In last month's column I gave a business owner advice on telling a long-time salesperson that they were going to hire a few new sales representatives. Now that the salesperson has been told about the new hires - and is willing to go along with the plan for the moment - here are some recommendations to work as a team to divide up the territory.
Discuss income first
Assure the salesperson that your decision to hire a few more salespeople has nothing to do with their total compensation (salary and commission) and that they will not take a cut in pay. Let them know that you have some ideas to help them increase, not decrease their income and that you'd like to focus on that.
When salespeople have a large territory with several plum accounts in it, they tend to spend a great deal of time on farming (account maintenance) as opposed to hunting (new account development). Let the salesperson know that you understand that prospecting was difficult with the geography they had to cover, and that with a smaller territory they will be able to do more prospecting. They might not perceive this as a plus, so you could, for instance, offer to pay a higher commission or bonus for any brand new business that they bring in.
There are other opportunities for additional income as well. Perhaps you can continue to pay the current salesperson commission on some of their old accounts for an interim period. It is sometimes easier to pay a double-commission during transitions than having a hard cut-off. Now that you will be managing a sales staff you can create a group bonus that rewards the whole team for hitting their goals - both monetary and non-monetary. This can be a great morale booster.
Let your salesperson make the initial attempt to divide the territory in a way that they deem fair. They may surprise you with what they are willing to give up, or they may disappoint you with what they insist on keeping - but either way let them go first. Listen to their reasons for doing it the way they did it. Keep an open mind. You might try the old "I cut, you choose" approach - as in the way kids divide a piece of cake. That way they will think the most fairly about dividing the territory.
After you consider what they have proposed, start to negotiate. Ask questions like, "Can you see what I'm saying from the perspective of a new hire? or "What would you do if you were me?" or "How would that jibe with my desire to grow the company?" Appeal to their general business intelligence and sense of fairness.
Bring up a hypothetical
If the discussions are going reasonably well but there are a few things they insist upon, you have to decide how important it is for you to retain them as an employee. If they are unreasonable about a few things, you may have to play hardball. Ask them something like, "If you do walk out tomorrow, what are the odds that you will be able to find an employer who lets retain all of your current accounts and gives you no territorial restrictions whatsoever?" Let them think about the long odds on that one.
This is not an annual review, so their strengths and weaknesses should not be discussed in depth. But be up front about any areas that you need them to focus on. Let them know, for example, if you need them to step up their new business activity or if there are certain geographical areas you want them to focus on. If it has been a long time since they've done any appreciable cold calling, offer to evaluate them and get them some training. Above all, assure them that if your business grows, they will benefit as well. This will reinforce how committed you are to both their career and your company's growth.
There are other things to consider. The decision to hire additional sales staff needs to be communicated to the entire company as it will be a change for all employees, a transition period needs to be defined, and the whole process needs to be monitored so that the current salesperson does not take advantage of the new sales representatives or continually try to renegotiate terms. I will write about these topics in greater detail in subsequent newsletters.
Are you in the position of having to downsize your sales staff? Is who to keep and who to let go a more difficult dilemma than you thought it would be? A salesforce evaluation can provide you with the kind of information you are looking for to make an informed and unbiased decision. Contact me if you would like to discuss your specific situation.
Though my clients come from many different industries, the challenges they face are similar. In "Sales Management Tips," I regularly answer questions that have been posed to me by my clients. I hope the answers will help you to solve some of the sales dilemmas you face in your own sales organizations. If you would like to ask a question, please contact me. The identity and affiliation of those submitting questions will be kept confidential.