Nothing Happens Until Something Is Sold
It’s so true that nothing happens until something is sold. The question that we like to ask small business owners is “what are you doing to support sales and getting it done”? Let’s focus on the sales effort and provide a few basic rules that will provide success (we discuss this more in the article Pricing for Profit). But before we get into the how to do it, let’s outline the key factors:
- The Importance of Sales
- Ground Rules Need to Be Set
- Keys to Success
- Recognize the Success of Your Sales Team
- Enjoy the Results
1. The Importance of Sales
It’s the result of an effective business plan: sales. Without sales, you have no revenue. Without revenue, you have no business. So, how do we create a successful sales program? We’ve talked about having many sales programs, all of which are producing a positive result and I stand on that. You should have as many different sales efforts as you can.
But I want to look at one in particular which almost universally occurs and that’s direct sales: Going out and selling. Let’s start at the top. First of all, you must have a direct sales program. You need to have direct sales no matter what it is you’re doing. What is direct sales? Direct sales means you’re implementing a strategy that asks somebody to buy, typically done through salespeople, if it’s B to B.
With retail, it’s done by website advertising and marketing. With B to B, it’s wholesale and typically done by telephone, which is fine, or in person (that’s expensive but best): putting a man or woman on the road to knock on doors to go see people to create appointments, etc. It’s the most powerful, vibrant sales effort of all of them.
Telemarketing is just short of that. It allows you to reach more people with less money and talk to far more than you can on a personal basis but it’s also less effective.
For the purpose of this article, let’s focus on the direct sales efforts by sales forces, perhaps the most vital and important part of so many sales activities. Here are some ground rules on how to make it most successful:
2. Ground Rules
The owner of the company must be involved in sales. You can’t just sit back and delegate to your sales department. Your business exudes your essence. It’s your:
- Guarantee, and
The company typically revolves around the owner, the face of the company. That person, man or woman, must be involved in sales — in the biggest, best and most important sales –because you carry the weight of the company. You are the company. It’s your word and your commitment and the gleam in your eyes, the passion in your voice that supports the sales of your company. No one can produce that better than the owner. If the owner is not involved in sales, you’re making a big mistake.
The owner should be involved in sales, specifically the biggest and best sales of all. If you have a sales department, doing it in tandem is wonderful. Join your salespeople, make the presentation together – your team’s passion will shine.
If you’re using brokers, which many of you are, brokers are a wonderful way to have a dedicated sales force without paying for it weekly (you pay a commission). But getting brokers to successfully work is a small miracle. To support a broker to deliver successful sales, get on a plane, fly out there, spend a day or two with the broker visiting his/her key accounts. A very interesting dynamic happens.
The broker is selling other products as well but he has created a long-term relationship with the owners of the various businesses that he services. Why? Because he’s representing key products that they need so they have an ongoing relationship. So if you show up predetermined with an appointment with the broker at the doorstep of the distributor that that broker is representing, a couple things are going to happen.
Certainly, the distributor will greet his friendly broker with open arms. He/she wants the broker to succeed, and the broker is honored that you’re actually showing up. So there’s a good amount of pressure to give the broker the sale. Honor his/her showing up.
You as the manufacturer, you want to show up with a special deal, a better deal than the broker. You’re doing your job, the broker is picking you up at the airport, schmoozing, shaking hands, and showing goodwill. The client wants to make an order to make the broker look good and honor the distributor showing up. The manufacturer can push a little bit harder because it’s his product and at the end of the day, you cracked the door of a major client by going there and doing it with your broker.
Back to your in-house sales department…There are some classic mistakes and some classic rules. First of all, you’re probably paying a salary to your salespeople that’s way too much. You’re giving the broker 80 or 90 percent of their weekly take and your commission is only five or 10 percent of their weekly compensation, maybe less. Well, that doesn’t work!
Think about it: If a salesperson is getting 80 to 90 percent of his/her revenue as a salary, why bother to sell? There’s no incentive. They may be thinking:
“I’m not going to get that much more. I get enough money from my salary. I can be lazy. I have no pressure. I’m taking orders, and I’m not selling anything. There’s no pressure here. Just service the old clients!”
New business? Now that’s hard work.
3. Keys to Success
For a sales program to work, the paycheck has to be half or less than what he’s going to earn that week. I like 25 percent or how about no percent: You earn your commission. You pay him/her a large commission because you’re not paying him/her a substantial paycheck and he’s beating the doors down. He’s aggressive and hungry. He needs to earn a commission because the paycheck is limited.
Here’s the magic: you give him the biggest commission on new business. On repeat business, you give him a little commission, a taste if you will. If you’re giving 10 percent on new orders, give two percent on reorders. They can’t live on reorders, they need new business. If you skew the commission heavily on new business and very light in existing business, you will get the results you want: A lot more new business. Follow that and you will win.
Sales people will do anything to get a sale. They’ll:
- Cut prices
- Allow clients to cherry pick the good items
- Allow short shipments
- Give away shipping
- Do anything they can to get an order, including wiping out the company’s
This must be carefully watched. When there’s a sale and they just order the sale items, that’s not any good. The sale is an incentive for them to order bigger or more, opening up the door for a sale. If they just order that sale item, the sale served no purpose. In fact, it served a negative purpose. You lost money. You gave away money and got nothing in return because you paid him a commission for that.
You must have rules around your sales force to maximize your gross revenue and your success of the program.
If you want to give a special discount, they must either order much more than they normally order or have to open the invoice to many more products or else they’re not getting the special. If they order less than the minimum, you don’t pay shipping. You have to make money or you lose money. It’s simple. If you have a minimum, then hold the minimum. Hold them, control them.
When a client fails to pay in Net 30, there has to be communication from your accounting department. You’re not going to ship your customer any more goods until the open invoice is paid. Sales people will sell over an unpaid invoice all day long. Absolutely not. You don’t ship again until you get paid for what’s owed.
4. Recognize the Success of Your Sales Team
If you have more than one salesperson, recognize his/her success, applaud big sales, celebrate quotas, be free with bonuses when they succeed, and support good habits. Likewise, when they don’t succeed, it’s not a matter of beating them with a stick. It’s sitting down with them to find out what they need to succeed. What can we do that can induce more sales and that doesn’t destroy profit? You’ll determine that client by client, product by product. You’ll find ways, whether through educational programs or extras to help them stimulate sales.
You’re always looking to have your salespeople get their B to B clients to promote your product. Here are some ideas:
- Give them a sell sheet that has their information on it so that it promotes
the distributor as well as the company
- Prepare for them
- Give them materials about your products or industry that they can promote
It’s about getting them to promote your products. That’s where more success will occur. You’ve got to promote it locally, in the store, B to B, using sales skills and offering cost-efficient marketing tools that can be utilized to develop revenue by more successfully selling your product.
5. Enjoy the Results
Follow these rules and your dedicated sales force will produce results. When your salespeople stop selling, get rid of them. If you can’t turn them around through inspiring them and supporting them, get new ones. I would much prefer to rehabilitate but it’s a tried and true fact that salespeople lose their edge and sometimes stop selling. Create a good sales force. Inspire them to go out and sell and pay them for success.