Prepare to Hire a Sales Person

It is the time of year that businesses start to look at their anticipated revenues and question if they can increase the top line with additional sales resources.  A sales person is an investment in your business. Preparing for the role within your organization is as equally important as hiring the right person.

Before you hire anyone, have you created a sales plan?  The sales plan is where you define your revenue goals for the year, the budget for required headcount and support resources, and the tactics you will employ to achieve your goals.  At a minimum, you must define what you are willing to invest into the selling of your products and services for every expected new dollar of revenue.  Once you make this calculation, set your budget based on your investment requirements and expected returns with new sales.

Now that you have your sales plan outlined, here are some steps to help you get ready for hiring a new sales person:

  1. Sales Role: Will your new hire be a direct, field sales person or an inside sales person?  A direct sales person will have a larger budget for travel and expenses, in addition to higher compensation.  The expense of a direct sales person can be offset by a putting in place a higher quota.  A direct sales person is expected to negotiate larger contracts and develop profitable long-term relationships over the phone and in person.  An inside sales person will conduct all of their selling over the phone. They will be qualifying opportunities, making online presentations, negotiating and asking for the business over the phone.  Inside sales people will have a smaller quota and also typically sell smaller priced products and services that do not require face-to-face presentation and negotiation.
  2. Job Description:  Create a job description that clearly defines the requirements for the role, responsibilities and expectations of what the sales person must deliver.  Be specific. State the sales goals, types of customers they need to sell and how they will engage with prospects.  Will they be a “hunter” or a closer or both?  Will they need to have existing relationships?  How much experience in your industry?  Note how your sales person will be measured and how you view success.
  3. Quota and Territory:  Generally inside sales quotas will start at $100,000 to $250,000 in new business revenue per year.  The defined quota will always depend on the sales price.  A direct sales person can be expected to have a quota of $500,000 to $1,000,000 a year in sales.  Again price of product will help set the quota, along with experience of the sales hire.  If you hire someone with no experience in achieving a million dollars in sales, they probably won’t hit a million dollar quota no matter how much they sell you on the prospects.
  4. Comp Plan and Incentives:  Detail how the sales person will be compensated.  Typically there are three factors in sales compensation:  sales commissions on new business, incentives to exceed quotas and bonuses for quality or quantity.  Define your compensation and commission rules.  When will the sales person be paid?  You can set different commissions for different products, based on profitability.  The average sales commission is 4-8% of top line sales revenue.  One word of advice, the easier the plan is to follow, the more focused your sales person will be on achieving plan instead of trying to figure out when and how they get paid.
  5. Sales Process:  The sales process defines the steps a sales person will engage to find, qualify, present, negotiate and close a deal.  If you know the process, you can better hold a sales person accountable to how they manage their sales funnel.  It will also provide you data on how many leads you need to support the number of deals you expect to close each year.  Data is your friend in sales.
  6. Marketing and Sales Support:  Sales people will typically work independently; however, you can shorten the sales cycle by providing sales tools and marketing support to help educate the customer, drive the process forward and substantiate the value propositions of your products.  Prepare a training plan to educate the new hire on what they will sell.  A minimum requirement for any sales person is a CRM tool.  Your prospects and clients are a company asset.  Track and manage the data and make sure it is stored in a company repository.
  7. Measurable Success:  Before you make the hire, know exactly how you will measure their success.  A sales person, no matter the level of experience, will have a ramp up before they start closing deals.  Your sales cycle can range from weeks to years.  The more complex the sale, the higher price of your products and the more consultative the sales process, the more likely it will take six months or more before you see traction with even the most experienced sales person.  Your only exception will be to hire a person that already has relationships with your targeted customers.  The ramp-up will decrease with selling experience; however, you will pay a lot more for this type of sales person in base and expected overall compensation.  Do the math.  Can you invest more early on to increase odds of higher returns with a shorter sales cycle?

An investment in sales is one of the most important decision an owner makes in the life cycle of a business.  Making a bad sales hire can crush your business.  Prepare and plan for success.  Set reasonable expectations and measure performance.  Sales is a numbers game.  Know the numbers, inside and out.  Know what you spend.  Know what you want in return. Know how the sales person will achieve the sales goals.  Prepare your plan so you know what success looks like and then execute your plan.

