Profiting At The Bottom Line™

This month’s focus: A Star Salesperson, Or Door Opener?

Salespeople are the life-force of a company. If the sales staff is not working properly, or is in some other type of funk regardless of the reasons – the whole company suffers.

Not only is it imperative to keep a sales team motivated properly, it’s just as important to understand the true reasons why they are doing well as opposed to why they may be struggling.

If you just use numbers as a guide you might be rewarding what you believe is praiseworthy for all the wrong reasons.

Case Study: I hired a veteran salesperson from a competitor who showed great promise and had all the right traits: outgoing, unafraid of cold calling for new business etc. Not long after his first couple of months he seemed to be moving in the direction I had hoped. His sales volume began increasing in a way that seemed to solidify my decision as correct. Then I began to notice a trend that caused me to reevaluate.

It seemed indeed his numbers were going up earning him top slot, but his profit margins were going down at a rate faster than his volume. It seemed the more orders he brought in, the more emphatically he argued why a discount was needed to solidify the order. Not just any discount, rather one far from the business norm.

Add too this; he started to exhibit a posture around the office of “I’m the best!” Along with acting as if they were the new crowned prince and others should pay homage, for after all “just look at the numbers for proof” was the tone and tenor now being displayed. Then the inevitable: the calling for a meeting to discuss his current salary.

At the meeting it was expressed why not only should an increase in salary be forthcoming, but also a few other perks not within the company norms at that time. It was also argued if others (such as the rest of the sales staff) might take offense all they had to do was equal this persons numbers. The meeting had an overhang in tone where if this person’s demands weren’t met – they would go elsewhere.

Fair enough I said. Here’s what I propose…

I agree with you that your overall volume numbers are doing well. So well in fact you currently are the #1 volume producer. However, your margins are terrible. Not only are you below your peers, but many of your sales have been based solely on whether or not a discount far exceeding what is considered fair volume prices is allowed.

That doesn’t equate to a sale generated by you per se’. That’s a sale more inline with a finder’s fee scale. Yes you opened the doors, yes you initiated the dialogue, but you could not close the sale unless the company discounted far outside its normal parameters.

We can acquire new or keep current customers without the need of any salespeople if all we want to do is sell on price alone. The maintenance crew could sell the doors of this place if all they had to do was quote a low ball price to anyone that can use our products. So here’s how I believe we should move forward. I want you to forget about increasing your volume or your customer base for the next 6 months, and focus squarely on these two areas.
First: I want you to reduce the need for any “price over-rides” required by management to a level inline with the rest of the sales staff.
Second: I want you to focus on increasing your margins where ever possible. Then at the end of this period I believe it will be fair for both of us to reevaluate your performance for review. You could hear a pin drop.

In the end it sent two clear messages. One – as a company it would not fear losing anyone. Two – if you’re going to ask/demand compensation, you had better make sure you have all your numbers ready for comparison and analysis because after all: that’s what profitable companies and salespeople do. Period

They agreed and in the end it did work out advantageously for all. It immediately toned down the disruptive aura within the sales department while reminding a very good salesperson that it’s not just about volume.

© 2014 Mark St.Cyr

Profiting At The Bottom Line™ is a monthly memo, which is pithy, powerful, and to the point. It focuses on innovative techniques and or ideas that you can put to work immediately in your daily or business life.