Building a Successful Sales Team
Updated: Jan 24, 2020
In my travels throughout the country there is one request that I get more than any other; “Can you help me find and keep good sales reps?” As a matter of fact, when we survey dealers this comes out as the top condition holding back dealership growth. I constantly hear the frustrations owners have after they have hired a rep from another dealership and then realize he wasn’t as good as he seemed in the beginning. I’ve also had similar stories about hiring rookie reps only to have them get disillusioned and leave after you’ve invested countless hours training them Those of us who have been in this industry for any length of time know how much money sales reps can make. Six figure earnings are quite common. So how do you get a team full of producers?
Hiring sales reps from other dealerships rarely works. In this scenario you usually must guarantee substantial income and quickly realize why they were leaving the dealership they were at beforehand. The problem here is two-fold. First if they are a strong rep, why are they leaving their current employer? Strong reps usually inherit the best accounts over time and wouldn’t consider leaving this lucrative base. The second problem is one of human nature. When you reward someone with large guaranteed earnings regardless of sales production you WILL get little or no production. In the Hubbard™ Management System, developed by world acclaimed author and administrator L. Ron Hubbard, this is referred to as rewarding a downstat. By downstat is meant someone whose production (as measured by statistics like dollars sold) is not rising. It works like a welfare system; pay people for not producing anything and their production drops, or in the case of the new sales rep production never starts.
On the other hand, many dealers go the route of hiring rookie reps and training them. The problem that they often face is keeping the rep excited and “winning” as they learn the business. New reps often get discouraged as they see senior reps closing sales and try to compare their own sales production to this team of seasoned reps. When this goes on for a few months the outcome too often is a new rep that leaves for the false promises of a pharmaceutical sales job or some other “easier” sale.
So how do you break this cycle? One very workable solution that’s common in the business systems market is to create a different atmosphere and a career path for new sales reps in your dealership. New reps start out as junior sales reps sharing a territory with a senior rep. Their job for the first three to six months is to learn your dealership, prospecting skills, sales skills and product knowledge. The junior rep is charged with prospecting in the territory shared with a senior rep. Their focus is calling on new accounts only. When they uncover sales opportunities for low-end systems, they work these deals with the sales manager and keep the sales themselves. When they uncover opportunities for large sales, they work these with the senior rep and the two of them split the commission. Commissions can be split 50/50 or any other way that works for your team.
The key to success with this first stage is to measure and reward the junior rep’s production based on the sales prospecting and skills development activities more than on sales volume. This can be done by tracking their sales activities and providing skills and knowledge tests along the way. If you need to offer a guaranteed income when hiring a new rep, the best method is to give a standard salary and meet the needed income level with a draw against commission. For the first few months the draw can be monitored against prospecting activities. To do this you would set up weekly activity targets that must be met. A common way of doing this is to assign point values to each activity and require a certain number of points per week. The rep’s draw would be contingent on achieving the points quota. If a rep is 50% of their points quota, they get 50% of the draw. This will allows you to reward production and quickly determine if this new rep is going to have the work ethic required to succeed. It’s amazing how quickly a lazy rep will be identified with this system.
The junior rep would remain in this position until they have met certain criteria that you’ve determined in advance. For example, once the rep can schedule at least eight appointments per week for three straight weeks, has met the weekly points target for three straight weeks and passed the product and skills tests you’ve designed they are ready for a promotion. This takes the guesswork out of the timing for everyone.
Once the junior rep has met the above promotion criteria its time to take the next step. They are now assigned a territory or a portion of a territory and moved to the position of associate rep for another three to six months. During this time, they are placed on a compensation plan that puts more focus on personal sales while keeping attention on prospecting activities. The associate rep is typically still charged with calling on new accounts only. Current customers in the territory would reside with a senior rep. However, every opportunity they uncover is theirs to work and they receive full commission. The sales manager spends a lot of time with the associate rep coaching him and building his skills.
The territory assigned can be one that the rep will eventually take on permanently or it can be a temporary one. The benefit of having the rep start in the territory that they will eventually keep is that they will be building momentum with their prospecting activities. The benefit to using another territory is that you can have the rep work an area that is convenient for the manager or one that doesn’t have as much long-term potential. Either option can work. An associate rep would be assigned sales quota on a ramped-up schedule. For example, they could be assigned a quota of $10,000 the first month and increase in $10,000 increments for the next two months. Once the rep has met the quota for three straight months, they would be promoted to account executive status.
At this point the rep is promoted to account executive and placed on the corresponding compensation plan. Compensation plans here run the gamut but should be designed to reward sales production. The plan can be anything from straight commission to a blend of salary, commission and benefits such as travel allowances. The account executive would be assigned a permanent territory and current accounts to work. Reps very often will remain at this level for the rest of their tenure with the dealership. However, if a rep shows the desire and ability to take on more responsibility then the next step would be the senior rep program. This is where they now have a junior rep working in their territory per the above junior rep plan. The senior rep focuses most of his time on current customers, referrals and leads while helping develop the junior rep. His compensation is still focused on sales production, however, there can be an additional element to the compensation plan rewarding him for working with the junior rep. If the senior rep excels with this program you may have your next sales manager.
The most important thing to remember is that each step of the sales development process is different. Make sure that you have a system in place to reward the expected production at each phase and keep in mind that it isn’t always dollars sold. By outlining a path of sale rep development, you create an environment where newer reps can be recognized and rewarded for their production as they learn the business. They will know what is expected of them and what they must do in order to advance to the next level. You’ll be amazed when you see how excited a rep gets when he has met the criteria for promotion to the next level. You’ll also be amazed when you see the impact on your dealership sales once this program is up and running. If you have questions as you implement this program, please don’t hesitate to call on us. Good luck and good selling.
Learn more at our next webinar - Thursday, May 23, 2019 at 2 pm Eastern.
Reach Jim Kahrs by email at firstname.lastname@example.org or phone 631.382.7762.