By failing to prepare, you are preparing to fail.” ― Benjamin Franklin

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

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Questions Sales Candidates Ask that Should Stop the Interview

There are certain questions that should raise a red flag when you are interviewing sales candidates.  You are hiring a person who will be responsible for driving your business forward.

The sales person you offer the job is representing your brand, your company values and creates your business first impression.  This person is accountable for increasing revenues.  Know for certain, they will have a bottom-line impact on your business.  Positive or negative, the interview process is critical in making the best determination of the outcome.

There are questions and statements sales candidates make that are telltale of their priorities.  When you hear them, stop the interview, thank them for their time and move onto finding a better qualified candidate.  Your time is valuable and you need to find the best person for the job.

One red flag or alarming question is enough, no matter how many other green flag answers you were given during the interview process.  Avoid the energy of imaging “what if” or talking yourself into dismissing what you know was a clear indicator this candidate is not worthy of the job.  Don’t compromise!  Your business can’t afford a bad hire.

The biggest red flag is not having any questions prepared.  Ask everyone you interview, “What questions do you have for me?”  If the sales candidate responds that they do not have any questions, stop!  Any novice interviewee will have at least one or two questions prepared for any job interview.  This response tells you they have no interest in the job you are offering.  It also indicates they didn’t do any homework before the interview. Next.

Here are more red flag questions:

1.  “What opportunities are there for promotion?” We all love ambitious people.  The problem is that you are not hiring for a future promotion.  You need a person to do the job you have open right now.  This question may be a red flag that your candidate is more focused on telling others what to do, not doing the job themselves.  They may feel over-qualified.  They absolutely are telling you they are not interested in the current job opening.

2.  “How do I get leads?”  This is an indicator that the person may not like cold calling.  It is hard work.  There are some sales people that only perform well with nurtured, warm leads.  Your sales hire should be equally good at cold calling, as growing business with existing customers or well qualified leads.  No one really wants to take a job “dialing for dollars”; however, you have to hire someone that will do whatever it takes to find customers, including making a lot of cold calls.

3.  “What is my salary?” People who ask this question want security.  Sales is risky business, for the business owner and the new hire.  A green flag question from a qualified, competent sales candidate would be, “What is my quota and commission rate?”.  They might even ask you if there are caps on earnings and incentives for exceeding quota — even better.  When a person indicates they are hungry to earn more than what you project at 100% of their sales goals, that is a very good sign this person is used to winning.  A person that is asking about salary wants to know if they can live on the base pay.  Not good.

4.  “What are the hours and the vacation policy?” Sales is a do whatever it takes job.  If a person is worried about the hours they are working each day and when they get their first paid day off, they aren’t thinking about how much money they will make selling for you.  A green flag would be a question about how soon they can get into the office each morning.

5.  “Where will I be sitting?” Sales people should be able to perform anywhere they are located.  Whether they are in an office, cubicle, table or at home, good sales people will sit where they have access to a phone and computer.  This is a person that is not attentive to the most important qualifications needed for this position and they are wasting your time.

6.  “What qualifications are you looking for?” This is a red flag that the person did not prepare for the interview.  Researching the job and the company should provide indicators of what is important in this job. This is a sign the candidate may be looking for any job, no matter what you have to offer.  You need a qualified candidate that fills the job you have open now.  This question is also an indication that the sales candidate is not ready to make an assumptive close.  The assumption should be that they are qualified for the job and they do not need to be interviewing you for background information.

Making a hiring decision about a sales candidate is difficult.  You need to trust this person will take on the responsibility you give them to grow your business.  They must be accountable for delivering results.  They must be eager to learn and willing to do whatever it takes to win.  Most importantly, they need to be able to ask for the close and that means they need to ask you for the job!

Jamie Glass, Outsourced CMO and President of Artful Thinkers, a strategic sales and marketing consulting company and Sales & Marketing Services Managing Director at CKS Advisors

A Bad Sales Hire Can Crush a Small Business

ImageThe decision to bring a sales person into your business is the most important decision you make as a business owner. Financially, it can be very rewarding or it can be devastating to your bottom-line.  The reality is that your hiring decision can propel you to mega-success, crush your business or land you somewhere in the middle.

