What is the cost of under managing sales?
Many organizations solve their sales problems by simply hiring a salesperson. Having a sales staff is certainly a quick way to start to generate more business by having individuals that are solely focused on that goal. However, if you do not have a vertical sales management structure, it is not always the most cost-effective way to generate revenue.
There are hard and soft costs to having a salesforce that is not properly managed.
1. Headaches – If you have a sales function, you will eventually have issues and need some management. Without a solid sales manager, these management headaches usually get bumped up to the CEO. Salespeople are a unique breed and need to be managed by someone who understands the day-to-day rigors of sales and motivating sales performance.
2. Turnover – With no one to mentor or manage salespeople, issues will fester until eventually someone quits. Turnover costs money. Lost revenue due to lost sales and the hard dollar costs of recruiting, hiring, and training new people.
3. Staff under-performance – You know the old saying, “What gets managed gets done.” Well, if nothing is getting managed, nothing is getting done (at least on some fronts). Part of sales management is knowing the numbers since sales is a numbers game. If you know the numbers (if you do not, then you have another issue), then you know that a small increase in closing percentage or proposal activity can have a huge impact on revenue. Every small piece of the puzzle matters a great deal.
4. Fall behind trends -The market, technology, sales techniques, and the competition all are intricately linked and the landscape changes drastically and quickly. The sales team is hyper focused on each individual prospect and it is the sales managers role to monitor the overall market and keep the sales team focused. Missing out on a first mover advantage or getting significantly behind a trend can really cost you.
5. Holes in the sales process never get fixed – Great sales process is the hallmark of great sales organizations. A great sales process is fluid though. It is not constructed and then left alone for eternity. It must constantly adapt with the tide and address any holes. The sales manager is responsible for keeping the selling process finely- tuned. Paying a team of salespeople to use a half- broken process is like asking the mechanic to fix your car with broken tools.
6. Can only hire experienced (and expensive) salespeople – Great salespeople are expensive to hire. Someone who already understands sales, has their own successful sales process, and does not need a lot of direction and training is already earning a good salary. It would be expensive to lure them into your organization. Most companies are forced to inexperienced future star and train them. However, most organizations in need of sales assistance do not already have either a mentor or dedicated training program to put the new hire on a path for short- and long-term success. Having an experienced sales professional assigned to mentor new hires takes them away from generating their own revenue and since they are not commissioned on mentoring, usually does not get an all-in mentality. A sales manager is solely focused on the development of the sales talent regardless of where they are in their career.
7. Complacency – You cannot fight human nature. With no sales management in place, the seasoned veterans tend to get set in their ways and find the path of least resistance to maintain the status quo and lack the energy to continually push the ceiling to new heights. A sales manager continues to set the goals and move the yardsticks down the field, so a complacency plateau is never created.
8. Resource Whack A Mole – Problems that would normally be solved by a sales manager are going to pop up. It will happen. Not having the dedicated resource to solve that problem does not mean it gets ignored. It means that a different resource, normally dedicated to something else is going to have address that problem with time, energy and maybe money. This means that other problems are popping up and temporarily being ignored. You are simply whacking the biggest problems that pop up and moving around the board instead of trying to prevent the moles from popping up at all.
The moral of the story is that even though there is a cost associated with having a sales manager, there is usually a larger cost to not having a sales manager. One solution is a fractional sales manager that brings organizations a sales manger solution at a fraction of the cost.