Finally, after completing an exhaustive process of interviewing, testing, checking references, re-interviewing, background checking, salary and compensation negotiating and more, you have hired what you hope to be your next sales superstar. Now what do you do?
The first week is easy. He or she goes through the normal new hire process of completing paperwork, making the rounds to meet people, receiving some basic company orientation and so on. Then it’s typical for the new territory manager to ride along on calls with other territory managers to observe and discuss what they do. Seems about right? After all, you, as the manager, don’t have the time to introduce him to dozens of accounts you barely know. This is what you have done in the past and it has seemingly worked out okay.
Something often overlooked is the importance of establishing appropriate goals right at the start and making sure the new territory manager understands how his compensation is the result of meeting and exceeding his goals.
A potential problem with this approach is that the new person often picks up as many bad habits as good ones. Since management isn’t participating or usually even debriefing after these calls there is little direction and coaching for the new territory manager at a time when it is the most important. This is a formative time where information is gathered, judgments are formed, behaviors are patterned and future results are determined. Not only should it be managed, there should be a prescribed training and coaching process that is designed and proven to produce the long-term results you expect and need.
Also, something often overlooked is the importance of establishing appropriate goals right at the start and making sure the new territory manager understands how his compensation is the result of meeting and exceeding his goals. The territory manager position is usually a combination of salary plus commission or incentive based on sales or profit margin, or both.
Most new hires are eager to meet customers and immediately prove their worth by providing excellent service. After a few months, she may find that all of that hustling around taking care of every request produced a lot of smiles, but little income. There has to be a balance between the two or, more accurately, there has to be an intention by the territory manager to tie service into receiving business commitments. This is something that is learned and requires some skills to create with demanding customers. Now is the time to develop this thinking and capability.
One proven strategy is to include a transition period of up to three months where the new territory manager is compensated solely with salary before shifting to the commission plan.
One proven strategy is to include a transition period of up to three months where the new territory manager is compensated solely with salary before shifting to the commission plan. Each month the territory manager should be shown what her commission would have been, so she is fully prepared when that shift is made. By the end of the transition period, she will have had enough time and experience to see the value of focusing her time and efforts on accounts that have potential and probability for results.
The accounts that make up the territory are worth considering. To justify the cost of a territory manager, a territory will have annual volume of $2-$5 million spread among 50 to 80 accounts or more. The time-proven Pareto Principle holds up with 10 percent to 20 percent of the accounts producing 70 percent to 80 percent of total territory revenue. Even if the territory is expanded out of others that are overloaded, there will be a few accounts with significant volume that need regular attention. The wisest of contractors will recognize that this as an opportunity to get as much service and support out of the “new territory manager” as they can.
This is fine as long as there are adequate sales and profits to justify the time investment, but often this is not the case. Some large-volume accounts come with low profit margins and slow or no growth potential. The territory manager must be coached on how to determine potential and probability and how to allocate time and effort where there is a fair return.
The best way to get a new territory manager started, whether it’s an expansion territory that may have had poor account coverage in the past or taking over a territory from a territory manager who has moved on, is with a formal account analysis.
The best way to get a new territory manager started, whether it’s an expansion territory that may have had poor account coverage in the past or taking over a territory from a territory manager who has moved on, is with a formal account analysis. This is not just a statistics gathering exercise; it is a guided questioning process that will give the territory manager a roadmap to follow, helping him build confidence with his new clients. It will also impress the customer that he is taking time to learn about his company, his goals and his growth plans. The account analysis call is arguably the most important call of all and is the foundation of the Proposition Selling process I have been writing about.
During these first few months, the sales manager should be reviewing the account analysis results with the territory manager at least weekly. When clear opportunities show up, and some will, a ride-along coaching call should be scheduled while the opportunity is fresh. During the coaching call, the manager should refrain as much as possible from engaging the customer, giving the new territory manager the opportunity to practice and learn. All of this must be discussed and agreed upon ahead of time; otherwise it can be very awkward and confusing when the manager starts taking over the call.
Tom Piscitelli is the founder and principal of T.R.U.S.T. Training and Coaching, www.sellingtrust.com. For nearly 40 years, he has worked with contractors, distributors and manufacturers with a focus on increasing sales via effective customer relationships. Tom's new book, co-authored with John Sedgwick, "Proposition Selling: How to Create Extraordinary Success in Business to Business Sales," is available to purchase. Contact Tom at [email protected].