For as long as I’ve been in business, over 15 years now, it’s by far the most challenging problem a business faces as it gears up. Where do the extra sales come from? The answer is often getting a sales person, and typically a business will go through several of them, and spend a stack of cash over the first couple of years trying to get it right.
But apparently there IS a right way to do it, so this week I’ve been picking the brains of the greatest authority on the subject I’ve met, Steve Potts, and this is what I’ve discovered.
Hunter or Farmer – you’ve got to know the difference
A Hunter finds new business and open doors, whereas a Farmer account manages your existing customers and stops them falling out of the bottom of the bucket.
This is the key thing that most businesses get wrong – they are different people. It just won’t work if you want someone to do both roles.
What does a Hunter look like?
- Difficult animals to manage
- Most usually aged 25-35 (before they burn out!)
- Driven, very hungry and motivated to be successful
- Often don’t follow rules and processes
- They close on average 1 in 5 or 6 deals
- Because they have to handle a lot of rejection they are often full of bravado and over-confidence.
- They tend to move jobs every 2 to 3 years looking for a new challenge.
What does a Farmer look like?
- Farmers are more settled than hunters
- Usually older than hunters
- Will have a higher conversion rate as they’ll be selling to existing customers
- More likely to follow your processes
If you’re not completely sure which you need, draw up a job description of what you really need someone to do, and see which role fits.
By the way, a business owner tends to close 1 in 2 deals so think about how this could fit into your sales strategy. Perhaps a hunter to open the doors for you to close?
Finding them
Whichever route you use, agency or advertising, bear in mind 1 rule. CVs are a waste of time. They will only tell you what the applicant wants you to know – remember they are sales people!
Draw up your own application form with questions you want answering before you spend time interviewing anyone. If an agency won’t let you use your application form, find another agency. If they really want you to find the best person they won’t have a problem with this.
- You need to know if they know the difference between hunter and farmer, and which one are they?
- Always hold at least 2 interviews and get someone different to see them with you the second time. Take the time to get it right as the wrong sales person is expensive and exhausting to manage.
- You need to know if their values fit yours, as they’ll be representing you to the world. Dig this out in the interview.
- Ask them if they’ll bring their existing customers with them to you. If they say “yes” then you don’t want them. One day they’re going to steal your customers when they leave you.
- Set really clear expectations at the interview of what performance standards will be expected and how they’ll be managed. (more about this in a bit)
- Check their social media profiles – do you want them representing you?
Setting out the expectations
From day 1 a new sales person needs to know exactly where they stand, what “good” looks like and how they’ll be measured. This is the standard Steve gave me:
- In the first 4 to 6 weeks they should be learning your products, services and processes.
- By 3 months they should be opening doors and building their pipeline.
- By month 4 – 5 they should be covering their costs – remember this means the gross margin on their sales needs to cover their salary and any other costs.
- Within 6 months they should be breaking even, so the margin on their sales to date have covered their salary costs to date.
- Tell them you’ll be checking up on them and what thais means
If you have a Hunter, they’ll likely not be great at process but you need to keep them on a tight leash when they’re still proving themselves. The good ones will understand and be ok with this. Give them freedom to get on with it when you know you can trust them to hit targets.
What if they’re lying (or over-promising)?
A really common problem is how you’ll know if they’re telling you the truth about their prospects and pipeline. Many a cashflow crisis, and even business failure has been caused by sales people not delivering on their pipeline promises.
The answer is tight control, especially in those first few months, so you have to check up on them:
- Review their pipeline weekly, in detail
- Spot check their prospects – you’re looking to find out if they’re qualified, are they talking to the decision maker, have they presented a solution, has there been a negotiation?
- Look at their emails, phone records, mileage records to see if their activity stacks up with their pipeline.
And then Measure and Monitor
Sales KPIs are a must and you need to measure these on a regular basis:
- Closing ratio – for both hunter and farmer
- Average order time from enquiry to close
- Average order value
- Lead time to cash
- Average gross margin
- The profit of each sales person after their direct costs.
When they’re up and running, keep your hunters out selling and not processing orders in the office – keep them doing what they’re best at. If they’re brilliant at selling but rubbish at process, you can choose to turn a blind eye!
I’m hugely grateful to Steve for sharing his many years experience and expertise with us. I’ve definitely learned a lot that I wish I knew before and could have saved clients a lot of money and stress. Obviously we’ve only scratched the surface here so if you’d like to find the best ways to find and manage sales people, think about having a chat with Steve. Here’s his email address: Steve.Potts@transmentum.co.uk (link sends e-mail).
Steve, a huge thank you from me for such a great interview!