Balancing the need for proven sales capability with available remuneration and brand attractiveness.
If you can pay, hire the best mercenaries available. Top people with a proven and demonstrable skill command very high salaries. Whether they are mercenary by nature does not matter. The market sets the going rate for sales capability.
Alternatively, you can hire beginners and train them.
If your market position or performance is premier league, you will find it reasonably easy to attract top talent. Otherwise, offering top salaries and benefits may not be enough to lure the best salespeople. If you are unsure how to recognise those with proven ability, this article titled 'No More Hiring Mistakes' will help.
People with sales capability that has yet to be tapped, are much harder to spot. If you take on beginners, you should expect to succeed with one out of three and those who achieve success may then be difficult to retain. Their success makes them attractive to larger, more prestigious employers with deeper pockets.
Betting both ways has some drawbacks:
- Paying high levels of remuneration will necessitate higher targets and greater risk.
- Hiring beginners will increase the need for supervision, direction and coaching.
A halfway strategy that involves paying moderately high remuneration is likely to result in recruitment of hopefuls.
If productivity measures - key performance indicators - were to account individual costs and use of resources, then a balance of both approaches would be more practical.
Basing revenue or profit targets on a productivity metric could make targets consistent regardless of the experience and remuneration of a salesperson.
For example, a graduate sales trainee earning £18k plus an on target element of £10k might have a total resourcing cost including overheads, support resources, expenses, and training of £70k. With an annual profit target of £140k, this person would have a productivity ratio of 2.
Using the same productivity ratio, a proven performer producing an annual profit of £360k could have a cost budget of £180k and an on target total income of £72k.
In the same way, someone responsible for £600k of profit could be paid £120k for on target performance.
With this approach, a team might sustain salespeople with all levels of experience and ability without being seen to be unfair.
Similarly, a productivity formula can address account and territory inconsistencies.
Revenue and profit targets need to be consistent with territory and account potential. Using a formulaic framework for assigning potential business values to territories and accounts allows allocation of vastly different sales targets according to the territory and account responsibilities.
For example, account potential could be linked to historic segment spending. Territory potential could be linked to regional GDP. There are many ways relate account and territory targets to empirical measures of potential.
Establishing initial benchmarks and setting up a reliable and consistent measurement and reporting process requires some forethought, planning, and preparation. Since hiring strategy and team motivation have such a huge impact on results, organisation and measurement of a sales force it is worth significant upfront investment.
If a current structure and management is less than optimal, it may be time to rethink holistically.
Article by Clive Miller
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