Ask HN: What's wrong with our sales team/strategy? | Hacker News Reader

Ask HN: What's wrong with our sales team/strategy?

21 pointscallmeed18 comments

My business partner and I are getting a little frustrated with our sales team, so I thought I'd ping HN for some advice/thoughts.

Our primary service provides websites and hosting for a niche industry. They are CMS-driven and we charge a setup fee and monthly hosting. Sales are good (growing since we started 5 years ago) and most online signups are finding us via organic search (we have good placement), referrals (we have a great CS rep) and a few targeted forum ads.

But we also have some sales reps that make commission and that's where we're at a loss. For the most part, they don't do any proactive sales (finding leads, cold/warm calling, etc.). Often, they will take a call (we do have a phone number), answer a very simple question in 10 seconds, and then demand a commission if that person signs up online 2 days later.

We've also had 2 sales people request commission on the same customer–both claiming to have answered questions for them.

We're not trying to put any blame on the sales team–we just have no idea how to structure this part of our business. We never gave it much thought before–but we're starting to feel like we're paying out money that 1) isn't earned and 2) could be used for more online ad buys.

How can we better structure/organize our sales team? Should they be required to log their calls daily? Should we force them to make sales over the phone? Should they use some sort of code when signing up?

Thanks

Commissions work only if they influence behavior in the way you want. In this case, you're paying the same percentage commission to your salespeople no matter if they answer an inbound lead or make an outbound call. It's thus rational for them to just focus on inbound leads, because the commission/ounce-of-effort ratio is so much better.

If you want to change their behavior, you need to do one of three things:

1. Require that salespeople hit certain targets/quotas for desired activities or their commissions get a haircut (e.g. you get 15% commission if you hit your target, 10% if you don't). Some possible targets:

* Make at least X outbound calls a week

* Close at least Y sales generated from outbound leads

2. Pay a lower commission for inbound leads and a higher rate for outbound leads. This will require policing so that salespeople don't mark inbound leads as outbound leads.

3. Stop using commissions as a stick/carrot and hire good self-motivated people, like you do for other departments. Here's a great article on that: http://www.inc.com/magazine/20030501/25416.html

P.S. Yes, all calls need to be logged for a commission to be paid. If you can't afford Salesforce or Netsuite, try Highrise. You need to be using a CRM anyway.

As the analogy goes - coffee is for closers.

Seriously consider getting someone with experience in sales to come and manage the team, and bring processes in.

A couple of thoughts: 1. Assign clients to your reps, so that they both don't service the same client.

2. Don't worry about paying commission on a sale that occurred 2 days after the phone call. It is likely the rep played a key role in them signing up, so they likely earned most if not all of the commission.

3. Consider increasing your commission rate and/or lowering your salary (if you are providing one). It seems to me that your reps are not terribly motivated. This lack of motivation can occur for a variety for a variety of reasons: role confusion and rule confusion (see #1 above), lack of financial incentive for new sales/commissions, too high of a base salary. Basically, you need to find the right level of giving them a solid enough base, but low enough for them to be really motivated to make new sales.

4. Add a bonus if certain sales goals are met.

5. Be generous - I've found that a number of startup folks under value the role of sales/marketing in a startup. If you have measurable sales goals and they are meeting those goals, then be generous.

Once a client signs-up with us, they generally start working with our CS people. We have a support ticket system and most customers use that ... the sales people are really not involved once we have the customer.

Take them off handling incoming calls for a week and put someone else on. See if your conversion rate from incoming calls changes and by how much. If it doesn't change, the person answering the phone does not need to be on commission.

You are thinking what I am thinking. The OP definitely gives off the vibe that he doesn't actually need a sales team (it sounds like their business comes through other channels and the sales team is acting like a customer service desk).

So it would be good to review whether that team is necessary, before spending much brain time revising their incentive structures.

That's fairly accurate ... we have a separate CS team but they are very busy answer client tickets. They don't really have time to answer pre-sales questions.

