Every CEO I've worked with has struggled with salespeople. I've heard stories from many top executives who have endured months and quarters of lackluster results and protracted performance improvement plans that end in finally letting someone go because they simply can't deliver. Unfortunately, this result usually occurs after they've invested tens of thousand of dollars.
In order to make sure you're hiring the right salespeople for the right sales positions, there are several questions you need to ask yourself. Answering these questions will help make sure you and your sales team are in sync regarding company goals and compensation plans that makes sense to both parties.
1. Do they need to generate their own leads or just close deals?
This is a common problem. Many times, salespeople are hired and then have no prospects to sell. If you expect your sales team to generate their own sales leads, then make sure this message is crystal clear up front. Most sales people expect to be given a list of warm prospects, which is usually done through an internal or external marketing team.
If you expect your salespeople to generate their own leads, they will need some time to process resources. Whether it's networking, cold calling, or trade shows, they will need training, collateral, content, and budgets. This time and energy should be figured into the sales budget and timeframe estimates.
2. How do I want to compensate my sales people?
Many CEOs struggle to decide if they should pay a fixed annual salary, a pure commission, or a blend: a base and a bonus. I find that the best arrangement for the compensation of your sales team is a question of culture, situation, and risk tolerance. I've seen all of these work well in different situations.
Regardless, if you decide to make some or all of a salesperson's compensation variable based on performance of some sort, you need to have a clear understanding of what counts and what doesn't. I've seen too many misunderstandings and disagreements about qualifying revenues and calculations that could have been avoided with more clarity upfront.
3. What can I measure and what do I manage?
All good sales teams and sale processes have good management. Making sales is a process and, like all good processes, it needs checkpoints, key performance indicators, targets, and measures of quality.
Find 5-8 stages in your sales process to track and measure progress and achievements. Knowing what's going into it, what's passing through it, and what's coming out of it will give you important data regarding what to expect and what to pay attention to.
4. What are my red, green, and wow numbers?
Regardless of whether it's your hiring commission or salaried salespeople, define your performance expectations upfront and certainly before you hire them. I suggest 8-10 key areas of performance that you define in clear, measurable terms.
I like to set three key numbers for each area of performance. My red number is my "Houston, we have a problem" number. Green is my minimum expectation. Anything between red and green is yellow. Finally my wow number is the figure I would really happy with but is a bit of a stretch.
By defining these up front and having my salespeople clearly agree to them before they start, I take the drama out of performance management. I'm no longer the bad guy. We're just sitting down and reviewing the numbers and the results. Everyone can see if it's working or if it's not.
Sales is hard. But hiring and managing sales people doesn't have to be. By asking yourself these questions and developing good, clear answers to them, you'll make your life easier and your sales team more successful.