Sales & Service Company
This multi-generation company did between $5,000,000 and $10,000,000 in sales and had five salespeople. Actually, there were three salespeople when we started the project and two were in the process of being hired. In addition, there were outside sales reps and dealers (the reps sold on commission and the dealers bought and sold the company’s products). There was also a customer service department that was critical to ongoing relationships and repeat sales.
The sales manager, Bart, was a family member who had very little sales experience, very little business experience, and no management experience. Bart’s in-house sales team was in shambles. There was high turnover, lousy relationships, and absolutely no structure. Two major customers had “thrown them out.” One did so after the company president visited the customer in order to try and salvage the business.
By the time I arrived Bart had interviewed many salespeople and narrowed the field down to three. We reviewed resumes, interviewed all three again, and hired two new reps. For the first time in the company’s history, they hired the “best of the best” and paid a base salary twice what anyone else had ever received. This was a huge issue, created a whole new paradigm, and took extensive lobbying with the company president to get done.
We also changed the whole paradigm relating to territories, the selling of the product, and the related service, and we formulated and implemented a new compensation plan. Previously the salespeople could hit bonuses or commissions before the company was making profits on their sales.
We studied the salesperson’s duties and started delegating to lower-paid employees everything not directly related to sales (deliveries, pick-ups, etc.). Finally, the report structure was overhauled for both the salespeople and the sales manager. The new activity reports were easier to complete and provided more pertinent information that was easier to understand.
Within four months the company felt they were positioned well enough to expand into Portland (with another new salesperson). This was possible because by hiring higher quality people they got better results. Within this four-month time period, both new salespeople were “profitable,” meaning their commissions exceeded their base.
To summarize, the benefits include:
- New, dynamic sales people, of a much higher quality than the company currently had
- A compensation plan that rewarded success but didn’t penalize the company at the same time (the company was in profit before the salespeople were in commission over base)
- Sales territories that were efficient and made sense
- A system that could be easily replicated in other markets
- A much-improved attitude and culture especially in the sales department
Industrial Products & Parts
Ken owns a distribution and manufacturers rep firm that sells equipment and parts to large industrial companies. His products include filters for air, powders and liquids, pumps, mixers, strainers, and more. He was hit by inside and outside factors at the same time. This included events such as his top supplier merging with their competition and using the competition’s distributors. And because there wasn’t the pressure caused by the merger there wasn’t a culture of aggressive sales and marketing. This left him in a lurch. Sales were down, morale was down and profits were non-existent. As always, the first step was to research and analyze the situation.
Exact sales duties for inside and outside salespeople were defined. As inventory was too high, we instituted marketing and sales strategies to sell from stock (even at reduced prices, to free cash) and inventory was quickly reduced by one-third. We targeted the markets and customers to approach, determined which products had the best future and highest margins, and did our best to reduce expenses without hurting results or morale.
Some of what we did was hard work and took some creative ideas. Some was basic common sense. For example, Ken put in a “Quota buster” program for his employees. Every month they hit their quota on orders the employees got a cash bonus. It wasn’t much, $50-$100 per employee. And it got results.
The employees understood there was regular urgency and a small cash bonus was a lot more effective than a larger contribution to their retirement plan. In fact, it was more effective than a larger bonus on their paychecks. Cash truly does talk.
Within one year the company went from a six-figure loss to almost a six-figure profit.