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Thursday, May 29, 2008

Rules for salespeople

This thread, The rules our sales guys live by, is fascinating on several levels. Different businesses have different models, it seems, on guiding and compensating their sales team. Should salespeople set their appointments, or go to them on pre-set calls (by company management). When/how should they meet internally, and with potential clients? And how should they be compensated.

One of the most intriguing insights from the thread is the way some contractors use "average dollar per lead" as a guide to sales performance.

If I give a salesguy 30 leads a month... and he sells $90K in gross.. his average dollar per lead would be $3000. That means that no matter what the circumstances... the good, the bad, the whatevers... I know the company will bring in $3000 for every lead we give the salesperson.

The other nice thing about this is it eliminates false numbers. If I close 80%... but every job I sell is undercut with little profit - would you be happy? If I sell super-fat jobs with lots of profit - but am sporadic in my closing - would you be happy? This number tends to be a much better indicator of true performance in your sales staff.

This is a good system, of course, if the company provides/counts the leads, and flows naturally into a cost per lead measuring system for initial marketing (and would I think provide great Key Performance Indicators if your business has this marketing capacity).

But what about the other end of the equation -- larger projects, with long lead time, and the implied value of relationships, connections, client service and the like. As readers of this blog know, this is the type of selling/marketing that works the best -- just look at our poll statistics on the sidebar (or take the poll yourself, and you'll soon find the answer).

Here, concretemasonry writes:

We operated in a different world than you. There is a difference between peddlers and professional salesmen. The thought of no salary was ridiculous and could not worked in any way in our situation.My salesmen sold materials and called on established contractors and not on the public using referrals. They had a reputation to build and maintain, so the time frames were different. Because of this, pride, success, friendship and accomplishment became very important.

They were also a part of a team, so the two of them were not the only reason for $12,000,000 in annual sales.When we were sold out, one was told to use his golf membership every day (avoid problems), but he still ended up on jobs we were supplying and on jobs supplied (poorly) by competitors in order to be ready for the next year or two. The other did not want to entertain customers, so he went fishing on the customers boat. Both sold by making money for the contractors after they got the jobs and by getting them new jobs.

They had a more difficult (time)separating business from pleasure on their expense accounts than I did when it came time to approve them.

When I used the term 'professional salesman', I was not being critical, but defining the position. On one $400,000 project that we were not the low bidder on, one salesman and my self did some work and justified getting another 15% from the GC due to labor savings. After the agreement and five minutes of talk, the salesmen tore up the revised agreement and got another 5% from the G.C. that felt it was worth it. - That is a salesman!

I'm sure the selling cycle and guidelines for selling vinyl siding or household window replacements is truly different from promoting your competence to design and build a $50 million commercial complex. You need to develop your own models and approaches, depending on the circumstances.

Where do we stand in our own business? The answer, to me, is less than perfect, but "somewhere in the middle" is where I'm at now. The reason this answer is less than perfect is that when you are neither black nor white, sometimes you don't know where you are -- and your standards and guidelines can get fuzzy, and people don't know/how to relate to them. But our challenge is we are selling an intangible; with a mixture of one-time business and long-term relationships, with a modest entry point cost, but a truly high total potential client value. I would like to find a more consistent answer here.

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