Your outside commissioned sales force is established. They’re veterans, with a broad range of construction and product knowledge. But they still need a focus to keep them pointed in the correct direction to match company goals. Here’s what works for me, starting with a key preliminary step.
Before talking to the sales reps about goals, the management team must set the boundaries. In particular, the executives must decide:
What type of customer(s) will the company serve? Are they tract builders? Remodelers? DIYers? Commercial contractors?
What products will the company inventory? What will be outsourced? What won’t be offered at all?
What support services will the company provide to the reps and to customers? (Possibilities include inside sales support, estimators, Moffett delivery, installed sales, and help on slow payers.)
Once a clear understanding of what the company will provide and support is reached, it’s time to sit with each sales rep and discuss goals.
First communicate a benchmark of the sales dollar and the margin levels that successful reps are achieving within your company. All commissioned competitive sales reps want to keep score and be the best, so give them a target. It helps to know the same benchmarks at your competitors.
Second, compare the rep’s performance with that benchmark. If he or she is below the target, determine whether the rep needs to increase sales and/or margins. If that rep already meets the benchmark, discuss how to stretch to earn more and to protect against sales decreases should customers falter.
In either case, plan how to grow sales. A basic tenet is that it’s easiest to grow sales with existing customers. Are they buying every product your company supports?
If the sales rep is selling most products to most customers, it is time to add customers. Do this strategically. Look at the sales rep’s customer base: Does it have a good balance of all the customer types your company supports? If not, encourage the rep to diversify. If it makes the sales rep uncomfortable approaching or selling an unfamiliar customer type, you must help, either personally or by finding a mentor.
Fourth, if you want to sell a broad array of products to the same customer, keep the commission plan simple. Make it equally profitable to sell framing, windows, interior trim, roofing, and other diverse products. Keep the focus on selling all products, not cherry-picking the ones easiest to make a buck on or avoiding the less profitable products.
Also, a simple commission plan should be fair and consistent. If a rep makes a big sale and thus a big commission, great! Remember that to fully serve a customer there can be many small sales that take up a lot of time. A fair plan will even out the singles and home runs. And don’t cut commissions if sales are going well; it can be disconcerting to a commissioned sales rep to move the cheese.
Finally, forget about sticks and carrots. It goes against the simple commission structure and motivating reps to sell all possible products to a customer. Besides, if you have done a good job in the interviewing, testing, hiring, and training process, you will have chosen and groomed the right type of rep for your company.
Let your reps spread their wings. Be their partner and sounding board in the selling process, and enjoy their success. Don’t hire order takers. Hire professional sales reps.
David Luecke is vice president of sales and marketing at Forge Lumber, Erlanger, Ky. Contact him at email@example.com.