Are You Ready to Hire Your First Salesperson?
In my last post Getting The Founder Out of Sales, I talked about the typical frustrations, challenges, and pitfalls I find companies experience as they hire their first salespeople. In this article, I want to provide a specific framework for what you will need to have in place before hiring your first salesperson.
It bears repeating that the most important component of hiring your first salesperson is having the right mindset and orientation.
More often than not, I see companies wanting to move from the founders selling to hiring a team all at once. They want to be done and out of the sales process without having put in place any transferable process or structure for the transition.
Of course, it makes sense to want to free up the founders’ time for more strategic activities; however, the ‘big bang’ approach to hiring your first salesperson really doesn’t work. Instead, think about getting the founder out of the sales function as a progressive path. You’ll need to build out the process as well as map how you will sequence the transfer of specific process competencies required. Start by thinking of selling as a continuum rather than one big process. It begins with research (finding potential companies and contacts), then prospecting (getting to the first conversation), then qualification, then discovery, and finally selling.
As you move along the continuum, complexity increases and the need for knowledge and experience grows. When bringing on your first salesperson, start modestly by hiring somebody to whom you can offload the mundane and administrative functions of the sales process. In many respects, you shouldn’t be looking to hire a salesperson at all. Instead, find a glorified sales assistant or executive assistant with the potential to develop into more advanced functions over time.
Now that you have your mind right about realistic expectation for the whole process, let’s dig in…
You Need a Sales Process
Before hiring your first salesperson you need to be prepared from a process standpoint. I’m not talking about something fancy, complex, or perfectly documented. I’m simply talking about having a basic approach to selling that you believe in (and hopefully have demonstrated works). The good news is that when you hire someone, they start at the beginning of the sales process rather than closing deals on day one so you don’t need to have everything figured out all at once. That said, you still need to provide a specific set of instructions for how someone should go about performing research to identify new target companies, who they should be targeting, how to go about making contact, and ultimately, the overall prospecting pursuit process (the sequence, order, and timing used to set that first meeting).
Clients often express frustration when they realize the person they hired has not brought a proven process with them. Really? I’ve made a career out of studying sales process and it’s taken a long time to learn what works and what doesn’t. The notion that you’re going to hire somebody with a couple of jobs under their belt that has mastered this is humorous. Moreover, it’s unrealistic to expect you’re somehow going to spend a couple thousand dollars a month or hire a $35,000 a year resource and get somebody with a deep understanding of sales process and best practices. You own the process, not your new hire.
Imagine hiring a construction crew and then spending the first few weeks shopping for tools and materials. Waiting until you hire your first salesperson before defining the tools they will need to be successful is just as silly. New hires should arrive to find all the tools they’re going to need to be successful. You should have a CRM system in place and that needs to be set up appropriately for them. This could be as fancy as Salesforce.com or as simple as an Excel spreadsheet.
In terms of other tools, it’s not about creating collateral because you’re not hiring somebody to pitch your product…you’re hiring somebody to prospect and start setting meetings. Instead, you need what I call professional introduction materials: blogs, articles, white papers, etc., that represent you as a resource and subject matter in that field. For example, they are going to encounter gatekeepers that they need to work through to get you in front of the right person, and that gatekeeper is going to ask for some sort of a letter of introduction. That’s not something complicated so have that set up ahead of time. They will also need basic email templates for confirmations and follow-ups. You don’t want your brand new (and lowest paid) person in the company making these up so think through what this person is going to need.
Your Salesperson Needs A Schedule
Ultimately, you’re asking someone to perform a certain set of functions with competing priorities. To be successful, your new hire will need a sense of the rhythm you want them to follow. You need to help them apportion their time from a percentage standpoint and lay down a framework for success, so they need to have an overall schedule. Imagine yourself saying something like: “I want you making cold calls between 8am and 11am. From 11am to noon I want you researching new contacts, new companies, and surfing the web. From 1pm to 3pm I want you making calls to acquire specific contact information. From 4pm to 5pm I want you doing another hour of research to identify new prospects.” The layout of a simple but tangible schedule is essential.
