4 Big Mistakes Sales Managers Make
Sales managers have an unenviable job. They’re under constant pressure to achieve results, but not in a position to directly impact those results, and with the bar being raised each year, they have to find ways to “make the numbers” through the efforts of others. The job is tough enough without making it tougher than it needs to be. Before your next meeting with your company’s sales manager, consider these four widespread mistakes sales managers make, and recommendations on how to eliminate them.
Mistake #1: Making bad hires
Most business owners will tell you that their greatest asset is their people. Hire great people—talented, motivated, passionate, collaborative—and any given product and strategy will have an exponentially greater chance of succeeding than if you hire the wrong people. This is particularly true of your sales team—the customer-facing members of your staff responsible for generating the revenue that pays the bills, salaries, and investments. Yet many sales managers do not really know how to make the right sales hires, largely because they’ve never been taught how, and have to instead rely on gut instinct. Hiring the right salesperson is arguably more challenging than hiring for other departments because the candidate for a sales position, by virtue of what he does for a living—sell—is more skilled in selling you on himself than someone interviewing for, say, a finance position.
Furthermore, the cost of making poor hires, and the related turnover, are numerous: wasted salary, confusion among customers, and a sales territory that remains uncovered longer than necessary, among others. In order to increase the odds of making good hires, sales managers must have a systematic, repeatable, and objective way to find, attract, and evaluate sales talent. To help your sales manager be more prepared to make hiring decisions, consider coaching him or her on the following:
- Know what you’re looking for. Be able to identify your requirements in a sales candidate, and your nice-to-haves. Items include experience (outside vs. inside, number of years, industry), skill sets (hunter or farmer, consultative or transactional)¸ personal attributes and traits (persistent, tenacious, passionate, honest, team-oriented), and cultural fit.
- Communicate it accurately. Make sure the job description accurately lays out what you’re looking for. Do you really need 10 years of experience, or will 5 do? Using 10 may deter qualified candidates from applying, and will also attract candidates who expect a higher base salary than you’re willing or able to pay. If you’re hiring for a hunter position, say so. If salespeople at your company make few but large sales, make it clear that those selling high-volume small-ticket items need not apply.
- Interview intelligently and consistently. Ask questions that help you determine to what degree each candidate has what you’re looking for; keep a spreadsheet that tracks this information.
- Consider using assessment tools.
- Always be recruiting. Don’t wait until you need to fill a position to start recruiting.
Mistake #2: Not dealing properly with poor performers
Another mistake sales managers make is also a personnel-related one of the opposite kind: not dealing properly with a struggling sales rep. If the rep was hired by the sales manager himself, he may have a tendency to ignore the rep’s poor numbers and what everyone else on the staff may see self-destructive behavior, self-defeating attitude, a refusal to enhance skills, and not incorporating coaching recommendations. You can provide your sales manager with this three-step process for dealing with a rep who’s not meeting standards:
- Don’t immediately fire the rep. You’ve made an investment in him or her, so your first order of business should be to protect that investment. Instead, work with the rep to try to turn him or her around. Diagnose, identify, and agree on the root causes of the poor performance.
- Create an action plan. This is often also referred to as performance improvement plan, or PIP, and it should have a specific time frame, such as 60 days, and specific and measureable targets. These targets should not be just sales targets; they should include targets tied directly to the causes of poor performance identified in step 1. For example, if an identified behavior issue is arriving late to work, the target would be to arrive on time every day.
- Closely monitor progress. Continue to coach, but only to a point. The responsibility for improvement lies mostly with the rep. You’re evaluating commitment as much as anything else. Also, bear in mind the time you’re investing in this rep is time you’re not investing in your more successful reps.
If after the prescribed time period the rep has hit his targets, you as the sales manager will have achieved an all-around win. If, however, it becomes clear that despite the manager’s coaching and the rep’s best efforts the targets aren’t being achieved, the difficult discussion that too many managers avoid has to be made.
Mistake #3: Not enforcing use of the sales force automation system
It’s a well-known fact that salespeople despise doing paperwork—even the electronic kind. Yet for a sales department to operate optimally, sales managers must enforce the use of their company’s sales force automation (SFA) system. Too many sales mangers let reps off the hook by not doing so, reasoning that it’s not a battle worth fighting. This is a mistake. Enforcing proper use of the SFA has numerous benefits, among which are preventing salespeople from calling the same customers, enabling management to spot problems and identify opportunities, and enabling sales management to provide accurate forecasts to you and your senior management team. The soft way to do this is to do what any good salesperson would do—sell your salespeople on the benefits of doing so, and the negative ramifications of not doing so. Benefits can include avoiding delays in paying commissions, properly assigning commissions in split-commissions situations, and making your coaching sessions with them more effective, thereby increasing their close rates.
My experience, though, is that this sensible and rational approach rarely works. Instead, I’ve found having the sales manager mandate proper use of the SFA system as a component of the rep’s variable commission to be more effective. Incentives such as commission accelerators and bonuses motivate reps to do more of what you want them to do, so why not build into your incentive pay plan a component tied to using the SFA system in accordance with company policy. There are two keys to making this work. First, make the component a meaningful enough percentage of their overall incentive compensation that they won’t blow it off. Second, be very specific about what’s required (and factored into the plan) and what’s optional (and not factored in). Now, one might reasonably argue that this pays salespeople for non-revenue-generating results to perform an administrative function they ought to be performing anyway. If this is your perspective, you can accomplish the same objective by using a stick instead of a carrot—imposing penalties (negative incentives in the form of commission hits) for non-cooperation.
Mistake #4: Accepting Inaccurate Forecasting
Salespeople are notoriously optimistic about the likelihood that they will win a deal. All too often, this optimism is misplaced, and not grounded in an accurate, objective reading of a sales opportunity. Too many sales managers either accept the reps’ projections at face value, or don’t know how to separate fact from fantasy. Yet it’s the sales manager’s responsibility to ensure that the sales forecast is as accurate as possible, because senior management and ownership base their financial decisions—spending, investment, pay increases, dividend payments—to a large degree on what they expect the business to bring in new sales revenue. If your salespeople’s forecasts are inaccurate, then well-informed decisions cannot be made, and suboptimal corporate decisions result.
Here’s how your sales manager can improve the accuracy of the reps’ forecasts. First, in one-on-one deal reviews, the sales manager should force reps to provide evidence to support three aspects of their forecasts for each deal. The first is win likelihood, or the likelihood the deal will close at all, expressed by high, medium, or low. Avoid vague numerical probabilities (what does it mean that a deal is 75% likely to close?). The second aspect is timing likelihood, and the third is amount likelihood. For example, Does the rep “feel” it will close in the next month, or did the prospect say something to lead the rep to believe that? What has the prospect told the rep that has him projecting $20,000 instead of $10,000? What buying signals did he get that made him feel the likelihood of winning is “high”?
Second, as with the SFA system solution, consider building into your incentive pay plan a component tied to accurate forecasting. Provide positive incentives for accurate forecasting, and negative incentives for poor forecasting (eg, reduced or no commission). While this may seem draconian—and is sure to draw protest from your sales staff—it’s a surefire way to get them to develop the skill of better forecasting by asking these questions of themselves, which in turn makes the sales manager’s one-on-ones more efficient.
A sales manager’s job is a tough one, but by implementing these recommendations, it just might get a little less tough, and a lot more secure.