Good leaders must be good followers.  That is paradoxical, isn’t it?  This article from CNNMoney.com chronicles an M.B.A. students journeys from grad school to the Marines to a tour of duty in Iraq and back to grad school.  It is a fascinating first-hand account (h/t to JustSell.com).

This is profound (emphasis mine):

In many ways there’s probably no better preparation I could have had for the business world than joining the Marine Corps. The Marines teach you how to be both a leader and a follower.

I don’t have to lead in every situation – but I’ve come to enjoy stepping up in a time of chaos. When I’m working with a group now, I can honestly say that I think about the team first. The “I first” approach has been drilled out of me.

Therein lies a common problem I encounter with business leaders – they are not good followers.  Leadership has a way of removing empathy over time.  Some leaders forget what they personally experienced when they were in follower positions.  Other leaders develop what I refer to as “god complexes” where they believe they are all-knowing.  Usually they are not, but you can’t illustrate that point to them.

For instance, I know of one business owner who is a subject-matter expert in his field.  Unfortunately, that field is not a business field.  However, he believes his subject-matter expertise transcends the subject into business management.  His employees, some of whom do have business expertise, attempt to contribute to him in these areas.  He will not receive the input.  Instead he forges on making independent decisions that have cost the business dearly.

If you read the entire article you will see a unique process, employed by the Marines, to teach team-building amongst leaders.  The best sales leaders I have encountered are the ones who know how to empower their employees, direct through difficult situations and make the tough decisions at critical junctures.

That last sentence sounds trite, but it is true.  The gist of it is the opening sentence of this post – good leaders must be good followers.

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I’ve come across two different instances of a nefarious sales trick that is reviving itself in the telecommuting era.  Two different customers recently shared accounts of salespeople who were on their payroll and the payroll of another company.  This stickler is that they were allegedly full-time employees for both companies.

In one instance, the salesperson was on the West coast while headquarters was back in the East.  This guy set up a small office in an office building and had a slider sign on the door.  He would simply slide it to reveal the company he was representing that day for that appointment.  He also had a company car from both companies.

Outside of the healthy paychecks, it appears this guy was submitting expenses to both companies also.  Double reimbursement!  What a snake.

The other customer has a woman who works for them on a part-time basis which worked out well for them.  Unfortunately, another company was paying her full-time as she was working at home for them.  She would be at the part-time job in for half of the day while she was “on the clock” for the other company.  True double-dippin’.  In the end it evened out as the full-time employer found her work lacking (imagine that) and ended up letting her go.

Workers of this integrity are the ones who make managers uncomfortable with telecommuting.  There is no denying the telecommuting trend, but hiring the right salesperson with the right aptitudes and responsibility is crucial to success.

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Here is another line from a sales employment ad (emphasis mine):

The primary role of this position is to build a revenue generating sales pipeline which will primarily consist of prospective accounts.

Pipeline bloat is something we encounter with sales managers on a regular basis.  As you probably know, salespeople have a tendency to…overestimate their pipeline.  This is done for a number of reasons, but the primary one is to make their sales manager believe that the salesperson is on the cusp of big revenue.  Many a sales manager has been drawn in by potential deals.

So with that as a backdrop, I am surprised to see a sales ad written with the weak qualifier: primarily consist of prospective accounts.  The sales managers we work with are usually attempting to reduce the pipeline to only prospective accounts.

Clearly the better sentence for the ad would have been: The primary role of this position is to build a revenue generating sales pipeline consisting of qualified, prospective accounts.

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SellingPower.com’s article deals with something we have seen throughout our many years of sales assessing, hiring and coaching – financial comfort zones.  Here is a good explanation of it from the article (emphasis mine):

Eker stumbled on the concept of financial blueprints while running his first company, a fitness business. In that business, his trainers often referred to a body’s “set point,” or the metabolic rate at which a body is comfortable. Eker, looking back over his financial history one day, realized that again and again he followed the same financial pattern of making a lot of money and then losing it. Up and down, up and down for fifteen years. “Wow,” he thought. “In the same way we have a set point with weight, we must have a set point with money.” His follow-on observations of others confirmed his theory, that everyone has a financial set point they unconsciously return to all their lives.

So true – this plays out time and again in the sales world.  Salespeople often get caught in a stagnant mode once they hit their financial set point.  They stop prospecting, they find busy paperwork, they fine-tune tasks…essentially their behavior goes into cruise control.

When hiring salespeople, it is important to dig for this set point.  Typically a candidate will not provide it willingly, but you can pursue their past successes.  It is perfectly legitimate to ask for a previous W2.  It is always valuable to delve into the largest deals they closed and the commission they earned.

