Hiring always presents a degree of risk. When the goal is hiring a sales representative, the stakes are especially high. The lifeblood of your company — your sales revenue — is at risk.
Luckily, there are some things you can do to increase the likelihood of hiring a great sales rep.
Whether it’s your first sales representative, or you’re back-filling an existing sales position, here are tips from people who’ve ‘been there, done that’:
Write Out a Job Description
It’s a mistake to think that every sales role is the same, says Anita Campbell, CEO of Small Business Trends, who has hired dozens of sales representatives. “That’s why you need to write out a job description when you hire your first sales rep. It makes the scope of the role clear for the candidate’s benefit. It also helps get others in the company on the same page. Don’t skip this step.”
Write down the activities the sales rep is expected to do, starting with:
- generating the lead,
- through closing the sale,
- through any post-closing follow-up.
Consider such issues as whether the sales rep is required to generate leads, or whether your business has a marketing machine in place to bring in leads. That distinction is important in determining what skills to look for. “Some people are good closers if you present them with leads coming in, such as from Google AdWords or an online lead-gen form. Not everyone can go out and prospect to generate their own leads,” says Campbell.
Another issue is sales administration and support. Will your sales person have to enter orders into your system? Will he or she be expected to follow up on post-sales details, such as gathering information or delivering status updates to a client? Or do you have other staff to do those activities? “Some sales people expect to be able to hand the sale off and not handle post-closing duties,” adds Campbell.
Besides, she says, it’s not wise to load up a sales rep with too much paperwork. It reduces the time available for making new sales.
Determine Compensation Range
Always make the compensation package based in large part on commissions, advises Campbell. “Then the sales role more or less pays for itself,” she adds.
A good salesperson is motivated by money. But it won’t help you retain that sales rep if you’re thinking the person can make $75,000 annually in your company, yet the candidate comes in expecting $150,000.
Figure out the target compensation if the sales reps meets stated goals or quotas. If this is a new position, you’ll need a sharp pencil or calculator:
- Estimate the number of sales a motivated rep can comfortably close each week. Calculating by the week helps you gauge sales more realistically than calculating monthly or annually. This number can become the rep’s quota or goal.
- Then calculate the amount the sales rep will make from those deals based on the commission rate.
- Don’t forget to factor in any base salary.
From this you should get a good idea of the realistic target compensation. During the hiring process, express this as the compensation ‘at quota,’ advises Campbell. Consider including a high range for added earning potential if the rep meets stretch goals or exceeds quota.
What’s a Good Commission Rate?
There’s no right answer to this question. Start with a commission percentage in line with what is common in your industry, advises Tamar Weinberg, the chief strategy officer for Small Business Trends. It also depends on whether the person gets a base salary.
“Real estate agents make six percent commission and no base salary. If you are selling tech products, I’ve seen anywhere between three percent and 10 percent, with a generous base pay. If you’re not offering base pay, commission could be from 20 percent to 25 percent,” Weinberg says.
Also, you “may want to consider adding a team bonus down the road. For example, hitting a certain milestone yields a $X,XXX bonus.”
Weinberg also recommends sweetening the commission to encourage stretch sales goals that exceed quota. For example, for sales “you make up to $375,000, you get three percent, and at $375,001 to $500,000 you get six percent, and for amounts over $500,000 you get nine percent.”
Keep Guaranteed Payments Temporary
It’s customary in many companies to offer new sales reps a guarantee of compensation for the first 90 days, or possibly up to 180 days, says Campbell.
During this ramp-up period, the sales representative is assured of compensation of a certain amount — whether he or she actually makes sales.
Be clear that this is a temporary arrangement. Give it a cut-off date. Call it a ‘temporary nonrecoverable draw‘ against commissions, so as not to set an expectation of an ongoing salary, advises Campbell.
Stoney deGeyter, Pole Position Marketing’s CEO, offers a cautionary tale about guaranteed entry compensation. “A few years ago we hired our first sales person (in a long time)….” The company didn’t have a clue as to what to expect from its salesperson in terms of sales numbers, but decided “to make it lucrative for him to work for us,” deGeyter said.
So, Pole Position created a high salary with a low commission structure. “The idea was to pay the way during the learning process, but once sales started coming in take him off salary and move toward commission.”
However, “to our disappointment we never hit the benchmarks,” said deGeyter.
Several re-negotiations followed over the next three years. “As you can imagine, that’s not something that anyone wants to do and, inevitably, someone feels like they are getting a raw deal. It was literally trial and error for us.”
