Scott Rosen fired his entire sales staff, figuring he could do better all by himself.
No one can say Scott Rosen didn't try.
Even his former salespeople give him that. "There was no quitting for that guy," says Mick Csernica, a salesman for the Rosen Group until a year ago. "He did everything he could to shake things up."
The sole owner and CEO of a human-resources recruiting and staffing firm, Rosen tried to light one fire after another under his eight salespeople. When they went on sales calls, he rode shotgun. When sales declined, he opened his wallet and offered $2,000 to the rep who scored the most appointments with potential clients. He redoubled his training efforts and tracked his reps' progress continuously. But when that didn't work either, he began to suspect that his people just weren't trying hard enough. At that point, he resorted to a move that company owners sometimes make to shake up the sales force: he changed the sales-compensation plan midyear, raising the compensation rate by about 35% and cutting base salaries by about the same percentage. He says he thought his staff would like the change. "The salespeople had the potential to make more money," he says. "I thought the change would bring out their hungriness." It didn't. One salesperson quit in protest.
So Rosen tried a different tack: he offered to spend more time helping the most promising reps if they in turn would take on more diverse responsibilities. They refused. "That sealed it for me," says Rosen. "No one said, 'I'll do whatever it takes.' Everyone wanted to maintain the same position they had in good times." Rosen could barely contain the growing frustration he felt toward his underachievers. "There were only so many times I could say, 'Why didn't you make your numbers?"
The more he thought about his sales reps, the angrier he became. This was not the way things were supposed to turn out. At the beginning of 2001, he had expected to grow at least 40%. And so, by October of that year, Rosen finally did something he'd been contemplating for weeks. He laid off half his salespeople, as well as several other core staffers. But even that didn't work. Thanks to his own success in landing a few big contracts, he managed to finish the year with only slightly declining sales -- but that still added up to a $100,000 loss. At that point, Rosen did the unthinkable: he fired the rest of the sales force and nearly every person on staff. Where he once employed 15 people in three offices, suddenly there was no one. Salesman Csernica, who was among the second group to get the ax, says he suspects that Rosen woke up one day and decided that he needed to "burn the village" in order to save it. Even Rosen doesn't contend that his decision was completely rational. But when everyone told him he was making a grave mistake, he consoled himself with one thought: "I'll show them I can sell." That was one year ago.
Before he founded the Rosen Group at the age of 36, Scott Rosen had had no sales experience whatsoever. For 16 years he'd worked as an HR and operations executive for the likes of Prudential, Cigna, and GE Capital before he tired of big-company life. In June 1995 he began the Rosen Group in Cherry Hill, N.J., in his spare second-floor bedroom, which he dubbed "Suite 210." By the year he turned 40, Rosen had single-handedly built a book of business worth nearly $3 million.
Rosen originally started out selling himself as a high-level HR consultant, but the business quickly morphed into providing HR specialists, from recruiters to 401(k) administrators. In short, he needed to sell two things: human-resources temps to corporate clients and his services to the prospective temps. And he was good at it. Rosen figured he closed 50% of his sales calls to prospective corporate customers. But he wasn't a natural. "I didn't think of myself as a salesperson," he says. "I used to view selling as this terrible, evil thing."
But he also knew that to grow a business, he had to get over that aversion. He signed up for a year of courses and one-on-one coaching from the Sandler Sales Institute, in Stevenson, Md., one of the more popular programs aimed at entrepreneurs. The institute was started about 30 years ago by David Sandler, a frustrated salesman, who taught selling basics infused with his own version of "I'm OK, you're OK" pop psychology. Rosen hooked up with Bob Waks, the Sandler licensee for the Philadelphia area, who quickly became his round-the-clock sales coach and confidant. "My first impression was that Scott had very few skills as a salesperson," says Waks. "But there are two things we can't teach: commitment and desire -- the passion to do sales and the willingness to want to make money. You've got to bring those with you. And Scott did."
"I was totally pumped to sell," Rosen agrees. "I called everyone I'd ever known, then I started cold-calling from a list of the 100 fastest-growing Philadelphia-area companies" -- a list, published by the Philadelphia Business Journal, that the Rosen Group would one day appear on.