A candidate with enough of a history will show distinct financial set points that you can then determine if they are a fit for your position.  One last thought is that this set point works 2 ways – you won’t retain a salesperson in a $75K position when their set point is $150K.  If your compensation plan is inflexible, capped or unattainable, they will leave once they realize the ceiling.

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That is a tough question since I think values are primarily hardwired into each of us.  We assess this trait in sales candidates – call them motivations.  Each person tends to have two of these motivators that drives their behaviors (some people have 3 primary motivators).

We have assessed salespeople who were in slumps, who were unemployed and who were candidates.  These are stressful situations that should impact their values.  When we had the opportunity to assess the same people at a later date (years later), we did not see an appreciable change in their values/motivations.  Granted, this was no scientific study, but rather a consistent observation.

BusinessWeek.com provides this article – Value-Based Motivation – that discusses how values change in a recession.

One thing that makes motivation particularly difficult to manage is that individuals differ significantly in what they value and events can change what they value. What is very rewarding for some individuals, say, a day of golf with the boss or even an all-expenses-paid vacation trip to Hawaii, may not be seen as a reward by others. The same thing goes for praise by the boss and most forms of recognition.

Recessions can have a significant impact on what people value. Not surprisingly, job security, and financial rewards tend to become more important in periods of recession. It is particularly important that organizations skillfully manage these two drivers of employee motivation during recessions. How they manage them needs to be fine-tuned to the business strategy and how a company is affected by the recession.

Interesting point in that recessions have a global impression – the recession is outside of my control so my motivations are influenced towards monetary and security rewards.  That seems like a logical assumption…perhaps a macro-level influence like a global recession can sway motivations.

As a manager, it is important to know what motivates your salespeople and what rewards them on an individual basis.  This point is valid no matter what the economy is or isn’t doing.  These two factors provide the beginning of a roadmap to gaining the most production out of your sales team.

If you haven’t discovered these motivators in your current team, may I suggest a test assessment?

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I have come across many articles recently that promote selling tips in this recession.  One common thread runs through all of them – chase smaller deals.  Here is an example from Inc.com – 5 Tips for Selling a Service Now:

“The big change for us in 2009 is that we are more flexible on minimum amount of an engagement that we’ll pursue,” says Gay Gaddis, the founder and CEO of T3, an Austin-based advertising and marketing agency that specializes in digital media. In years past, her firm only went after client engagements that were worth between $1.5 million and $2 million. Now, “some larger clients are breaking RFPs into smaller amounts,” Gaddis says, prompting T3 to pursue accounts in the $500,000-to-$1 million range. The company, which had $300 million in capitalized billings in 2008, is still selective, however: “We won’t take just any piece of business,” Gaddis says. “We really want to work with large and midsize companies that are making digital marketing really central to what they do.”

As a sales manager, this approach is counter-intuitive during booming economic times.  I could launch on RFP-based selling (really is quote writing), but I will refrain for the purpose of this post.

Right now we are seeing most companies pursue smaller deals as a means to survive the present economy.  It is a wise pursuit in that it will help keep people working, some cash flowing and new business developing.

However, the caveat in the pull quote is this – don’t pursue every piece of business.  Some deals, no matter how desperate, are not worth pursuing.  Many salespeople will chase a bad deal in a recession for the simple purpose of looking busy.  Forecasts are the means for monitoring effort and focus.  Each prospect should be discussed in detail to ensure that the salespeople are targeting the proper small deals.

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I read this line from an sales employment ad this morning:

Reps are NOT restricted by territory.

The unrestricted territory seems innocuous enough…maybe even valuable.  It usually isn’t.  As a salesperson, I would read this ad with some skepticism in that the company may be trying to add salespeople without a cogent management plan.

Back in my early years I took a job with a company that had no territories.  There were approximately 15 salespeople in there serving the local market.  What I learned is that the “old-timers” had effectively squatted on all of the accounts, whether they had an active relationship or not.  Since there were no defined territories (geographic, market, size, etc.) and weak sales management (completely hands-off), I was left to scavenging like a meerkat to find any lead.

The aforementioned line from the ad may seem like a benefit, but I would suggest that most savvy sales candidates will drill down on that topic for absolute clarity.

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Inc.com is celebrating its 30th birthday with some fascinating articles including an interview with Jim Collins.  The interviewer asked for his definition of entrepreneurship which involves a paint-by-numbers vs. blank canvas analogy.  However, the follow up question and answer was notable:

It has to do with your ability to handle risk, no?

