Rethinking Sales Management The diagonal bars on this slide are actually lines drawn very close together. To give the line ends a straight edge, an additional line was drawn over the ends. David M. Fellman dmf@davefellman.com www. davefellman.com

1. The “rethinking” starts with four fundamental truths… Rethinking Sales Management The “rethinking” starts with four fundamental truths… 1. If your salespeople knew how to sell more and make more money, they would probably already be doing both of those things.

2. Four fundamental truths… Rethinking Sales Management Any skills or knowledge which are necessary for success, but not present in a current salesperson, must be trained in.

3. Four fundamental truths… Rethinking Sales Management Any attitudes which are necessary for success, but not present in a current salesperson, must be motivated in.

4. Four fundamental truths… Rethinking Sales Management Sales Management is not about managing sales figures, it’s about managing sales people and sales processes

X ü ü ü The best place to manage from: Rethinking Sales Management The top The front The beginning The end ü ü ü

It all starts at the end… Rethinking Sales Management It all starts at the end… Establish strategic objectives Establish volume objectives Convert to “action standards” Enforce accountability

Strategic Objectives… Rethinking Sales Management Strategic Objectives… What do we want to sell? Who do we want to sell to? What is our value proposition? What is our competitive differential?

Volume Objectives… Goal or Quota? Quota implies consequences Rethinking Sales Management Volume Objectives… Your Goal > Their Goals Goal or Quota? Quota implies consequences Quota requires reward Your quota or their goals?

Core Selling Knowledge: Rethinking Sales Management Core Selling Knowledge: Your salespeople will encounter four kinds of people “out there”… Suspects Prospects Customers Maximized Customers

Convert to “Action Standards”… Rethinking Sales Management Convert to “Action Standards”… Chris sold $500,000 last year and earned $60,000... $10,000 salary + 10% commissions Chris wants to earn $75,000! $75,000 - $60,000 = $15,000 cash $15,000 @ 10% = $150,000 sales

Chris will target suspects/prospects with Rethinking Sales Management Chris will target suspects/prospects with substantial volume requirements 2 new clients who will average $30,000 3 new clients who will average $20,000 3 new clients who will average $10,000 8 new clients………..….$150,000 sales

Chris will now make these “sales efficiency assumptions… Rethinking Sales Management Chris will now make these “sales efficiency assumptions… 1 out of 3 prospects who agree to at least two meetings and a shop tour will become a client 1 out of 3 suspects who agree to a first meeting will agree to further meetings and a shop tour 1 out of 6 suspects will agree to a first meeting

Here’s the arithmetic… Rethinking Sales Management Here’s the arithmetic… $15,000 cash = $150,000 new sales $150,000 new sales = 8 new clients 8 x 1 of 3 = 24 follow-up meetings 24 x 1 of 3 = 72 first appointments 72 x 1 of 6 = 432 “prospecting starts” 432 / 52 = 8-9 “starts” each week!

Rethinking Sales Management Call Reports should be 80% for the salesperson and only 20% for the sales manager

Rethinking Sales Management Sales Meetings are the most effective means of sales/sales management communication Daily Weekly Monthly

On a scale of 1-10, how would you rate your best salesperson? Rethinking Sales Management On a scale of 1-10, how would you rate your best salesperson? On the same scale, how would you rate your worst salesperson?

Objectives & Subjectives Rethinking Sales Management Objectives & Subjectives General knowledge of manufacturing processes Specific knowledge of the company’s capabilities Ability to “work the program” Willingness to “work the program” Understanding of the company’s value proposition Ability to present the company’s value proposition Questioning skills Listening skills Team skills and attitudes Reporting and recordkeeping skills and attitudes

Objectives & Subjectives Rethinking Sales Management Objectives & Subjectives General knowledge of manufacturing processes — 7 Specific knowledge of the company’s capabilities — 5 Ability to “work the program” — 9 Willingness to “work the program” — 5 Understanding of the company’s value proposition — 8 Ability to present the company’s value proposition — 7 Questioning skills — 8 Listening skills — 5 Team skills and attitudes — 7 Reporting and recordkeeping skills and attitudes — 8

How do you use this knowledge to improve your current salespeople? Rethinking Sales Management How do you use this knowledge to improve your current salespeople? Evaluation Improvement Plan Priorities / Goals / Benchmarks

…so let’s think about exactly who you’re looking for! Rethinking Sales Management / Hiring More Sales Management mistakes are made at the hiring stage than anyplace else… …so let’s think about exactly who you’re looking for!

