When it comes to understanding the role of sales and how to maximize sales performance, not too many business executives “get it”. Hint: Managing sales is not about dictating control. If your salespeople are totally controllable by you, then what are they like when negotiating on your behalf? Worse yet, if you have total control over them, then do they have to wait for you to tell them to do something before they do it? Two major characteristics of great salespeople are the strength to negotiate value in the face of a buyer’s price pressure and the self-discipline to get things done without adult supervision. Neither of these characteristics are those of someone who is “controllable”. In fact, another inherent characteristic of great salespeople is they are fiercely independent.
But this doesn’t mean they are insubordinate, cocky, or arrogant. It’s just that their independence is built with the passion to solve problems for customers at a profit to the company without sacrificing their deeply driven principals centered on integrity. These salespeople walk away from bad deals for either customer or the company. At the same time they are willing to stand up to management that is not delivering the goods, the promises, or is actually getting in the way of the salesperson’s ability to sell by restricting (controlling) their behavior. Independence also doesn’t mean great salespeople aren’t team players- quite the contrary. They function well with teams. They just happen to be the ones that lead the charge to get things done- like generating new business.
Here is an unedited email from (with permission) from Dick Benbow, Vice-President of Walter’s Wholesale Electric- an executive who clearly “gets it”:
Paul, you mentioned managers "governing" from afar. They have their people filling out sales call sheets, contact reports, expense reports, projections, marketing reports, etc. Nothing but stumbling blocks to success. They do these things because they don't trust the system. They don't trust the people they hire. We are fortunate when our competition goes to market that way. I contend, hire the right person, get accounting people to make out all the reports you want.
Have your salespeople on a commission program that rewards high achievers, SUBSTANTIALLY. You can't be afraid of overpaying them. A sales manager is lost as soon as he feels no one salesperson should make as much or more than he does. I pride myself in claiming I have a number of salespeople that have higher incomes than we V.P.'s of our company. The more they make the more we make.
For the life of me, I don't see how one manages people by not being with the people you are responsible for. How can one manage people when you aren't in the field seeing first hand what they are up against. How many of these managers woke up one morning and found out that one of their high achievers just left the company. Probably wouldn't have happened had he/she had been out there in the trenches with that individual, at least it would not have come a surprise to that manager.
Check out Walter’s Wholesale Electric growth and success story over the last forty years. They are cleaning their competition’s clock, and doing it profitably. An executive of another extremely successful company (even in this tough economy) Russ Lesser, President of Body Glove International, is an accountant by profession who understands the value of the sales function. At a recent lunch he commented, “I don’t need any accountants if I don’t have any salespeople because without any sales we won’t have any money to count! It’s crazy for an accountant to get upset with a salesperson because the salesperson is making more than the accountant.”
Russ continued, “Two stories come to mind about how NOT to treat salespeople. One has to do with a salesman I knew back in the 60’s who sold for Hang Ten. He made $75,000/ year, which back then was not bad. He called me up one day and said he was quitting Hang Ten because they were cutting his territory and cutting his commission. They were punishing his success. So he went to work for an upstart company called OP- Ocean Pacific. Three years later he was making a million dollars per year selling for OP and Hang Ten was bankrupt.”
“Another story was about someone I knew making $180,000/ year on straight commission. Then the company said they were going to do away with the commission and go to a $200,000/ year salary, so he quit. You would think that getting a guaranteed $20,000/ year raise wasn’t so bad, except this guy wanted the incentive- or perhaps fear- to get out of bed every day and sell. Also, even though he made less than the salary, the thought that he was limited in income was a turn-off, even if the salary was high.”
How about another story of another exec who “gets it”? The Los Angeles Business Journal as “CFO of the Year for 2008”, Dennis Eder, CFO of SCAN Heathplan, the fastest growing Medicare Advantage plan in the country. We had Dennis do a presentation to the SCAN sales team about the fundamentals of SCAN’s financial structure, how they bid the Medicare process, and how the monies are distributed. Dennis’ opening remarks to the sales team were- with arms wide open for emphasis- “THANK YOU for feeding my family!” That was not scripted. Sales went up 20% that month. That was the result of his genuinely sincere statement.
What about execs that don’t “get it”? We’ve met a few of those. One president of a $120 million division of a $700 million company had 12 sales managers covering territories spread across the United States. Every month, he would make these managers fly in to a meeting near the company headquarters. We asked him why he did this. He said, “My philosophy is to make them come to me. And the one time we did not have the monthly meeting, they did not make their numbers, so we concluded that the monthly meeting is a necessity.”
We asked him, “Do you have a yearly strategy for these meetings? In other words, does one meeting strategically lead into another with some major milestone objective toward the end of the fiscal year?”
“No, we can’t do that because we don’t know what we need to fix from one meeting to the next.” That didn’t sound too productive. In fact, it is totally reactive- just like the management style.
This was really more of a monthly beating, than a meeting. The first time we presented at one of their monthly meetings, we opened with an interactive question that generated conversation every time for other clients. Except for this one. The silence was absolutely deafening if not alarming. It is difficult to “fix” a problem when the guy paying you is the problem. We suffered through this for two years. The only reason we were kept in the game was his boss- the company president- insisted on our involvement with the division. Sometimes the most influential sales calls come when you are seated next to the big boss for five hours on a cross country flight.
Finally, the division president was fired. Guess what happened? Sales shot up 20% across the board! So, the manage-by-dictating control was hurting sales to the tune of 20%. We have seen the same result in at least five other cases in the last ten years; a manage-by-directive sales tyrant is terminated resulting in an immediate across-the-board net sales productivity improvement of about 20%.
What’s the pattern? Performance-based pay (commission) that rewards- not punishes- success. Business systems that don’t stifle, but support sales activity. An organizational culture that embraces sales not as a necessary evil, but as a competitive edge. A management team that understands that good salespeople are independent and management’s job is to leverage that independence strategically. Fundamentally, in business the executives that win believe that a good defense is a great offense- and offense in business can only come from sales. Unfortunately, these execs and CFO’s are the exception when it comes to their view on sales. But, I’m sure they don’t mind being the exception, because that is why they keep winning.