A Bad Sales Hire Can Crush a Small Business
By artfulthinkers on July 15, 2012
The 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 id="mce_marker"0,000. 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.
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