Who are the best salespeople? Owners. And what do owners like to do when their business grows? Hire salespeople. And thats where the problems start.
The custom installation sales process can be broken down into three significant parts. Lead generation, sales administration and the act of selling. Lead generation includes all the activities a salesperson might undertake to find customersfrom organizing formal presentations for architects and designers, to cold-calling custom builders. Sales administration is the detail work associated with setting up a sales call, doing the follow-up, and making sure the salespersons time is optimized. The act of selling is self-evident.
Quite often, the CI salesperson is also involved with project management. I define project management as any part of the process from proposal generation through managing the install team.
Heres a typical growth pattern for a young CI company. The company is founded with a few key players. The owner (or partner) is the salesperson. The company has one or two techs. Theres another individual (employee, partner, spouse) who runs the day-to-day side of the business. No project managers are needed at this point in the companys life.
Sales reach $1m and the owner/salesperson is jamming all day long. Hes finding the leads, making the sales calls, writing the proposals, and closing the sales. Hes involved in project management and scheduling. At some point in this development he may ask a lead installer to step in and take over a portion of the project management responsibilities.
With the lead tech taking on more managerial chores, the owner hires additional techs to fill the gap and handle the increased work volume. Life is good.
As the company continues to grow, the owner/salesperson realizes he cant follow up on all the leads and referrals. Plus, he stops doing any lead generation or marketing due to lack of time. In short, hes becoming less effective as a salesperson. The typical solution? Hire an outside salesperson to pick up the slack.
Here are two possible outcomes from hiring this salesperson:
Scenario 1: Time goes by, and the owner realizes the new salesperson isnt pulling his own weight. In fact, the new guy is selling less than 25 percent of what the owner sells. There are several reasons for this. The most obvious is the new sales guy just isnt any good. Lets face it; it takes quite a bit of skill to be a successful salesperson in this industry. Just as likely, the new sales guy is tossed headfirst into the fire with little training, guidance or supervision from the owner, The owner usually figures, “Hey, how hard could it be? He just needs to get out there and make some presentations.” Not so easy. If the new sales guy were such a great self-starter, chances are hed have his own CI business. But this individual chose to be an employee, signaling his need for supervision. Most owner/salespeople dont have the time, skills or cash to train a new salesperson, so the experiment goes poorly.
If the new guy is on commission, he gives up in frustration after a year. If hes on salary, hes fired for underperforming. In any case, his presence is a distraction and an expense to the company.
Scenario 2: The new sales guy is a superstar. He pulls in big business, makes big money, and has the ego to support it all. He starts treating the company like his own fiefdom, changing business processes, product mixes and personnel to suit his needs. And when he doesnt get his own way, he jumps up and down and squeaks until he get what he wants. Or, leaves the company altogether, either to start his own CI business or to park “his” business at a competitive operation. Either way, the superstar is dangerous for the CI company. The ride is exhilarating while hes there, but the long-term impact on the business is dangerous.
Instead of hiring a salesperson, the owner could increase his support staff, concentrate on the “sales” end of the selling process, and delegate the other sales related responsibilities. By looking at the four segments of the selling process and choosing to concentrate on the most important taskmaking the salethe owner can increase the companys revenue substantially.
To increase his support staff, the owner should start by hiring a dedicated project manager who creates proposals, hands them over to be “sold,” then manages the project through completion. It means finding a person dedicated to lead generation to plan the architect gatherings and send literature to custom builders. It means having a third person in-house to help with sales administration.
In my experience, Ive seen owner/salespeople capable of selling (thats pure selling) up to $6m per year. Ive seen project managers handle about $2m per year. Lead-generation people can pull in about $3m worth of good leads. Sales administrators can handle about $2m worth of business. Given these numbers, a $1m CI business that wants to grow to the next level might consider the following full-time staff: one salesperson (the owner) one project manager, and one person handling both lead generation and sales. With this level of staffing in place, the owner can concentrate on the selling process and very likely double his sales. Of course, this “sales team” requires management and supervisionthe role of the owner.
This is not to imply that ever hiring a salesperson is a mistake. There are plenty of situations where a hired salesperson makes sense. Heres one: when the owner of a CI business is not a great salesperson, and spends more time on another aspect of the business, like overall management. Another is when the business has a retail presence. In these cases, extra salespeople are a must. Plus, there are cases when a CI business has such a broad range of offeringsselling entry-level systems all the way to million dollar automation jobsthat segmenting the offerings into price points and finding appropriate salespeople for each segment makes sense. However, in the cases where a CI company is owned by a salesperson and the company focuses on a narrow price range, hiring sales support staff makes more sense than hiring additional salespeople.