There have always been two types of candidates to populate a sales force; experienced and inexperienced candidates. This article explores the reasons why a company would choose one over the other.
Interestingly, the industries most likely to repeatedly choose inexperienced salespeople – usually recent graduates, moms returning to the work force, and recently laid-off employees – are also the high turnover industries, including Insurance, Real Estate, Telecommunications, Copiers, and Direct Sales. The latter includes legendary businesses like encyclopedias, vacuum cleaners, knives, and cookware.
Why do companies choose to hire inexperienced salespeople? Most of these businesses compensate their salespeople with either straight commission or programs heavily weighted toward commission. As a result of the high turnover, they are constantly hiring large numbers of salespeople with the knowledge that only 5-20% of them may stick. They don’t invest in developing these people either, further increasing the odds that these inexperienced salespeople will turnover. The net result is that their new salespeople don’t cost much, but the companies begin their recruiting process over again every single week and make little progress in developing their sales forces.
These companies should consider the beliefs that cause the repeated turnover. In my opinion, the following 5 problems are to blame:
1. Acceptance – They are guilty of believing and saying “that’s the way it is in our industry” as a primary excuse for the high turnover. The excuse making has to stop before anything can change.
2. Compensation – How many managers are paid bonuses, based not on the effectiveness of their people, but on the number of bodies in their employ? This just perpetuates a bad model. To compensate for the lack of candidates who are retained and who succeed, they make sure the managers go out and hire more of the wrong people! Even power in numbers can’t make that model work.
3. The Candidate Pool – This is populated mostly by recent graduates. They may not cost very much but they don’t generate much revenue either. And those who stick it out may take months to generate meaningful revenue. What would happen if you paid more money for candidates that had better odds of success and were more likely to succeed quickly?
4. Selection Process – In these industries the candidate only needs to pass the stethoscope test. Why select a candidate if there’s little chance of success? If they were more realistic about who had enough desire and commitment to overcome the adversity they would face, and who had the strengths to neutralize rejection, resistance, competition, fear, pressure, stalls, objections and put-offs, they would be far more successful, a lot more often.
5. Development – All the development in the world (coaching, training, mentoring, and practicing) along with all the pressure to produce, has no impact if they’ve selected the wrong people. On the other hand, even if they have selected the right people, unless their development is consistent, comprehensive, powerful and effective, the new salespeople will still fail. They must prepare your new salespeople for success rather than allow them to flounder so they can fail.
Most of the companies in these industries make money despite it all. But can they change? No, industries don’t change. Individuals must change, one at a time, until there is a critical mass of early adopters. At some point in time, the people who enter sales management will come pre-wired for the new model, at which time the industry will have already changed. If they change, have success, talk about it with their colleagues and they tell somebody and they tell somebody, well, you know how that works.
It’s not difficult to make these changes. It’s fairly simple to do things the right way when you’re empowering and compensating managers to do it the right way. You can’t say, “OK, from now on we’re going to do it the new way”, but not do away with the “minimum body count” rule. Either you run for second base or you stay nice and safe on first. You may not score from first, but at least you’re playing the game. If you want to know what’s really hard, it’s recruiting the way these industries have been doing for years. They start their businesses over every day, repeating recruiting rituals that hardly ever work. That’s hard.
There is no hope until they stop expecting different results from doing what they have always done.