The 5% Solution
Having a sales force in reserve is like taking out an insurance policy on your future sales growth--it helps you cope with unexpected challenges and opportunities
PSS/World Medical Inc. has grown to be a pretty big company. We have close to 1,000 sales representatives. As a standard practice, we also keep about 50 reps in reserve--5% of the total.
You heard me right: those 50 people are not out selling. Some are driving trucks in one of our branches while they undergo training. Many have finished their training--and they're still driving trucks while they wait for an assignment to a sales territory. If you're a new sales rep at PSS, it can be three or four months before you begin doing what you were hired to do.
"Well, sure," I hear you say. "You have this huge organization, so you can afford to keep people on the bench. If I ran a big public company, I'd do the same thing." Sorry--we've been practicing that 5%-in-reserve policy since we were a little bitty business. And don't tell me how tough it is to find good people these days, either. I know it's tough; so does every CEO. But most of us manage to attract enough people to keep operating. The question is whether we invest in finding enough to grow.
Here's my thinking. Whatever your industry, one big factor determining your growth rate is your sales force. It's hard to boost revenues without putting more people in the field to call on customers. Given that need--and given today's tight labor market--it's only natural to put every new sales rep out on the street as fast as possible. But that's exactly where most companies are making a mistake. They're thinking short-term, not long-term, and their growth eventually will suffer for it.
One reason for having sales reps in reserve is that a poorly trained rep can be worse than no rep at all. I learned that lesson firsthand. Right after college, I was working as a management trainee for a medical-supply house in Atlanta. A sales rep in Macon, Ga., quit, and Rick, my boss, decided to send me to Macon the very next week to take the rep's place. Training? Rick gave me a price list and a customer list. He suggested I look in the yellow pages under physicians to find more customers. My first month out I had negative sales. Many of the doctors I called on were disgusted with our company and wanted to return items. I was taking more out of their offices than I was sending in.
When my partners and I founded PSS, we vowed we wouldn't make that mistake. Our new salespeople spend a minimum of 16 weeks in training. We drill them on product knowledge until they wonder if they ever left school. We give them intensive, detailed instruction in selling skills--indeed, in all the tools and techniques they'll need to manage a successful territory. What's more, they aren't just sitting in a classroom. Those who are driving trucks handle all our products. They get to know our customers. If they'll be selling to physicians, they learn useful tricks like checking the storeroom to see what the doctor or nurse might need.
In your company, of course, sales trainees might be doing something else, like working a computer or handling customer-service calls. The point is that no sales rep should ever go out on the street until he or she knows the business cold. We've seen the payoff at PSS: reps who stay in our training program the longest seem to do the best when they get out. They have a level of confidence that greener reps lack.
There's another powerful reason for keeping a reserve army of salespeople. What happens in your company when a rep quits, or when you see a territory that's ripe for expansion?
You need a new rep, and you're not sure where to find one. Maybe you begin snooping around the competition, hoping to hire someone away. Maybe you put an ad in the paper. Most likely you do what Rick did--grab the first warm body you can find and decide that the body is now a salesperson. Every day that goes by, of course, your competitors' experienced salespeople are calling on your customers and prospects. If your rep has quit, you can be sure those other reps are raising questions about your company's reliability.
When a sales rep leaves PSS, by contrast, we have a replacement working that territory the very next day. And not just any replacement but a highly trained salesperson with months of work under his or her belt. The customer is aware of no interruption, only of a new face showing up at the door. Or let's say no one quits, but we notice that a particular market is growing faster than the branch's sales force can handle. We can drop another rep or two into that market in a heartbeat.
I don't mean to mislead you. Keeping that many salespeople in reserve isn't easy. You have to spend the time and money to find more reps than you need at any given moment--no small matter in today's economy. You have to pay your sales trainees more than you would pay truck drivers. Your operations folks need to be prepared to deal with the turnover that occurs when the trainees become sales reps. Of course, there's nothing magic about the 5% figure. That's what works for us, given our growth rate. You might get away with fewer people in reserve. Then again, you might need more.
There is one other little wrinkle. You need a level of dedication and commitment in your new sales reps akin to what's expected in the U.S. Marine Corps. When we assign trainees to a new territory, we don't want to hear that they need a month to collect their things. We don't want to hear that it'll take a week to find a mover. We want to hear that their car is gassed up, that their bags are already packed, and--yes, sir!--that they'll be in the new territory within 24 hours. At PSS we do hear it, because the salespeople that we hire and train learn that it's exactly what we expect.
So, yes, it's hard. The 5% solution demands discipline. But reserving 5% of your sales force is like taking out an insurance policy on your future sales growth. It enables you to maintain your growth when you confront unexpected challenges and opportunities.
Patrick Kelly is the founder and CEO of PSS/World Medical Inc. and the author (with John Case) of Faster Company: Building the World's Nuttiest, Turn-on-a-Dime, Home-Grown, Billion Dollar Business, published by John Wiley & Sons.