Decide Where to Recruit
“It’s not easy to find good salespeople,” says Weinberg.
“Salespeople have to be go-getters who are comfortable going in front of people and pitching something.” Not everyone has the moxie to ask for the sale.
She recommends using websites, including LinkedIn, as well as “career-minded sites like Monster or Dice, if a tech product is involved.”
She also advises attending meetings and observing professionals in action. Seek out “people who outshine others socially — those people would make for good sales reps, especially since a sales rep needs to be a good schmoozer.”
Diane Helbig, who offers an online sales training program, Clarity of Course Sales Training, recommends leveraging one’s network.
“Getting a referral to someone can be one of the best ways to gain a salesperson,” she said, noting further that LinkedIn is the go-to site for filling important positions. “Do a search for salespeople, account executive, business development, and see who comes up. You can research them just like you would a prospect.” You can also post the job on LinkedIn, among other job sites, she said.
Don’t overlook existing employees as a referral source to hire your first sales rep, added Campbell. “Some companies pay a referral bonus to existing employees who refer a new hire. In small businesses this bonus averages from $100 to $500. Make the bonus payable after the new hire has made it through the first 90 days or other probationary period.”
Go for Skills or Experience?
Helbig doesn’t believe it is mandatory to hire someone with sales experience. She does, however, recommend finding someone with a particular skill set that includes the ability to build relationships quickly.
Also, “they should have a good network and be able to expand on it. They should be able to work autonomously as well.”
Experts disagree on whether industry experience is necessary. According to Helbig, industry experience isn’t important. “If they are a good salesperson, they can learn [the industry] and the value of your product or service. If they are new to sales, consider providing sales training to set them up for success.”
However, Campbell points out that direct experience may be crucial in certain industries. “Some types of sales are complex. Or the industry may be too specialized to learn quickly. Small businesses usually need sales fast. Many of us don’t have the luxury to subsidize a nine-month learning curve.”
Check Background and Attributes With These Questions
When checking up on a sales-rep candidate, ask about past results. “You’d want to know what sales they’ve closed, what quotas have been met or surpassed, and how their track record compares to the rest of the track records” at previous employers, Weinberg said.
Also assess personal attributes and character. “You’d want to know if they were leaders or followers. Your first sales rep is probably someone you’d want to be a leader, but who is willing to go out and start small to grow with the business. They’re going to be taking risks, because really good sales reps command a higher salary than what a company looking for a ‘first sales rep’ can usually pay.”
Ask probing questions to assess the candidate’s sense of urgency, Campbell advised. “Sales deals die from lack of momentum. You want a person who acts fast. Do they return messages within X number of hours? What’s their attitude toward emails? An ‘inbox zero’ personality is ideal. What’s their daily routine like — do they set daily goals? You want a sales rep who will be hounding you for deal approvals because they operate lickety-split, not one you have to hound just to return a call.”
Helbig noted that checking references involves legal pitfalls that may prevent you from gleaning much from a reference check, however.
She said, “Legally you aren’t going to get many answers other than the basics,” such as “how long they were employed. Companies are taught to not give more information about past employees because it could come back to bite them.”
Look for Willingness to Use Reporting Tools
Finally, remember that accountability is crucial. So you’ll need some kind of reporting and tracking mechanisms.
Hire a person willing and able to use your software programs, or learn them.
Weinberg noted that a CRM tool is useful for tracking sales and performance. She likes Salesforce.
Your salesperson should enter the contact information of prospects into the CRM. That way you can access this data in case the employee departs (or is asked to leave).
As Weinberg noted, “You, as owner, should know what opportunities are gaining ground, as well as the ones that aren’t, and where the salesperson could use support.”
“All the companies I have worked for have used forecasting spreadsheets to determine what deals in the pipeline are likely to close, at 10 percent levels, 50 percent levels, 90 percent levels, and 100 percent signed. So for example, you may have one client at $50,000 at 10 percent, three clients totaling $275,000 at 90 percent, and 11 closed deals at $1.3 million.”
Weinberg recommends that the salesperson report his or her progress on a weekly basis. “You don’t need to know every call they’ve made.” The salesperson should provide this report every Friday afternoon and the owner should read and comment on it. “If a salesperson doesn’t report, that’s a red flag.”
This, by extension, doesn’t mean you should micromanage the salesperson’s activity, she said. “As long as they are acting legally, morally, and ethically the owner shouldn’t care how the salesperson spends their time — provided results are being realized.”
New Hire Photo via Shutterstock