Selling is a tricky and difficult activity for most of us. I am currently participating in a sales training program with Seica Systems through BizEnrich and am learning a lot about the process of selling and, more importantly, the process of buying. As owners, we are a key factor in the “selling” part of the business but often don’t classify ourselves as “salespeople” – yet we are salespeople. In addition to the owner, though, the business has a sales force. The sales force may be individuals whose specific jobs are to sell the products and services of the company or they might be the professionals performing the services who also have a role in selling. Different structures exist to drive sales in a business and different tools are needed for them to be effective.
When planning for a sales force in your business, you must think about the products and services to be sold and the customers who are buying them. On the products and services side, the cost and complexity of the products and services play a role in how they are sold. In addition, customers buy from people they trust. The sales team must not only know the product but promise what they can deliver and deliver what they promise. These factors frame the structure of your sales force.
Employees. When your sales force is comprised of employees, a company must implement formal hiring practices which include a job description, performance expectations, policies and procedures, and “restrictive covenants” to protect the company during and after the employment term. These documents serve to set expectations about the company’s culture and relationship with its employees, vendors and customers. The implementation of formality and structure in the hiring process and communicating critical information to employees sets the tone for employees.
Employees may be dedicated salespeople whose primary job is to sell the company’s products and services. Compensation for these employees is often part salary and part commission. Regardless of the structure, the employee must earn at least minimum wage for the hours worked. Companies should clearly document the compensation package and maintain records of sales and commissions. Commissioned salespeople are typically exempt from overtime.
Employees whose sales role is ancillary to their primary job are typically hourly or salaried at rates above minimum wage. If these employees sell products or services in addition to their other role, compensation for selling takes a variety of forms. The sales compensation may be a commission or a bonus. In addition, the company could choose not to compensate for sales activities at all.
Contractors. Many companies opt to use an independent sales representative to sell their products and services. The sales representative is typically an independent contractor and often paid almost entirely on a commission basis. In taking this approach, the company must be aware of the state and federal regulations defining “independent contractor” status and be sure that the sales rep is treated as a contractor. For example, the sales rep must have a business license which files its own taxes, must serve other clients besides the company, and must not be controlled by the company in how he or she performs the work.
As Dave Mantel of Seica Systems tells us in class each week, “People want to buy; they don’t want to be sold to.” The structure and incentives of your sales force may influence their actions, set the tone of trustworthiness with customers, and ultimately impact the buying decision.