Specific (and Formal) Expectations
The next component required is a very clear set of expectations, and I see this as a problem more often than not. Imagine you’ve hired someone and two months into his or her new sales role you are really frustrated because ‘there is not enough activity and results are not where they should be’. When I ask clients about expectations I get a couple of types of answers. In most cases I hear, ‘I wanted him to make about 30-50 calls a day’. That is a ‘fuzzy’ expectation and I’ve written a lot about how those don’t work. Worse, I’ve seen situations where there weren’t expectations at all. This is simple to fix. Every function of their job needs an expectation tied to it and that expectation needs to be specific and formally communicated. Some examples include hours a week, number of calls, number of new contacts identified, number of new prospect companies identified, number of meetings set, and meeting show rate. All of this needs to be written down and communicated. Then, if expectations are not being met, we can focus on whether this person needs coaching, support, or more management. We can also address the issue of whether or not expectations are realistic or even whether or not this person represents a fit for the job. Absent specific and formal expectations it tends to be difficult for everyone to do anything other than get irritated.
Compensation: People Care About How They Make Money.
Compensation comes up a lot, and I see a lot of companies really wrestling with how they should compensate a new sales hire. I’ll convey a couple of key principals. This person is being paid to get you in front of prospects so tying them to commission and closing deals is a very poor way to structure their pay. I understand the desire to backload compensation (we’ll talk about that next) and I understand the desire to tie the compensation to the desired outcome. However, this person is an appointment setter and it’s your job to close the deal. As such, pay needs to be tied to the volume, quality, and quantity of scheduled and held meetings with qualified prospects. I am a proponent of back loading compensation from a time and return on investment standpoint. Realistically, you’re going to go through two, three, or four people before you find a person that sticks. Similarly, no matter how good someone is, they’re going to leave you. If someone can be successful setting appointments, prospecting, and hunting then another company will come along and offer them more money than you want to or are able to pay. I recommend a modest but livable non-variable (base) component because people need to eat and pay their rent. I prefer a fixed contract fee paid at the middle of the month and then again at the end of the month tied to specific agendas. For example, if I’m going to pay you $2,000 a month in ‘base’ pay, I would divide it into a $500 payment in the middle of the month followed by $1,500 at the end of the month. I weight compensation towards the end of the month so that if someone is gone in two weeks or not performing, you conserve most of the cash. In terms of variable pay, I prefer a bonus tied to the meetings set and held, and I pay this on a quarterly basis. For example, if the goal is 60 scheduled and held meetings for a quarter (five per week times four weeks and three months), I’m going to pay you another $50 per meeting for a total of $3,000. That’s meaningful (50% as a percentage of the base) and tends to keep people focused. It also helps somewhat with retention assuming a person is doing well. You want to create an incentive to stay or leave quickly, and you want the motivation to be on both sides.
ABC (Always Be Recruiting)
The last principal I’ll leave you with to ensure you are ready to hire your first salesperson is related to recruiting. Companies tend to hire somebody, and then stop looking. Two or three months later when that person quits, gets fired, or otherwise wanders off we have to start from scratch, which creates a very disruptive lag period and our sales machine grinds to a halt. One of the most important things any selling organization can do is make sure recruiting is a continuous process. Keep your ads up on Craigslist. Don’t stop trolling LinkedIn. You should always be searching for good people and always have candidates ‘ready-to-hire’. When I’ve overseen sales managers, my directive to them has always been: Have two to three viable candidates you’d present for hire should somebody leave or you get an additional head count. Ensuring your gap between open headcount and hire date stays small is a long-term success factor. I hope this has been helpful, and if you have any questions or if there is any way I can help you get some more clarity on some of these components then I invite you to shoot me an email.
By Townsend Wardlaw