By Mike Southon
Never ask a candidate for your sales team how they should be rewarded. Here’s what you’ll get; “a highly competitive salary” (read, £200K per year) “a fast company car” (so they can get to that important meeting on time), “a realistic expense account” (where “realistic” is a euphemism for “unlimited”) and “very long holidays” (they work really hard and need their recovery time).
This little excursion into Cloud-Cuckoo Land is finally garnished with: “an uncapped commission scheme”. They argue that results should bring proper rewards — so what if it bankrupts the company at the same time?
This is, of course, meaningless drivel, guaranteed to give the Finance Director an ulcer and a hernia simultaneously. Anyone who sits in front of you and seriously suggests you should pay them £200K per year plus fringe benefits needs their head examined (possibly by your steel-tipped boot). You’re an SME, you can’t afford ludicrous packages. Plus you don’t need to pay them commission.
I can hear the red felt-tips of hate being unleashed as I write this. Surely sales people need to earn a proper living? Surely the sales force needs to be motivated?
Of course they do, but in Maslow’s famous “Hierarchy of Needs”, money is way down the list. In a small company, with its tribal atmosphere, anyone who tells you they’re only working for the money needs advice on moving to somewhere more boring and stable, like a building society. Working in an SME provides the key things at the top of Maslow’s list: peer respect and making a difference.
What salespeople really want (but usually won’t tell you) is “an easy life”. The perfect company has a nice bunch of people who are a joy to work with, not too much hassle (like checking up exactly where they are every 10 minutes), and a product or service that’s easy to sell to nice people, who enjoy a decent lunch now and then.
I remember seeing Sir John Harvey Jones chatting to the sales director of Morgan in an early series of the BBC’s Troubleshooter. There was a two-year waiting list for the car, so the guy wasn’t “selling” cars, he was “rationing” them, possibly the easiest sales job in the world. You can’t promise that the job will be quite that simple, of course. But great products are easy to sell because people need them. If you can say “we have the No 1 product in the field, and can prove it with our customer referrals”, applicants should flock to your door.
Salespeople should be rewarded for success, but not some ludicrous commission scheme that means they get three times as much as the delivery people who actually do the hard work. Our model is to put everyone on the same scheme. First, pay a slightly above market rate salary, so you can attract the best people. Then, give out bonuses based on two factors: how the company’s performed, and how the individual has performed.
The first is the most important — if times are hard, it’s belt-tightening all round, even if you’re working 14-hour days. Company performance should be presented openly at the monthly company meeting, so this element should not be a surprise at bonus time.
Personal performance can be hard to measure for administrators and delivery people, but not for salespeople. Discuss and agree sales targets at the beginning of the process, and measure the salesperson’s performance on a weekly basis.
It’s important to explain that if a salesperson beats their sales target, this is usually increased for the next quarter; it’s the way of things. Also, if you don’t hit your sales target you get formally warned, and then fired, sometimes over the course of only a couple of quarters. That might seem a little unfair, since it’s a lot more difficult to get fired from delivery or admin or finance. But that’s just the way sales is.
So only hire salespeople who enjoy selling, who like your customers and aren’t too greedy. High-commission salespeople get desperate and will tell any damn lie or stick a knife into their workmates’ back if they think it might help them hit target.
And that’s why you’re reading this column in Fresh Business Thinking, not Estate Agent Weekly.