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Managing Salesmen

With salesmen, you pay for results through commission.  What is there to manage?

I made the transition to management while an engineer.  At that same time, my main outside activity, sailboat racing, also made a transition from racing crew with a small role to starting my boat and taking on captain responsibilities.  With both, I made lots of mistakes.  Later, I started to educate myself in less damaging ways through reading and classes.  One surprise, was that the problems I was facing on the job, were nearly the same that I was facing with my unpaid racing crew, and even more remarkable was that the management books would often describe the techniques that I discovered through painful trial and error.  Engineers and volunteer sailors are difficult groups of people to manage effectively, but far easier, in my experience, than managing salesmen.

We pay salesmen almost exclusively based on results (not effort), yet they do not control markets, don’t make the products they sell, and have few control points within the customer.  Of course you might note that only part of their job is paid as commission, but how many times have you heard of a quota achieving salesmen ever being fired for not doing other assigned tasks? When you pay for results, you must never over restrict the process.  Salesmen need the freedom to do their emotional magic, but people with too much freedom easily get lost.  Your job as a sales manager is to behave more like a basketball coach.  On the court, you can occasionally call time out and “sort out their head”, you can help prepare them for the next game, and you can hire and fire them.  When to shoot and when to pass is always an instantaneous of the player on the court.   If we move the analogy back to sales, we can start with the sales funnel review and “sorting out their heads”…..

The sales funnel is the list of potential deals that a salesman is working on.  Each has its own point in a sales opportunity life cycle, its own probability of success, and its own rewards when and if it is won.  Salesmen can keep approximately five deals with details in their head and 15 with limited details in their head.  Your first step in coaching a salesman is to get them to start using paper or a software tool to track their opportunities.  Successful salesmen are typically not good at recognizing processes or even realizing that they already use a process themselves, so they will naturally resist any of this type of formality, but you must persist.  Once you have a clean, documented funnel, you must now resist the temptation to discuss forecasts.  Management always needs and wants forecasts, but any process/tool must first benefit the salesmen if we are to build reliable, living data for management to get the accurate forecasts it wants.

When reviewing the sales funnel, look for “self lying”– there are lots of “cold opportunities” in a normal salesman’s funnel that distract from the real situation.  Also test the predicted closing dates, salesmen are often optimists and fail to recognize the number of final steps before the customer will formally buy.  Set “safer” close dates and find a way to park cold opportunities in a different place outside the active funnel.  An overinflated funnel allows the salesman to believe that little or no action will bring big results, a clear funnel confronts him with the reality that he needs to start the hardest job of creating new opportunities and that each existing opportunity is far more critical than he first though.

Next, each opportunity should have a “next step” that the salesman can take.  If you want to influence a decision process, you need to be actively engaging with the customer.  Calling customer’s for decision status updates or waiting for the customers to call you are indications that the salesman is losing control of the opportunity.  You or another respected salesmen need to brainstorm about what could be a next move with each significant opportunity.  If there is no possible next move, then you need to agree on what could have been done differently so that the next situation does not end up in this type of dead end.  Be careful, this has to be a learning experience.  Telling a salesmen to do something that he does not believe in will either push him to agree with you and subsequently ignore the recommendation and/or give him the future excuse that your process created the bad outcomes.  Salesmen are experts at removing excuses from customer and his employer.  As a result, they are masters at making excuses for their own performance.  You must be sympathetic, but firm– they are responsible for results.  Salesman generate results through luck, hard work, intelligence, or getting others to do the work for him…. we, as managers, don’t care– we appreciate the results.

Another common trap for salesmen is that activities within existing customers are far more emotionally rewarding than activities to introduce yourself to new companies.  Salesmen do need to intervene in up-selling and post-delivery issues; however, there are an unlimited number of activities that a salesmen can do with an existing customer.  Confront them with the need to create new leads every week or every month as a form of good hygiene.  Generating new customers takes high concentration and is not easily done between other tasks.  Help them organize their schedule to have some dedicated lead creation time.

Next, sales is an activity of trust creation.  Customers must have confidence in the salesmen in order to have trust in your company.  This means salesmen need confidence just like great athletes.  You must confront them with their weaknesses, but then tell them why they will succeed.

Lastly, the market is always changing.  As a sales manager, your job is to resist this realization until it is an obvious fact.  Real, quota carrying, salesmen are great at making minor adjustments but are usually terrible at entering new markets or repositioning products.  Don’t let them use market shift as an excuse to re-focus on marketing material instead of direct customer contact.  Real salesmen only write brochures when they are lost.

As for tools, there is a category of Customer Relationship Management (CRM) software where Siebel (now Oracle) is the best known.  Sales Force Automation (SFA) is the most popular application of CRM, but also represents the area where failure is 90% certain (based on my research with Siebel implementers though the years).  Most SFA roll-outs focus on forecasts for management and little focus on helping salesmen manage their funnel and plan their “next task” with each opportunity as we described earlier.  If you want to deploy SFA, start with creating value for salesmen.  If you are successful, you will get forecasting as a consequence.  If you focus on forecast, you will consume all you management influence on enforcing internal rules rather than contributing to better sales.  If forecasting is your problem, better to do weekly funnel forecasts (1 on 1) and interpret the qualitative information.  If you decide to deploy a CRM tool, the key is selecting a tool that considers salesman’s work-flow and not the database design.  Siebel and Microsoft Dynamics are in my opinion very weak in this area, while Salesforce.com, Microsoft Business Contact Manager, and open-source Sugar CRM are all inexpensive, simple, and well influenced by real salesmen.

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