Prepare to Hire a Sales Person
By artfulthinkers on November 11, 2012
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:
- 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.
- 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.
- Quota and Territory: Generally inside sales quotas will start at id="mce_marker"00,000 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 id="mce_marker",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.
- 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.
- 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.
- 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.
- 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