Not risk. Ambiguity. People confuse the two. My students used to come to me at Stanford and say, “I’d really like to do something on my own, but I’m just not ready to take that much risk. So I took the job with IBM.” And I would say, “You’re not ready for risk? What’s the first thing you learn about investing? Never put all your eggs in one basket. You’ve just put all your eggs in one basket that is held by somebody else.” As an entrepreneur, you know what the risks are. You see them. You understand them. You manage them. If you join someone else’s company, you may not know those risks, and not because they don’t exist. You just can’t see them, and so you can’t manage them. That’s a much more exposed position than the entrepreneur faces. But there’s lower ambiguity on the paint-by-numbers path: very clear but more risky. The entrepreneurial path: very ambiguous but less risk. Of course, the truth is that it’s all ambiguous, anyway. If you think you can predict the future, you’re crazy.

That ought to get your mind racing this Monday morning.  As being someone on both sides of the proverbial fence, I know exactly what he is saying.  The key component to managing risk is seeing/knowing the risk.  Ignorance of the risk is tolerable to those who don’t possess the entrepreneurial spirit.

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Shrinking revenue reports are the fear of most sales managers.  This fear is further intensified during this economy.  There are salespeople who are attempting to leverage this fear by submitting an inflated forecast.  These salespeople provide forecasts that are filled with large deals that are welded to the 90 days out category.

The sales managers who buy into this approach are trading accuracy for enormity as they submit the aggregate forecast from their team.  I suppose the sales manager’s thought is that the salespeople will get shot before he or she is shot.  Perhaps, but the business pays a tremendous price for this obfuscation.

There are two antidotes to this inflated approach:  1.) Budget qualification and 2.) Salesperson close ratio.

Budget Qualification
Many salespeople suffer from a money weakness.  They have difficulty discussing price with prospects and customers.  This weakness is problematic in a strong economy, it is deadly in a recession.  Any salesperson who places a prospect into the pipeline needs to have the money portion fully qualified.  Any lack of clarity on this topic should immediately lead to the salesperson having to go back and clean up that bit of qualifying.

Close Ratio
Most sales managers know that each salesperson has a unique close ratio.  Some salespeople are overly optimistic and require a multiplier of <1.  Others are pessimists and typically close more than their forecast (there are far fewer of these salespeople, but they do exist).  The key is to know the historical ratio of the salesperson when analyzing their forecast.  If their close ratio is <50%, you know they best have a large number of suspects in the early stages of their pipeline.

One last note – sales cycles are extended in most industries so pipelines need to be extended also.  Since it is March, this seems like a trivial point.  However, if your normal sales cycle is 3 months and it has not been extended to 6 months, your salespeople do not have much time to establish their 2009 numbers.  The next quarter will determine whether it is a successful year or not.  This is an important point no matter how short your sales cycle.

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SellingPower.com offers up a spot-on short article about maintaining customer relationships in this economy.  The pressure on salespeople is extremely high right now in two regards – there are limited opportunities to close new business and the business world continues its radical information shift thanks to the Internet.

First off, companies have slowed down their purchasing, but they are still purchasing.  I think this fact gets lost in the doom-and-gloom reporting that saturates our senses.  The tactical truth is that salespeople are going to have to unhook business from their competition to increase their sales.  Many order-taking salespeople will fail miserably in this endeavor.

Second, prospects are far more informed than at any time in history.  They are able to research companies, products, services and solutions.  Companies that are small and nimble can use the Internet as a force multiplier to compete with larger companies.  Prospects no longer start out in discovery mode – their first approach is usually a fairly educated question and discussion about your solution.  The prospect probably has your competition’s value proposition sketched out also so salespeople leap right into an intense qualifying call.

These two factors make customer retention even more critical today.  The author of the article makes a salient point (my bold):

Little “r” relationships. These are the interpersonal relationships between members of a selling team and members of a buying team. They are built gradually, over time, and rooted in “a salesperson’s ability to demonstrate that he or she is trustworthy, competent, and credible as a business consultant and advisor,” says Emde. These relationships are most effective when they’re built not with just one or two people in the buying organization, but with an entire network of people who come to view the sales rep as a trusted business partner. To build little “r” relationships, Emde says reps must know how to establish credibility, build trust, demonstrate the value of the relationship on every call, and be savvy about identifying the right people with whom to forge connections.

What’s the cost of not building these little “r” relationships? When your relationships are weak, or you’ve eroded them with substandard performance, you leave the door wide open for your competitors, warns Emde.

Exactly.  I have seen this play out firsthand in the marketplace.  This problem is most evident with order takers.  They simply wait for the phone to ring and provide a quote.  This approach, in this economy, requires the company to be perfect.  Perfect product/service, perfect delivery, perfect terms, etc.  The second the perfection falters, a competitor moves in and the battle is on.

The key is to make sure you hire salespeople who have the ability to nurture the little “r’” relationships while closing the deal.  If you are not assessing your sales candidates, you are risking more than you know.

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