If you run a small business it's likely that one of the many hats that you wear is that of the salesperson - after all, it's very difficult to start a business without some ability to sell to people.
If you need to bring in specialist salespeople, it can be difficult to judge when to do this and how to recruit the right people for your business. If you already have a sales team, it's important to know how to motivate them and measure their performance.
This guide explains where to start the search for a salesperson, outlines the importance of the recruitment interview and explains how to set up a payment structure to encourage high sales.
Manage your sales team
Regardless of the size of your sales team, it's important that it is managed properly and given direction to allow each salesperson to fulfil their potential.
Begin with the basics and develop a sales strategy that everyone is aware of. This should make clear what your objectives are. For example, is the priority to target new or existing businesses? Which products or services are you most keen to promote?
Your staff should be clear on what their roles are within the sales team. It's usual to allocate responsibility so that one member of staff looks after a particular account, product or territory. This allows customers to build a relationship with a particular account manager.
Use data such as sales-activity reports to keep track of how well your sales staff are performing and combine these with reviews where you can discuss results face-to-face. This will give you the chance to address any problems or issues.
Feedback from your sales staff can be very valuable in shaping business direction because of the close contact they have with customers. Of all the staff within your business they are likely to have the best idea of what it is that your customers want.
When do I need to hire a salesperson?
There is no pre-defined time at which a business should hire a salesperson. Every business has its own requirements, which can be affected by seasonal patterns, as well as the ups and downs of the economy. However, there are certain triggers you might have noticed in your day-to-day business dealings, which could indicate that you'd benefit from recruiting a salesperson:
- Missed opportunities - you might feel frustrated by missing a number of opportunities that could have been taken advantage of by an astute salesperson with more developed skills in this area than you.
- Lack of resources - running a business requires you to give your attention to a huge range of issues. If other tasks become more demanding as your business grows, you may find you no longer have the time to look for new business.
- New direction - perhaps you've had an idea about a new market into which your business could move - but lack the specialist knowledge to make it happen.
- Increasing sales and market share - it's perhaps the simplest reason for hiring a salesperson, but one of the most sensible. Once you've established there's a need for your product or service you need to maximise your possible revenue - a professional salesperson can help you do this.
Whatever the reason, once you consider hiring a salesperson there's one important question you should ask yourself - will I be able to deal with an increased level of sales? It's an essential factor to consider. There is no point paying someone to bring in new customers if you don't have the resources to meet the demand.
Start the search for new salespeople
Before you begin to look for sales staff you should develop an idea of exactly what skills, experience or training are necessary. Will they need prior knowledge of a particular market? Or the ability to use a certain piece of equipment or software? Is it preferable for candidates to show a strong sales record, regardless of their industry background? Write down these requirements to help put together a job specification.
Once you've got an idea of the sort of person you need, decide which recruitment method is most likely to be successful.
There are four main options for recruiting:
- Newspaper or magazine advertisements - these can be a relatively cheap and direct way of recruiting. For example, by advertising in a trade magazine, you stand a good chance of finding applicants with suitable skills and experience. The disadvantages are that you could be deluged by unsuitable applicants. Also, it can be hard to communicate what's required in the few words available in an advertisement.
- Internet advertisements - either on your own company website or on specialist online recruitment sites. This can be a cheap way of getting to a wide audience and you can provide a link to your company website to provide more information. However, you may receive a wide variety of applicants and this can bring about a lengthy process to finalise a shortlist.
- Recruitment agencies - have experience of matching the right candidates to the right jobs. However, the fees are high and you might have to pay the agency a percentage of the candidate's salary. Agencies could present you with fewer candidates for interview and the process can be slower than recruiting yourself.
- Networking - probably the cheapest way of finding suitable staff. You could introduce an incentive scheme for staff to recommend suitable ex-colleagues or friends, or consider approaching a good salesperson you have dealt with yourself. If you do act on a recommendation, you should still conduct the necessary checks such as looking at the applicant's CV and checking references. This could prevent misunderstandings and perhaps costly tribunal claims against you. A disadvantage of networking is that it's unlikely to identify a large number of potential candidates.
What to look for in a sales recruitment interview
Interviewing sales staff is an excellent opportunity to see how good they are at selling. If they are unable to sell their own abilities to you, then it's unlikely they'll be able to sell your goods or services confidently to your customers.
When considering the personal qualities that make a good salesperson, you should look for:
- resilience - someone who bounces back from rejection
- urgency - a competitive character who wants to get on with things
- persuasiveness - someone who wants to bring people round to their point of view
- assertiveness - a person who makes their point firmly but without aggression
- sociability - someone who's friendly and bonds well with others
- enthusiasm - someone who really wants to sell your products
- self-motivation - someone with the initiative, drive and ambition to find and close deals for you
Ask about the candidate's past achievements. How many sales have they made for a previous employer? How did they help develop the business? How did they target potential customers and win sales from them? To guard against exaggeration, ask whom you can contact to confirm their claims.
The image your candidates convey is very important. Ask yourself whether you - and your customers - would be comfortable with this person as the public face of your business. Are they appropriately dressed? Do they listen well and speak articulately? Do they ask intelligent questions about your business? Make sure you are aware of the law on discrimination.
Remember that different sales techniques can be appropriate in different businesses. You need to hire a person with the specific sales skills you require. For instance, a rapid-sales technique may be ideal for high-volume cold-calling but not if you're selling a complex and high-value product or service requiring significant account management.
The induction process for new salespeople
New salespeople will need to familiarise themselves with your business - its products, its employees and its customers. You should plan an induction process that can also be used for any sales staff you recruit in the future.
