John is the most experienced salesman in the team. He’s been with us for a long time, no one has gained as many customers for the company as he has — he seems to be a natural candidate for the head of sales. What could go wrong?
The salesperson conducts sales talks on a daily basis, while the manager manages the work of other people. A good salesperson must know the customer’s problems and convince him that no one will help him as effectively as his company. A good manager must be able to manage team work, take care of their employees’ motivation, develop his department, delegate tasks, recruit and dismiss other employees or create structures and processes. The sales rep’s success rate is determined by his results.
The success of the sales director is determined by the results of the entire team. Even if the salesperson is the best one in his team, this doesn’t necessarily mean that he has the predisposition to manage the work of other salespeople. As a manager, John will have less time to sell than before (or he won’t have it at all), so it will be more difficult for him to achieve results such as when he was the best salesperson. Therefore, sales in your company will depend more on the team management skills of the sales director, rather than his sales skills. It’s a bit as if the culmination of the guitarist’s career was not a concert at a huge stadium, but conducting an orchestra.
How can you increase sales?
Let’s assume that there are 2 salespeople in the company who receive 600 leads a year. 50% of them manage to get a meeting and 20% of the leads who were at the sales conversation stage become clients. The average transaction value is USD 20,000.
Let’s see what can happen if the sales director teaches his salespeople to effectively address the most difficult objections, helps to better examine the needs during a sales conversation, eliminates the bad habits of sellers and shows how to communicate the benefits that the company offers more effectively. Let’s assume that thanks to such education, 5 percentage points more leads will meet with the salesman, and out of those who had the meeting, 5 percentage points more will become customers.
Sales increase by USD 450 thousand, or 38%. Without hiring an additional salesman and without increasing the number of leads. Of course, the reality is more nuanced than the example above, but the sales director, who, despite the great sales results, doesn’t know how to effectively teach his salespeople, won’t be able to increase sales.
Let’s assume that during one year the company must raise USD 6 million from sales to new customers. The company employs two salespeople and a sales director. The sales director must know how to translate 6 million dollars into goals for two sellers, set them monthly goals on this basis and then prepare a commission model.
There are no sales without leads, so in addition John has to know how many leads the company needs to make this level of sales possible. He won’t be able to indicate this number if he doesn’t know the conversions of each sales rep. Additionally each month, contrary to appearances, is not the same, and after all, salespeople have to take a vacation sometime, they will probably also have a worse month from time to time. If your company has an average sales cycle of 90 days, then sales in November depend on leads generated in August. August is a relaxed month, during which usually “nothing happens” — those are the kinds of things that should be predicted and addressed by the sales director.
A lot of places where someone with the “I don’t need data, because so far I managed without it” approach can make a mistake — e.g. unknowingly reduce the company’s sales by several dozen percent, because he’s decided no to properly calculate the work of his team and reduced planning to “as long as we do the right things every day, everything should be fine.”
Sales team management is not the only responsibility of the sales director. Sometimes, to a different degree, he is involved, e.g. in preparing a new commission model, launching a new product, pricing strategy, developing a new PDF offer or developing a model of cooperation with the marketing and customer service department. Each of these things requires preparation of the concept, bringing it to the initial version, taking into account the interests of the company, consulting with other people. Let’s assume that the company wants to launch a new product on the market. It is in the interest of the sales director that the new product is ready for sale as soon as possible and that the final vision leaves no room for understatement.
Although the sales director doesn’t have to be directly responsible for all of the above, any shortcoming will hamper his team’s successful sale of a new product. The more often the best salesperson happens to say “oh, I haven’t thought about it” or “yes, I’m working on it, but recently I had a busy period”, the more difficult it will be for him to ensure the smooth functioning of the sales department when he becomes a director.
John has joined the team two years earlier than other sales reps. The CEO gave him leads from recommendations and his friends, which in theory are easier to convince to cooperate than e.g. leads from outbound campaigns. John has built up a wide portfolio of references using both recommendations and leads from other sources over the two years. Currently 8 out of 10 John’s leads come from the references.
Zosia, who has joined the company six months ago, works on no more than one lead per month. It may turn out (but obviously doesn’t have to) that John isn’t the best salesman in the team, but works on better leads than other salespeople. If you decide that your best sales representative should manage sales in your company, make sure you select the one that really gets the best customers.
If the best salesperson becomes a sales director, despite the fact that he will still work in the same department, his daily duties set will change radically. He will talk with potential customers less often and focus on managing the work of other people, developing them, planning, counting and dealing with everything that, when neglected, sooner or later will translate into slower sales growth (or lack of this growth).
Finally, don’t forget that when the best salesperson becomes a sales director, due to the new structure of responsibilities, he starts selling much less (or stops completely), so the company loses the person who’s been acquiring the most customers so far. Therefore, make sure that the salesman you want to appoint as a director knows how to replace himself and take care of the results of the entire team.
So you want to hire a salesperson, without having to fire him during the trial period….
In my work, I sometimes hear: “We’ve never seriously analyzed our sales, but great people deal…