The tragedy of sales management is that good (sometimes great) salespeople are promoted to sales managers, where they often fail. They’re promoted to their level of incompetence. What makes a good salesperson differs from what makes a good sales manager.

Sales management is a role you can’t study in school. It’s learned on the job. Yet, if you want to grow your business, you need to master this role and be able to manage the person overseeing sales once you have grown beyond doing this job yourself.

A common mistake made by new sales managers is undermanaging their salespeople because they themselves needed no management to succeed. Being a good sales manager is knowing what to manage. Here are the five fundamentals to give you a good footing.

1. Pipeline is the tracking and measurement of activities and results the salesperson is responsible for. It starts with the monthly sales target and then breaks down further into activities per month: number of proposals, face-to-face appointments, property walkthroughs and phone calls. A sales manager’s job is to keep the sales backlog full. He or she should never be surprised at what is or isn’t in the sales pipeline.

2. Performance pay outlines how salespeople get paid and, thus, what they focus their energies on. The best performance pay plans are simple and have two attributes:

• A commission percentage for sales above a certain gross margin (with perhaps two levels of commissions hitting two levels of margins). It can be based on actuals or estimated, depending on who is doing the estimating.
• An achievement bonus for reaching and exceeding a high level of cumulative sales. This incentive can be monthly, quarterly or annual. The latter is straightforward and lines up with the budget. For example, a smart contractor I work with in Michigan had three salespeople selling $600,000 to $700,000 until he added the achievement bonus at a higher amount. His sales team immediately started selling up towards the million-dollar mark. Salespeople and owners love the achievement bonus. It’s win-win.

No matter how you tweak it, it’s critical for performance pay to reflect the sales volume and gross (or net) profit you’re budgeting to hit.

3. Pricing: Salespeople need consistent pricing systems for two reasons. If they don’t have confidence in the pricing mechanics, they won’t have confidence in their own performance pay. They need to believe in the system, and it must be relatively straightforward. Secondly, they need the confidence to sell at full price. If they doubt the pricing, it will show in the mark-up they’re able to attain and in their tendency to give things away.

Most importantly for the company, if you don’t get the pricing right, you could sell yourself out of business. I’ve seen too many companies sell work that doesn’t cover their overhead. When the growth stops, they realize they’re out of cash.

4. Profile: The key to sales management success is having salespeople with the right personality and skill set. Get this wrong and no amount of management will help. Too many people are promoted into sales because they have the technical smarts, a pleasant personality their customers like or because they have the gift of gab (yikes!). These first two traits are nice to have, but the following traits are “must haves”:

• A history of successful sales, reflected in a candidate’s earnings history;
• Self-confidence, ambition, thick skin, listening skills, social graces, organizational aptitude and a reasonable IQ—all of which can be ascertained in a professional personality profile;
• Experience with the sales cycle of your particular service (someone who can sell a $99 item will have trouble with a $25,000 sale and vice versa); and
• A good fit for the type of sales position. For example, an account manager won’t make a good business developer and vice versa.

If you’re taking over an existing sales team, analyze the profile of your team and develop a strategy to address their strengths and weaknesses.

5. Process: As I’ve covered in depth in LM before, the right sales process is critical to success, where the bad (red light) leads are filtered out, and the good (green light) leads receive the preponderance of the salesperson’s time and energy.
This requires a screening process and a clear understanding of who the company’s target client is and isn’t. (See “Avoid the red lights,” December 2014)

If you get all 5 Ps of sales management right, your chances of success are greatly multiplied. But get these wrong and no amount of sales management will save you.

 

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