There is no absolute science in making good hiring decisions.  Know your associated real and opportunity costs of making a bad hire.  Calculate the risks of the person not working out before you sign the offer letter.  Will your business survive making a bad hire?  How soon will you need to pivot if performance is substandard?

Based on the financial risk assessment, you can qualify whether you should invest in a professional resource or hiring profile tool to reduce the risk.  In other words, decide if you will pay now or potentially pay later.

What else can you do to protect your long-term financial security as a business owner and make an informed decision about hiring a sales person?

Ask candidates questions related to sales activities.  Don’t focus on their industry knowledge.  Industry knowledge is trainable.  You don’t need a nurturer or relationships person.  You need a sales person that will ask for money!  It is the secret skill that will bring revenue in the door.  There are two types of sales people:  hunters and closers.  In the beginning, you will need someone who is good at both.  They will cold call, with or without leads, and they will ask for the close.  These are “rare birds”.  Ask questions about the candidates history with sales cycles, average size of deal, average daily cold calls, number of customers sold each year, and presentation-to-close ratios.  These are all indicators of past performance and predictors of future success.  When a resume lists awards for exceeding quota, that does not tell you what they sold in the past is going to translate.  You want to know what they did to exceed quota.  What activities made them successful?

Invest in training and sales support materials.  Basic training materials should be product feature and benefit lists, industry keyword definitions, product overviews, competitive analysis, market positioning statements and scripts of common objections and how to overcome them. Utilize your team of in-house experts to train your sales people.  Set up daily Q&A sessions with product engineers, marketers, customer service personnel and anyone else that touches the customer.  Share all the secrets, good and bad.  The more knowledge and access to experts the sales person has the better prepared they will be to overcome objections.  The first two weeks of any new sales hire should include at least two hours a day training and practice calls.

Set sales quotes and activities quotas. An experienced sales person may only close 1-2 deals per year, with an average deal size of $2 million.  You need to clearly outline your expectations and what you will inspect regarding number of calls, meetings, presentations, proposals and closes.  Assigning the closing numbers without understanding how many calls that might take will cost you severely.  You must know, for example, 500 calls or 20 face-to-face meetings may result in five closed deals at an average sale of $10,000.  If this doesn’t meet your expectations, adjust accordingly.  Then measure the number of calls to see if you are on pace each week.  Early indicators will provide you the opportunity to pivot quickly.

Know your exit strategy.  What is the maximum time you can invest in a bad hire?  The answer can not be zero, because every hire has inherent risk.  If it is 90 days, then have a very specific plan with measurable key performance indicators (KPIs) that you can inspect every week.  You only have 13 weeks to determine if you will terminate employment or keep on staff.  Sales people are used to 90-day probationary periods.  You should have inspection points with planned exit strategies at 6 weeks, 90 days and 180 days.  Cut sooner and learn from your mistakes.  A year-long bad hire could close down your business if you are not well capitalized and depend on this new hire’s revenue to sustain your business.

Identify the characteristics that could be a threat or high risk to your business.  Character matters as much as sales skills.  You need to adequately assess the “fit” of this person in your business.  You are handing over the keys to your future.  Can you trust this person? Is this a person you would take with you to all your important meetings?  Does this person dream big?  Are they kind, friendly and positive?  Will your customers like this person?  If you can afford a hiring assessment by a professional, with tools that can define their character and skills, it will be worth the investment and potentially save you from making a big mistake.

Do your homework.  Never, ever skip reference checking.  Dig deep!  Ask community and business people that might know the person, look at their LinkedIn connections and recommendations.  Reference and background checks are as important as due diligence when buying a business.  You will be writing substantial checks to this person on a promise.  They will be creating your business first impression.  Reduce the risk by learning from other’s experience.  Again, it may be in your best interest to hire someone to do your reference checking to get a complete picture.

Finally, use your gut.  Do they represent you?  Your professional and personal instincts will serve you well.  A bad hire can scar you and make you timid in making a future decision.  Know that it can take four or five hires to find a rock star.  An early success in hiring a sales person is rare, so have a backup plan.

Sales people can make or break a business.  Know your upside and downside when hiring a sales person to promote your business.

Jamie Glass, CMO and President of Artful Thinkers.  Creative. Strategic. Results.