle of a year! Cutting a base salary that salespeople live on is never a motivator. Here's an idea, bite the bullet and hold the comp plan as is. Add incentives like, bringing in larger initial sales or incentives for compressing the 'time to sale'. In your case Scott, increasing the commission for add-on business from existing customers may have worked well.
" Secret #4: CEOs who know the sales process well have a crystal clear understanding of their vision and know how to get everyone rallying around their dream. Scott, how clearly and consistently did you articulate your vision to your organization, your prospects/customers and your sales team? In other words: you may have been better off 'Firing them up? not firing them!' the next time you feel the urge to administer 'pain' to a sales team (or any other employee) 'train' them instead. Give them new ideas, tactics and tools to prospect with. Provide them with a cutting edge way to create 'touch-points' with existing customers. By doing this you will show your team that you have unshakable confidence in their ability to overachieve your vision. When you put unrealistic benchmarks in place and enforce the use of call volume monitoring systems you only place uncertainty and doubt in your sales team's ability to overachieve your vision.
" Secret #5: CEOs who engage in their sales process retain their power and influence by having the final say in an assertive way. Even when they delegate, successful CEOs are the final approvers of every initiative with which they come in contact."
Greg Tushaus is CEO of Tushaus Computer Services (#160 on the 1999 Inc 500 list), a provider of computer services and products based in Milwaukee, Wis.
"Hiring good salespeople is a challenging task. Building a good sales team is more difficult. Once hired, it is one of the simplest positions to evaluate because a salesperson is either selling or they are not selling. A good salesperson is selling and selling profitably. Anyone can sell with discounts, bad terms or poor deal structures. A good economy can mask problems and a poor economy can highlight problems.
"Firing the entire sales force seems drastic. We adjusted our sales force as we experienced changes in the economy. If we hope to grow we need to leverage a good sales force. So, we continue to look for good salespeople.
"Our sales costs grew relative to other cost during this recession. We found it necessary to make adjustments in compensation and our tolerance for poor performance. We did our best to communicate the realities of this economy when making changes. But we also bore additional costs to sustain what we believe is a good workforce. We are hopeful this will garner loyalty in the long term.
"We are doing more to simplify the sales process in a complicated business. Since sales costs have increased we need to improve sales productivity. We changed compensation plans to align rewards or commission more closely with performance. We want a compensation plan that is fair and competitive. If we over pay this may lead to financial problems. It is a fine balance.
"These are all things that deserve greater attention when times are good not just when times are bad. We are experiencing improvements in sales recently and therefore are happy we stood together with our team."