If I see a sales team making mistakes, it is almost always due to sales leadership setting the stage for those mistakes.
Last week on a client call, my client (I’ll call her Nadine) who is being recruited by three different companies, was really stuck on which company to accept an offer from. The money was more or less the same and Nadine was struggling to identify a differentiator between the companies. It came down to identifying the better management team. Management and leadership mistakes are usually easily seen during the interview process if you are looking for the clues.
Here’s my top 5 list of the most common sales management mistakes I see:
The commission plan is capped. This is a huge red flag. Capping the percentage of sales of a commission/bonus plan is a wise and healthy thing for a business. Capping the dollar amount is completely foolish and a magnet for campers (sales people who do the minimum and then camp). Keep your cost of sales under control as a percentage, by all means, but all commission plans should be uncapped dollar wise. The more you sell, the more you make. Full stop. I told Nadine to automatically disqualify ANY sales job with a capped commission plan.
The Commission plan is complicated. Sales people need to be able to plan, and reverse engineer how much they need to sell in order to make the money they want to make. If you make it complex the sales people can’t tie activity to dollars in their pockets and that disconnects their effort and their results on a day to day basis. A client of mine once told me, “The problem is that our commission calculator isn’t working”. I replied, “No, the problem is that you need a commission calculator.” Simple is better.
End of Month/Quarter/Year pushes. Sales is about leverage. If your client needs the deal more than you do, you win. If the opposite is true, you lose. It doesn’t make a difference to the client if they buy on the 31st of this month, or on the 2nd of next month. When you artificially push sales people to “close the deal now” using incentives and discounts, you’re giving the clients the leverage and publicizing that you need the deal more than they do. I get it, you have numbers to hit, but if you need these gimmicks to make your month/quarter/year, then you lost the battle way back down the line. This is a tool of bad and desperate leaders. You set the stage to win the quarter at the beginning of the quarter, not at the end. A 80 yard drive in OT that scores the winning touchdown with 0:07 seconds on the clock is exciting in football. In sales, it reveals poor planning and poor leadership.
Management adds too much administrative work. It’s good business to make sure your reps report activity and other useful metrics. I go crazy though, when I see a company add tons of bookkeeping work on the reps because they migrated to a new CRM. Or even worse, change to a CRM that is less work for management but more work for the front-line sales people. Your sales people are only making you money when they are talking to your customers. Hire temps, make the managers do it, hire a sales assistant, find a better way. You kill the sales drive when you bench your sales people due to desk work.
Manage to results. The proper way to manage a sales pipeline is to manage ACTIVITY, not results. When you say, make more sales, your sales people become more salesy and desperate. Desperation is a lousy driver in sales. Clients have become very savvy at detecting “commission breath”, and when they do they will often assume there is a catch, even if there isn’t one. Manage activity. The number of calls, meetings, proposals, etc. Pay attention to the conversions and work to improve those. Once you have baseline on your pipeline conversions, you’ll be able to forecast sales. It really is that simple. I’ll occasionally ask a client for their sales forecast. When I see them start to ask the sales people or scramble for information, I know I’ve exposed a huge weakness. All it should take is a quick look at activity levels. Don’t have that information? The you are flying blind. Through mountains. This is often what leads to a last minute “OMG, we’re going to miss the quarter, run a contest, drop the price if they sign before the 31st” reaction from management. Reverse engineer your results to daily and weekly activities. Failing to plan is planning to fail.
By the way, If you are interviewing for a sales position, these are the kind of things you should be trying to find out. Ask questions to determine if you’re about to go to work for professionals, or amateurs. ALL problems are at their root leadership problems, and nowhere is that more true than sales. Salary is nice, product is important, but nothing affects your success more than the leadership of your organization. Interview them as much or more than they are interviewing you. You’re about to put your career in their hands.