As shared in the previous articles, managing sales in systematic methods can make sales predictable rather than random. The “systematic methods ” not simply refer to a computerized system, but a management system that includes:

1. Sales Channel
2. Sales Pipeline / Funnel
3. Recruitment, training, compensation or commission for salespersons

We discussed the management of sales channels, and sales pipelines (or sales funnels) in the last two articles, here I would like to continue on sales recruitment, training, compensations and commissions, etc.

Before talking about recruitment, training, compensations and commissions, etc., we have to talk about the company’s human resources planning. Human resources planning refers to how many people you would like to hire, in what position and level, management structure, hiring requirements, job details, compensions, commissions, as well as relevant training, and so on. Here is an example of a sales department as reference:

With comprehensive planning as the foundation, it’s time to take action.

1) Recruitment

First of all, business owners or managers must think clearly about the order in hiring. Using the above example, if the company has just started and needs to hire the first sales position, which level would you choose to hire? It depends on your company’s overall planning. If you’ve got a lot of funding ready, hire a Sales Director first. The Sales Director will then be responsible for hiring the rest (the business owner thus has more time to focus on other stuff). If you don’t have a lot of funding in hand, hire a front-line salesperson to get the sales first, then hire the others gradually. With several salespersons onboard, it is necessary to get a Sales Manager or a Sales Director to manage the team.

Hiring salespersons should not only rely on interview performance, because they know how to “sell” themselves. The best way is to observe and discover outstanding salespersons from the field. For example, if you go to a store to buy clothes and find that the salesperson outperforms, you may want to hand over your business card (if you are in a related industry). I remember once meeting a smart salesperson on the street promoting internet plans and so decided to hire him. Of course, this is only applicable to front-line sales recruitment, and the recruitment of Sales Managers and Sales Directors is another story.

For management recruitment, the focus is whether the person’s character is compatible with the team and the boss. Although some people are very capable, their characters are out of tune with the team, and they cannot play their due role.

(2) Training

Same as all employees, the first step for any salesperson to join the company is to understand the company’s background and its value. Don’t underestimate these so-called “fantasy things”, because these values will affect the employees’ behaviors, as well as becoming habits. Just imagine, if the salespersons are used to irresponsibly boasting, what impression would it leave to customers who bought the product? It seems irrelevant, but it actually brings far-reaching impact and is directly related to the company’s brand image.

Salespersons probably don’t need much training in presentation skills, but that doesn’t mean they don’t have room for improvement. For example, they can be trained in industry knowledge, product knowledge, industry terminology and taboo, etc. These can help to improve their professional image, so that customers are more likely to trust them.

Finally, the sales process matters. Every company has its own set of sales processes. Business owners or managers must familiarize every front-line salesperson with the process and make them part of the process.

Therefore, before recruiting talents, the company must have a complete training material ready, and for new employees to read and reference. The training material can also help the business owner or manager to better understand the company, thus being able to pin-point some blind spots, which were easily ignored before. Such improvements will help pushing the company to the next level.

(3) Salary and commission

Many people think that salespersons are mercenary – incentive and commissions attractive good salespersons to work for the company. Actually it is not entirely true. If business owners continue to push up salaries and commissions, the industry will be in vicious competition, and will have a negative impact on the company and its customers.

A veteran in the insurance industry once shared, “The money in the insurance industry mainly goes to three parties: insurance companies, salespersons, and customers.” Which means it’s kind of a zero-sum game. If an insurance salesperson asks for 1% higher commission, and the insurer is unwilling to give up their profits, then that 1% is naturally passed on to the customer. This is true of the insurance industry, and the same in other industries.

In order to avoid vicious competition, how much salary and commission are considered “reasonable”? To answer this question, we must look at it from a broader perspective.

All salesperson compensations plus commissions are sales-related expenses. Adding on other expenses incurred by advertising, marketing, and other expenditures, is the acquisition cost of the company to acquire customers. And each customer has their embedded value. It means how much the customer is willing to spend on the business (can be multiple consumption, instead of one-time). If the cost of acquiring customers is higher than the embedded value of customers (Acquisition Cost > Embedded Value), then it is unable to justify the costs. And this kind of unreasonable situation can only last for a very short period of time, for example, for a new start-up, or new product launched on the market. If it lasts in the long run, the company or even the industry will go bankrupt.

Summary:

There are many ways to recruit salespersons, but human resources planning for the entire enterprise must be done in advance.

There are also many sales training workshops available, but the most important thing is to grasp the enterprise value, industry knowledge, product information, and sales process.

There are various sales compensation and commission structures in the market, but the most essential thing is the business owner has to see things from a higher and more macro perspective, then he or she will know what a reasonable sales expense should be.