From Waks, Rosen quickly learned little tricks: smiling when you're talking on the phone as a reminder to stay positive and standing up rather than sitting while you're on the phone as a way of feeling more powerful. "One in 10 calls, maybe, I'd get through to the HR manager," he recalls. But he didn't let those odds discourage him. Little successes buoyed him. He had found a new calling. "It was thrilling," he recalls. "I can sell!"
The most important piece of advice that Rosen absorbed: "Try not to act like a salesperson." Working with Waks made him realize he had been "selling" all along in his previous corporate jobs. All he had to do was imagine himself back at GE, persuading department heads to adopt his HR programs. "What surprised me was how similar it was to the basic communications-skills training I had received as a human-resources executive. It was just packaged differently," he says.
Of course, sales school wasn't all just "Act natural." There was some technique involved. Rosen learned, for example, that when you reach the critical moment of truth with a prospect -- when it's time to do the deal or move on -- it's far better to get "no" than to hear "maybe."
Though Rosen pulled in just $40,000 during those first six months, the next year was better, 10 times better: $402,000 in revenue. Before he moved out of "Suite 210" in 1997, he hired a marketing specialist and a recruiter who filled the temp positions. By then, he says, "business was coming to me." Landing big-name customers like Towers Perrin put him on the map. "I'd get two to three calls a day from HR directors -- 'I need to hire a recruiter,' or 'I need a benefits person."
When he began to build his sales force, in late 1998, Rosen -- with help from Waks -- tried to instill the same lessons in his recruits. By 1999, his first full year with sales help, Rosen led his team to $5 million in sales. That was 60% better than the CEO's own personal best. At the company's peak, in 2000, Rosen's eight reps generated about 70% of the company's $7.6 million in sales. "I probably would have continued to hire salespeople," he says. But then the market changed.
The trouble began in January 2001, when the company suffered its first-ever monthly sales decline. Suddenly, Rosen and his sales force found themselves getting to no with alarming speed. Each rep had to make twice as many phone calls just to make a handful of sales each month.
The drop was ostensibly no big deal, except that the Rosen Group had just completed five straight years of record growth, up 1,790% in that time period. So Rosen's initial response to the January report was understandable. "I kind of dismissed it," he says. But then sales were down in February and March, too. "Each month I thought it would turn around and so did everyone around me," he recalls.
"Scott seemed to be hit first and hardest by the economy," recalls Larry Joseph, a member of Rosen's local CEO peer group. Says Rosen: "Every month contracts decreased in a steady downward trend. It was a painfully torturous, slow decline." At first Rosen was stumped. Some people -- including his chief financial officer, his sales trainer, and his eight-person board of advisers -- suggested that the problem was Rosen himself. "They said, 'You're not managing your salespeople actively enough, and that's why they're not producing," remembers Rosen.
So Rosen resolved to get tough. He began requiring that the reps submit reports detailing their sales activity, such as phone interviews, appointments, referrals, and even "dials" -- or how many times they picked up the phone to try to reach someone. Such sales reporting is commonplace at larger companies, but Rosen didn't love the slavish approach to tracking productivity. "You could see people getting discouraged. No one likes cold-calling and rejection," he says. So he tried to lighten things up with events such as a summer competition. Csernica won the cash booty by making more than 500 phone calls, netting a record 24 face-to-face meetings. End result: a paltry six sales. "That was very discouraging," says Rosen.
He was losing money almost every month because the reps weren't making enough new sales to replace the corporate contracts that had ended. Sales were down anywhere from 5% to 10% most months, which translated into monthly net losses of about $10,000. And here he was paying his salespeople an average base salary of $60,000 on top of commissions. "My overhead was huge," Rosen says. "I was projecting $11 million in sales, up from $7.6 million. But I rationalized that I was investing in overhead to grow through this. I was in denial."
Then came 9/11. A month later Rosen finally began laying off his sales force. It was an emotional decision -- and one he agonized over with his peer group, one fellow member recalls -- but essentially, he had come to believe that he had no choice if he wanted to stem his losses. And having run out of options with his sales team, he concluded that he could sell his company's services on his own. Not surprisingly, Waks disagreed with Rosen's thinking. "I advised holding on to at least one salesperson," Waks recalls. "Scott didn't always follow my advice."
