Blog written by Managing Attorney, Michelle Bomberger
At Equinox, we are seeing clients with much more optimism about business growth. They are taking action to proactively find and jump onto growth opportunities. A common way to doing so is hiring a sales representative. Anyone doing this for the first time thinks, “How hard can it be? There are tons of sales people out there,” but if you ask anyone who’s done it before and they’ll tell you it’s incredibly difficult to find someone who can effectively sell your products or services.
What can you do to hire right the first time? No one can guarantee you a great hire, but some careful planning in your hiring and compensation processes can put you in a better position to make a smart decision.
Hiring. During the interview process for a sales person, ask specific questions about the individual’s past success in sales. You must understand what circumstances drove that success and whether that success story can easily translate to your business. Dive into areas such as:
- Industry and product/services sold. Did the person sell products or services that were similar to yours? Was the selling cycle similar? The person may be great at direct sales with a short sales cycle but may not thrive in an environment that requires deep relationships in a long sales cycle. Can this person sell your products?
- Incentives. What was the compensation model where the person succeeded? A business owner who succeeded in sales may have different drivers than an individual with a goal of making lots of money. Can you provide the incentives needed by this person to succeed?
- Testing. A variety of tests are available to help you understand a candidate’s likelihood of success in a sales role. They are becoming less expensive and easy to administer. Many people advocate that testing should be the starting point in the hiring process.
- Network/rolodex. How important is a strong network of people to your success? In many industries, knowing the right people is paramount to getting the business. Does this person know the right people to sell in your industry?
- Reputation. Does this person reflect the values and culture of your business? You need your sales person to reflect your company’s values and not diminish your brand. Providing discounts simply to get the sale or bad mouthing competitors may be acceptable in some industries and not in others.
Compensation. We all know that compensation and incentives drive behavior. For your sales person to be effective, you must understand what behaviors you want and structure a compensation plan tailored to those goals. Compensation may include:
- Salary. The salary component may be a permanent baseline amount to augment commissions or may taper off over time as the sales person becomes more effective in selling.
- Commission. Commissions can take many forms and the form should be linked to the sales cycle and company goals. Commissions may be based on “hunting” activities or “gathering” activities. Hunting typically includes going out to get new business. Gathering involves selling to current clients and contacts of the company. Some companies differ the commission amount based on whether the client is new or existing and many don’t pay commissions for existing clients at all. Commissions may also be restricted to the initial sale to a new client or may include all sales to that client for the client’s life with the business or for a period of time. It’s clear that a sales person will respond differently to each of these commission models, so you must be sure that the incentive is tailored to the desired behavior and activities. Do you want the sales person out finding new clients? Is his or her role also to continue to foster and grow the account once it has signed on? Do these activities carry the same importance in your organization?
A thoughtful and thorough hiring process and incentives aligned with the business’ goals will increase your likelihood of success in hiring a sales person. Focus on hiring someone who has the propensity to succeed in sales and compensate in a way that drives them toward helping the business to achieve its goals.