Your induction process should cover the following:
- Your industry - give them the basic knowledge they'll need about your business sector, your position in it, and most importantly, who your competitors are.
- Your products - make sure they're completely familiar with the goods or services you supply - and how these might differ from the rest of the marketplace.
- Your customers - provide them with lists or databases of customers so that they know the types of individuals or organisations that you cater for.
- Your business objectives - explain to them where you want the business to go. Are there any new markets into which you aim to move or types of custom you want to attract? How do you intend to get there?
Some salespeople will need a longer induction process than others. If a recruit is new to your business sector, they'll need more coaching than someone who has worked in your industry for several years.
It may be that some training is necessary - something that isn't just restricted to new sales recruits.
Consider accompanying a new salesperson on their first few visits to current or prospective customers so that you can make introductions and observe how well they are settling in.
Set sales targets for your salespeople
You need to set clear targets for your salespeople, linked to incentives such as commissions and bonuses - this motivates them and provides a clear indication of the kind of performance expected of them.
This process is crucial to the success of your business and needs to be closely tied in with the rest of your business strategy and planning. For further information about planning your sales, see our guide on how to forecast and plan your sales.
Be specific when setting targets for sales staff - break your requirements down into different areas, for example:
- New sales - work from the projections in your business plan and sales forecasts - these will take into account changing market and economic conditions.
- Renewals - selling isn't only about new business - it's also about retaining your existing customers. A typical renewals rate is in the region of 60 to 70 per cent.
- Lapsed customers - a good salesperson should be able to recover some of your past customers who have not bought from you for some time.
Look at your business and identify the factors driving its profitability - you should use these to drive your sales targets too. Different businesses may require very different targets. For instance, winning 200 new customers in a year might be a poor performance for a supplier of low-margin foodstuffs, whereas recruiting just two new customers might be a very good performance for a manufacturer of luxury yachts.
Make sure that the targets you set for your new sales staff are reasonable for the territory they've been allocated. Making things too easy may lead to complacency and lost sales, while making them too difficult can be demotivating and lead to despondency.
Set activity targets for your salespeople
As well as setting your salespeople targets for the number of sales you want them to make, you should set them activity targets. These are all the individual aspects of their day-to-day duties that your sales team will carry out as part of their jobs - and which should lead to sales. The theory is that if enough of these activities are carried out, they will significantly improve the likelihood that sales are made.
Activity targets might be:
- Completed phone calls - ask your sales staff to record the number of calls they make that are completed with potential customers.
- Face-to-face meetings - get staff to record the number of appointments they make with customers where they attempt a sale.
- Leads generated - measure how effective your staff are at extracting new leads and generating potential new custom.
- Leads followed up - see how successful and fast your sales staff are at following up sales enquiries generated by your marketing activity.
- Qualified prospects - ask sales staff to let you have the qualified prospects that they have identified. These are people who have been picked out as needing the products or services that you offer and who are able to purchase, but who haven't approached you - or been approached.
This is an important area of the sales process, as continual efforts by your staff to generate new business leads may be responsible for keeping sales figures steady or on the increase. You may therefore wish to monitor this area of their work just as closely as the actual sales figures.
Measure the performance of your salespeople
You recruit salespeople because you want them to make a difference to your business sales. So how do you measure just how well they're doing?
One method is to analyse a salesperson's conversion rates. This is the number of visits, contacts or phone calls it takes to arrive at one sale to a customer. If, for instance, you calculate that it should take a salesperson 25 approaches per sale you have a good basis on which to gauge their progress. Likewise, if you employ several sales staff you can assess which of them is performing most effectively.
If you establish that sales targets are being missed you should investigate the reasons. One possible cause might be a lack of effectiveness on the part of the salesperson. However, it might just as easily be caused by one or more of these factors:
- the territory you've given the person to cover is too wide or too difficult
- there is a fundamental problem with the product or service they're selling
- there is a broad slump right across the market
- you are not giving the person the right kind of marketing support
Whatever proves to be the source of the problem, act quickly to remedy it - and, where appropriate, let your sales staff know that their sales abilities are not the issue.
From time to time, find out what impressions your salespeople are making. You could try conducting a survey of opinions across the customer base, or on a smaller scale calling individual customers to listen to what they have to say. You might also try accompanying salespeople on their site visits to see for yourself how well they're connecting with customers.
The right pay package for your salespeople
If you're taking on salespeople for the first time it can be hard to know what pay package you should offer. Not surprisingly for such a target-driven role, pay packages tend to be based on results and usually include lots of incentives. It's important that you spend time at the outset deciding on the right combination of basic pay and incentives since this will be much easier than changing the formula at a later date.
The typical pay structure for a salesperson is composed of a fairly low basic salary with an additional amount of commission. The package will usually be called OTE or on-target earnings, meaning that if a salesperson hits the targets that you've specified for them, they will be guaranteed that amount of money. A higher commission can be paid if the person performs beyond this target. Such incentives naturally help to instil a desire for sales.
You can customise pay incentives to your business' benefit. For example, if the company's future is heavily dependent on the success of a new product, you might want to offer a higher level of commission for sales of that product. Linking sales with commission in such a way can therefore assist success.
Make sure that sales staff are clear from the outset exactly what financial rewards they'll receive for successful sales. This will avoid any future difficulty and mean that staff focus their energies on the right targets.
Finally, remember to think about incentives other than pay and bonuses as these can be more effective. Securing an order provides its own sense of achievement for salespeople, but when orders are not so easy to secure you need to think of incentives to motivate your staff.
Original document, Recruit and manage sales staff, © Crown copyright 2009
Source: Business Link http://www.businesslink.gov.uk/
Adapted for Québec by Info entrepreneurs