"I felt this market was conquerable," Rosen responds, "so I was on my white horse trying to prove I could sell through this." Still, for a few days in January 2002, before his three-person support staff reported to work, it was just Rosen and the four walls. "That first day with no one was scary," he says. But he also felt a sense of calm descend upon his deserted office. "I felt like I had some breathing room, some time to figure this out," he says. "I wanted to prove I could make something happen."
The first thing he did was to set a cold-call quota for himself. But he quickly dropped it. "I don't think that's what made me effective before," he says dismissively. Or maybe he was just a little rusty. "I needed to get my rhythm back." Plus, there was no Bob Waks around to help keep Rosen on track: he had fired his sales coach, too. "I said, 'Bob, I'm going to try this on my own. You know what? I need a break. I don't want to be coached." In part, Rosen suggests, it was just obvious to him that Waks's method wasn't working anymore. For Waks, it was a crushing blow, not only because he believed Rosen still needed his help but because the two men had become close friends.
With zeal, Rosen focused on former customers, corporate clients who at one time had been worth millions of dollars to the Rosen Group. He called 15 or 20 of them a day. But whether he went down the list by revenue or alphabetically from Advanta to Vanguard, the outcome rarely varied. "Clients said, 'We like you, you have a good reputation, but we're not hiring now, and we're not using outside recruiters," he says.
What would seem like a logical conclusion -- as companies slashed costs and laid off staff, they would turn increasingly to temp solutions until the economy rebounded -- was not, in fact, the case. "When a company is retrenching, you don't add contract employees," says one of Rosen's clients, Paul Antony, director of HR administration for electronic retailer QVC. "You use temps on the upside."
It was not the reception Rosen had anticipated. He had expected to hear, "Scott, we're so glad you're back in sales," and he'd expected to be able to arrange more face-to-face meetings. At least a few times a week, he did go to meetings. And a few of them even felt like the old days. Like the time he got a call from an HR director at a large pharmaceutical company that came to him on referral. Rosen felt excited as he walked into the prospect's large corner office. "I was still following the Sandler model -- establish a bond and rapport and try to find out 'What's his pain?' After pain, it's 'What's the budget?' Basically, there wasn't much pain, and he didn't have a budget," Rosen says. "You can always tell if there's pain. There's an energy and urgency in a person's voice....He just wanted to know how much I mark up my contractors. That was a red flag. We agreed he'd be better off running an ad on Monster.com to -- quote, unquote -- 'get a body.' I didn't storm out; it was a cordial ending." But it was one more strikeout, he says, in "a steady diet of rejection."
He tried lowering his price, but that didn't win him much business either. There just wasn't work to be had. Rosen, the guy who had once cold-called his way to $3 million in business, could not overcome the immovable object of a slow economy. But there was something even more painful than not getting the order. It was how some customers now treated him -- as "the evil salesperson," Rosen says. It brought back his old image of salespeople as pushy and manipulative. He didn't want to be one of them.
Rosen was wracked by two strong and conflicting feelings. On one side of his brain, he could hear the voice of the uber-salesman who would never say die, personified by his old mentor Waks: "Get out there, man, and sell. You can cold-call your way to success. Dig deeper!" But another voice whispered something quite different. It said, "Stop banging your head against the wall."
It's hard to say exactly when Rosen gave up. It could have been March or maybe it was April. The weeks blurred together. But it was clear that he was psychologically defeated. He knew that "no sales warrior would say retreat," but that's exactly what he did. He quietly put his client list in a file folder and stopped making calls for a while. He would just take the business that he already had and stop trying to build on it. He decided to take a little sabbatical from selling, calculating that with his three-person staff and just 20 remaining HR temp workers, he could maintain about $3 million in revenue. In other words, his business was back to where it was in the days before he hired his first salesperson.
Nearly a year after Rosen embarked on his failed experiment, the Rosen Group is still alive. In mid-November, he was on target to hit his year-end sales projection of $2.5 million to $3 million, the value of his 17 or so corporate contracts. With only four employees including himself and limited overhead in his smaller office space, he's steered his company back into the black.