Does this mean we need a new CS person and no sales people?

You could add however many CS people you need to handle the extra load and then rotate some of them (not all may be suitable for this - pick the extroverts) into answering pre-sales inquiries, say one week out of four.

If I phone you already thinking I am interested in your product and talked to someone who sounded deeply knowledgeable about the service, this would increase my confidence level more than if I talked to a smooth-talker (obviously not knowing your niche this may not apply).

Fundamentally I think you need to listen in on some of the phone calls your sales people are taking. What are your customers looking for at that stage? Do they want to talk about pricing a lot? Do they want to discuss functionality or ask about future features?

Double-blind testing, I like.

Clarify the rules. If you value them a lot, negotiate with them. If you are frustrated with their lack of effort, then narrow the field by picking your best one, and letting the others go (or at least creating conditions favorable for that).

Half a year ago, Joel (now, don't downvote me for mentioning him ;)) had some sensible things to say on commissions : http://www.inc.com/magazine/20081001/how-hard-could-it-be-si...

I'm not sure if this article will help, but it may definitely make you aware of some possible problems with commissions.

First, make sure that their job function is clearly defined and understood by you and them. What are you paying them for? Do they handle any support, or are they only supposed to find new business? Depending on how big your operation is it might be helpful to hire a consultant or a friend who has experience with a sales force.

It sounds like there might be an economical solution. do you know how much a dollar of ads earns vs. a dollar of base + commission? You could be up front about these numbers with your sales team and say "Look, I could pay you guys $100 and expect $200 in sales, or I could spend $100 in ads and see $500 in sales," and use those numbers to structure performance reviews and establish sales quotas.

Much like the old motto that ideas are cheap, implementation is hard. The answer is simple, put the money(measure) on what you want done. The implementation is hard. Not being a guy with a sales team it is all arm chair from here.

You seem to want to push proactive sales so put the money there at the sign up add a how did you hear about us. If they indicate an advertisement then a sales men would have to show substantial effort on their part to claim commission. If they claim a salesmen then they automatically get commission. If they don't claim anything then salesmen can claim with some effort. If a salesmen pushes an ad then he gets reduced commission for everyone the ad brings in.

Yeah, I like the code idea.

Perhaps have the sales people give the customers a discount coupon identifier (5-10% or something) when they call. When the customer purchases, if they use the discount code, the sales person gets some part of the commission.

Not only does it help you track who got the commission, but it might increase conversions of people who are interested enough in the product to call you.

I think it can be fixed with a tiered commission structure. Pay X for sales that are made through cold calls etc. Pay X/5 for sales that are made from answering phone calls etc.

Hello from SalesBy5! "94% of all problems are due to systems not people" Demming. My suggestion is to have a code, process or log. Try anything and dot worry about failing just fail fast and fail cheap. I also suggest an open discussion with them, open blunt but respectful. chances are they are frustrated to and the answer is a meeting that has one objective: WIN WIN! If they are not trying to get new business they may not know how. Ask! Regards, ERIK

In the age of web based interactive permission direct response marketing... ...you know what I mean...

...sales people are best used for 2 kinds of products or services.

1. High priced stuff (were a comission makes more sense, also). For example: selling yachts. The website generates the leads and the sales clerk does what he should know best: closing the sale.

2. Upsells. This is for example a seminar to write better content for your new website. You could work together with good writers. The thing is: you new clients, you know they need a good content writer _now_. And this kind of now is the phase were good sales people excel in.

Salesfolk tend to be the most rational economic actors you can find. If a salesperson can make a reasonable living by just picking up the phone and signing somebody up, they're never going to do anything else. Why should they?

If you don't have an extensive sales cycle, there is zero reason why you need to pay commission.

If you want rainmakers, you've got to set up a sales incentive program that demands it, and then brutally winnow out those who don't make the grade. Otherwise, pay them a base salary and then a fixed bonus based on the entire group making quota. Brutal winnowing is still encouraged in this situation, to cut out the losers who aren't closing.

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