Small and mid-sized businesses have a chronic fear of losing their key sales people. How many times have we all heard CEOs say, “The customers really love Bob, if he left we would lose their business” or “It took me so long to get Tracy productive that I can’t bear the thought of having to suffer through the effort and unproductive time it would take to get someone else up to speed even though Tracy is a weak performer” or “If we lose Fred to a competitor we will inevitably lose our biggest customer to that competitor”. When you are so afraid of losing an employee, who is working for whom? Does the salesperson work for you or do you work for the salesperson? Whose company is it? The answer is that you work for these employees and it is these employees who are in control of your company. If you are afraid to fire salespeople or afraid that you will lose salespeople if you change sales commission plans and goals you will be severely limited in what you can do to increase sales, sales productivity and just grow your business profitably.
The fundamental reasons why this type of dependency occurs are twofold: there is an issue with your business model and there is an issue with your hiring and training process. Your customers are looking to your sales people rather than your company and its products and services for differentiation and value and at the same time, you cannot effectively manage sale people or even grow your business if you cannot efficiently replace them.
If you are absolutely dependent on personal relationships, whether they are your own relationships or those of your employees, to keep and acquire customers then there is nothing holding the customers to your company. When a company has no differentiation, it is simply a distributor of a product or service and it will always be in the crosshairs of the competitor with the lowest cost, a cheaper substitute or the greatest willingness to work for the lowest margin in your market—this means that you do not have a sustainable business model. With no differentiation in your company and its products and services, you have a lot of work to do on your business model and it is your business model that defines the framework of your value proposition and every key aspect of your business.
Your first step in re-fashioning your business model is to find areas in your company’s marketing, your products, your services, your customer touch-points and other aspects of your business that can be developed to create that differentiation. This is not a simple task and it is not a one time task—it is a continuous process and is certainly outside the scope of this article, but it should be said that you should be continuously looking to increase your differentiation to maintain or expand the distance between yourself and your competition. With tangible positive product and service differentiation in your company, your customers can and will be looking to your company rather than just your employees as the basis for why they decide to buy from you. This customer recognized differentiation is the definition of goodwill—that intangible asset that represents your company’s intrinsic value beyond the cash value of its hard assets or cash flow. It is what grows the value of your business.
The other reason why this salesperson dependency often occurs is that it is too difficult, disruptive and time consuming to hire and train salespeople and other key employees so CEOs and managers are reluctant to go through the pain and effort of hiring and training. Being able to hire and train employees efficiently is a key part of probably the most important internal competitive advantage your company can have which is worker productivity. I, myself, have been guilty of not firing employees because even though I realized that the employees were under-performing or otherwise divisive and disruptive to the organization just the thought of the effort necessary to interview, hire and train a new employee coupled with the time to get a new employee productive just seemed to be a much greater burden compared to accommodating the under-performing employee.
Companies need to systematize the processes of hiring and training new employees. In many smaller companies, the burden of hiring and training is borne on the owner/CEO who has to spend the time to interview, hire and train these new employees. This creates a hiring and firing trap for owner/CEOs where hiring and training a new employee is so resource consuming for the already stretched organization that companies would rather live with poor performance and divisive personalities than suffer through the effort to hire their replacements. What I mean by systematize is that the hiring process needs to be defined and documented so that much of it can be delegated by lower level employees and the training material needs to be collected and presentable in such a way that new employees can get up to speed as fast as possible all with as little owner/CEO time and effort as possible. The investment in creating this process and training materials is absolutely worthwhile because in doing this you lower the barriers to driving your employees to greater productivity because the cost to your company of hiring replacements for poor performing employees has been dramatically reduced.
This hiring trap is particularly acute when hiring new salespeople. It is one thing for a new bookkeeper to make some (usually) easily correctable mistakes in a financial report and it is another thing for a new salesperson to damage a relationship with an existing customer or even waste a qualified prospect with an inexperienced or simply inadequate sales presentation. We live in a time when it certainly seems that there is greater competition and every customer and with it every qualified prospect is critically valuable. The thought of losing a customer or wasting a prospect to an inexperienced sales person is a risk many business owners believe is not worth taking. Unfortunately, this kind of thinking is a similar trap and it traps businesses to mediocrity and owner/CEOs to slavery in that they no longer even have control of their businesses! It is no longer that hiring and training people is too time consuming and costly, in this case, it is about a company being too afraid of risk of losing customers or wasting prospects by using an inexperienced employee.
The fear of losing a customer or damaging a customer relationship by assigning a new and less experienced salesperson is really about two separate issues: your lack of confidence about your value proposition as mentioned above and the quality of your training. The point about the value proposition is that if you don’t believe that it is your company’s value proposition that is the basis of your customers staying with you then you have a bigger problem—the value proposition is really the first thing you need to work on. Simply put, customers should have more allegiance to your company and its products’ value propositions than to their sales rep. With regard to training, the better the training the higher the quality of the sales person the day they first get on the phone, the faster they will reach full productivity, the lower the risk that you will have a customer service issue with an existing customer and the better the results the new salesperson will have with prospects.
Like any process, a sales hiring and training process must be a living and breathing process—in other words, it must be a process that is constantly updated and improved. Your sales team can only be as good as your hiring and training process. Your hiring process should, to whatever degree possible, simulate the sales environment. If you salespeople will need to make cold calls, have your candidates make either live cold calls right in front of your or role played cold calls as part of the interview process. If sales people need to give presentations, have candidates give you a presentation. Make the interview process truly simulate the tasks that the candidate will have to perform. Remember that sales people are first and foremost experts as selling themselves people making hiring decisions.
There are added advantages to having a well defined training program and this will come in the form of greater sales productivity and greater top line sales. Sales training should include product information, competitive information, scripts and role playing, definitions of buyer criteria, a discussion of target markets and best practices to cite just a few points. If it is easier (cheaper, faster and with less management time expended) to hire sales people, you are more likely to do so. When you need one salesperson, you may consider hiring two and see which one works out better. Likewise, if salespeople are easy to hire, than they are easy to fire—and this should allow you to set goals and commission plans to achieve aggressive sales results without fear. You sales team will know that you are committed to building a team that can achieve big goals and they will rise to that challenge.
Companies in this economy or any economy cannot afford to have either an under-performing sales team or management that feels limited in the number and types of strategic moves it can make because it is overly concerned with sales team reaction to those changes. Certainly, managers should be concerned with all employees concerns, but the point is that they shouldn’t be unduly concerned by the sales team reactions. Now more than ever companies cannot be enslaved by their sales team. Products and services need to be repositioned, value propositions need to be re-adjusted and the fear of losing salespeople can’t be something that restricts management from making these types of changes.
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Steven Shaer is the President of Shaer Associates Inc a South East Florida based management consultancy and is director of CEO Focus of South Florida. Steve maintains a blog at: http://blog.shaer.com and can be reached as sshaer@ceofocus.com
