When does a salesperson become successful?

So you employ salespeople.

Whether you have one salesperson or one thousand - the requirement is simple, they need to be making you money. But how do you judge this?

Do you judge it on the performance of the last month, the last quarter, the last year, the ongoing orders from their initial sales or the back end value to your business?

This is a really tough but really important decision. If you employ salespeople or plan to then it is vital that you decide how to measure their success or failures.

I have worked with and for a number of businesses where their requirements of me were not clear. Would they prefer that I deliver ten clients a month who spend £1000 each or one client a year worth £300,000? The client who spends £1000 will be a significantly easier sale than the £300,000 spending client but what is better for your business? Lots of regular income that covers the costs of the salesperson each month or more income in large bursts but with the added cash-flow pressures of funding the salesperson while they try to win the larger deals?

It is really important that you do not become the employer that wants it all ways. It is perfectly possible to have a good mix of sales but if you are one of the 4.9 million small businesses in the UK it is unlikely that you will have a salesperson delivering twenty clients every month spending between £1000 and £300,000 anyway.

You need to decide what your ideal client is. Is it a client who makes just one large order or one that makes orders every month? Is monthly profit or back end value your primary objective? Can you achieve both? Are the skills of the salesperson suited to gaining your ideal client? Should your salespeople be focused on new business only or are they required to look after existing clients too? These are all questions that you must ask and answer before you employ salespeople as these issues will arise constantly and will cause confrontation.

I used to own a telecoms business. Before it was sold in 2012 we offered a huge range a products and services ranging from telephone lines and calls through to telephone systems and maintenance contracts and even with clearly defined responsibilities there were conflicts constantly from hungry salespeople chasing every deal they could. If a salesperson sold a telephone system to a new client all was simple but what if that client wanted to spend another £20,000 after two months? Who should run that sale? The original salesperson or the account management team that looked after the customer post sale? 

We in fact worked out that the initial sale was of little value to us so we rewarded the salespeople very well for the initial sale and we retained the benefit of forward business. The salesperson was happy with the lions share of the profit on the original deal whilst we wanted the long term value from the client and managed the relationship thereafter and paid the salesperson a token percentage of all future business - this worked well as they felt there were getting something for nothing.

Only once you have considered, planned through and communicated the criteria can you start to measure the success of your sales staff. If your business is based around a single sale to a single client then clearly performance is easy to assess. But if you get an initial order and then lots of regular orders or other elements of your business are able to cross-sell products into the same client then the ultimate value gained from the initial sale can be much harder to measure. This complication can be increased if there are other salespeople further down the line who are also making sales to the customer and need to have their success assessed.

Salespeople are very territorial and feel like they own every client they sell to and there are some arguments to back up why they should feel this way. They did, after all, win the client originally and could therefore argue they are best placed to manage all the needs of the client. But then what happens is that you can have salespeople doing very little work as they are able to earn significant income from the sales of their existing base and therefore new business can dry up.

It is a challenging problem for many businesses.

There is no right or wrong answer as every business is different but I think every decision you make in this regard should be solely based on what is right for your business. If you allow the decision to be clouded by the views of salespeople then you will regret it.

Of course you want to ensure people are rewarded for their performance but you pay commission for that. You do not pay commission to salespeople for them to demand anything beyond that reward. You need to make sure the targets of your salespeople relate to the needs of your business and then when targets are met you can be sure that your business objectives are also being met. This method will stop your salespeople making great money while your business is not progressing.

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