Key Attributes Intelligence A competitive nature Rethinking Sales Management / Hiring Key Attributes Intelligence A competitive nature An appreciation of the finer things in life

Key Attributes Ego Drive Ego Strength Assertiveness Empathy Rethinking Sales Management / Hiring Key Attributes Ego Drive Ego Strength Assertiveness Empathy Attention to Detail

Due Diligence Before Hiring Rethinking Sales Management / Hiring Due Diligence Before Hiring Multiple Interviews Check References! Caliper...www.caliperonline.com

A Key Question: How much is your sales position really worth? Rethinking Sales Management / Hiring A Key Question: How much is your sales position really worth?

Money Talks! What do you want it to say? Effective Sales Compensation Rethinking Sales Management / Compensation Effective Sales Compensation Fundamental concept: Money Talks! Fundamental question: What do you want it to say?

What do you want it to say? Rethinking Sales Management / Compensation What do you want it to say? I want you to generate lots of sales dollars. I want you to generate lots of profit dollars. I want you to develop new customers. I want you to sell more of our product line to established customers.

What do you want it to say? Rethinking Sales Management / Compensation What do you want it to say? I want you to increase sales every year. I want you to work a full day every day. I want you to do a good job with administrative tasks, such as call reports, expense reports, and CRM maintenance. I want you to work well with the rest of the team.

Another fundamental concept… Rethinking Sales Management / Compensation Another fundamental concept… Please don’t think that compensation is a substitute for management. Compensation works best as a reinforcement for management.

Three components to support management and motivation… Rethinking Sales Management / Compensation Three components to support management and motivation… Guaranteed component Earned component Incentive component

How do you determine how much you are willing to pay? Rethinking Sales Management / Compensation How do you determine how much you are willing to pay? Sales Volume $__________ Gross Profit $__________ x % Share = __________ % Comp. Fund $__________

Let’s look at an example… Rethinking Sales Management / Compensation Let’s look at an example… Sales Volume $1,000,000 Gross Profit $300,000 (30%) x % Share = 30% Comp. Fund $90,000

Option 1: 9% straight commission based on gross volume Rethinking Sales Management / Compensation Option 1: 9% straight commission based on gross volume What does the money say?

Option 2: 30% straight commission based on gross profit Rethinking Sales Management / Compensation Option 2: 30% straight commission based on gross profit What does the money say?

Option 3: $5000 per month salary 3% commission based on gross volume Rethinking Sales Management / Compensation Option 3: $5000 per month salary 3% commission based on gross volume What does the money say?

Option 4: $5000 per month salary 10% commission based on gross profit Rethinking Sales Management / Compensation Option 4: $5000 per month salary 10% commission based on gross profit What does the money say?

4 x $1000 short-term bonus opps 1 x $6000 full-year bonus opp Rethinking Sales Management / Compensation Option 5: $2500 per month salary 5.0% commission based on gross volume 4 x $1000 short-term bonus opps 1 x $6000 full-year bonus opp

4 x $1000 short-term bonus opps 1 x $6000 full-year bonus opp Rethinking Sales Management / Compensation Option 6: $2500 per month salary 16.6% commission based on gross profit 4 x $1000 short-term bonus opps 1 x $6000 full-year bonus opp

Bonus Opportunities: Rethinking Sales Management / Compensation Short-term Product Opportunities Short-term People Opportunities Short-term Behavior Opportunities Long-term Quota & Reward

Compensation Review… Rethinking Sales Management / Compensation Money Talks! Most salespeople need both a push and a pull Compensation (the pull) works best as reinforcement for management (the push) You’re better off sharing profit than volume Different strokes for different folks There’s more to this than just money!

A Final Thought: because they didn’t get enough! Rethinking Sales Management… A Final Thought: No one ever died from too much management... …but far too many salespeople have underachieved/underperformed because they didn’t get enough!