During the past year, Rosen did consider enrolling himself in a new sales-training program, because, as he says, "running a $3-million company wasn't cutting it for me." But instead of seeking inspiration from the pages of Dale Carnegie, he went to what he calls "personal growth retreats" and conferences with names like "Business and Consciousness." "I went the opposite way," he explains. "I decided more sales knowledge was not what I needed."
Lately, instead of the direct sales pitch, he's been trying a different approach. He's doing more of what he enjoys best: speaking at HR conferences and networking at local business events. He still picks up the occasional new client through referral. And he keeps in touch with old customers. It's just more casual now. "To Scott's credit, he's extremely well networked among HR organizations here," says QVC's Antony. Rosen has also started three new companies in three different consulting and recruiting niches. "I need the start-up excitement," he says. His retreat from the front lines of sales has, in some ways, actually helped him move forward. "I still think I'm a good salesman," he says.
But he's not the superstar he once believed himself to be. He's more humble. Today he credits much of his company's fast success not to himself but to having "a good wind at our back." He's also stopped beating himself up over the sales he might have made this past year if only he'd worked harder or applied his sales lessons more vigorously. Selling in a recession was an education he'll not soon forget. "Those of us who thought we were brilliant rainmakers during the boom and pieces of crap during the downturn have now decided we're neither," he concludes.
One thing's for sure: Rosen won't be trying to play the role of sole rainmaker. And he and his old sales guru Waks have made a new peace: Waks is back in a revised role, helping Rosen think more strategically about sales rather than focusing so much on technique. Looking back on Rosen's disappointing results as his company's only salesperson, Waks argues that Rosen may have lost some of his hunger. "Scott's commitment to making sales calls is not quite the same as it was in the beginning," he notes.
That, of course, is precisely the criticism that Rosen used to make about his own salespeople. How does Rosen respond to such a charge? "In the early days I was much more aggressive about getting on the phone," he admits. "But you need some positive reinforcement, some positive results."
So was Rosen right to fire his dispirited sales force? While Waks now says that he "supported" Rosen's decision at the time, he is also adamant that good salespeople can always prevail -- and as a company owner you'd be foolish to let them go. "If you have a viable product, the economy is not the issue," Waks says. "Top salespeople figure out a way to be successful."
But Rosen has come to believe that you can't fight market forces and thus justifies his decisions. If he'd known then what he knows now, Rosen says, he'd have acted sooner to eliminate the fixed costs of maintaining a traditional sales force, costs that ran him about $800,000 in salaries and benefits in 2001. "I've finally concluded that the markets are very powerful," he says. "You can't sell through some markets. It doesn't matter how great your sales force is."
As he considers hiring new sales reps, Rosen wants to believe Waks's rosy words. But his own experience tells him that many salespeople and most entrepreneurs are not infallible sales machines. "Maybe some salespeople can turn water into wine in down times. But you have to be honest with yourself," he says.
"I'm a good salesperson, but not as good as I thought."
Susan Greco is a senior writer at Inc and the coauthor of Customer Chemistry.
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"Going for the No" and Other Sales Lessons
1. Focus on your customer's pain. You know all the reasons that customers should hire you, but they've got to express it in their own words. If there's no emotional or financial pain involved, you're not getting the sale. By the way, a recession doesn't necessarily count as pain.
2. Don't be afraid to go for the no. Rosen is big on establishing an "up-front contract" with prospects. It sounds fancy, but it's nothing more than summarizing why the prospective client has invited you in -- and giving the prospect an out. Rosen often puts it this way: "Are you OK telling me no?" Asking for rejection takes guts, but it puts you in control. Maybe is the last word that any salesperson wants to hear from a prospective client.
3. Always be closing. Even after you think you have a done deal or at least a verbal commitment, clients may change their minds the next day or the next week. The solution? Always "post-sell." If you've secured a written contract or at least shaken hands, call back to confirm when the deal starts and that you are indeed the exclusive vendor. Even before your first sales meeting, you should call to confirm the agenda instead of assuming that everything will go ahead as planned.
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