Every company needs a sales manager. Even if you are a solopreneur, you are the sales manager.
I have this idea that everyone in the organization should have their titles changed to include sales. President of sales, sales accountant, shipping for sales, etc., I probably won’t get my way on this, but in almost every company with fewer than 25 employees, I rarely hear the owners talking about sales management.
What Can a Sales Manager Do For Your Business?
Every company needs a sales manager. Even if you are a solopreneur, you are the sales manager.
The sales manager has one primary task: develop a sales team to increase sales and profits. That sales team might be just the owner or sales manager, or it might consist of 100’s of sales professionals and customer service reps.
Even if you are a solopreneur you want to “manage” your own sales production. You want to review prior years’ sales by customer, by product, by territory. You want to set up a plan for maintaining existing sales levels and increasing to new higher levels profitably. You want to analyze and plan for increasing sales with existing customers and in existing territories, as well as adding customers, territories, and distribution channels.
Now as you grow, and you reach a point where you can hire a sales manager, you understand his job and can easily hand over responsibilities and authority as needed.
The salespeople are merely the tools of the above plan. A sales manager might hire commissioned, independent reps to handle one territory or distribution channel. He might hire inside salespeople to handle a different territory. She might have off-shore, outbound sales teams working on another. In another case, he might be using an advertising campaign to drive phone calls to an order desk where the management is of inbound calls.
WHAT SALES MANAGERS DO?
To deepen our dive into the job of sales manager we will take a look at a theoretical company with multiple types of sales professionals. The company is a manufacturer selling to various industries and exporting to Europe. Our sales manager in this case is Doreen Nosuch.
The company sells its products to six primary distribution channels. OEM (original equipment manufacturers) who use the company’s products as part of their own final product; small independent retailers who purchase through wholesalers; government agencies; mass market companies such as Walmart and major grocery and drug chains; consumers through online platforms such as Amazon, and foreign companies in all of these categories.
Doreen has just been hired and finds that the company’s sales efforts are totally seat-of-the-pants. The company and she agree that there needs to be a complete restructuring. In order to decide how to proceed, she needs data.
COMPILING DATA TO MANAGE FUTURE SALES
AND REBUILD THE SALES ORGANIZATION
First, she talks to accounting and asks for customer sales reports that are organized into the above groups. She also asks that sales be shown for each customer by month with comparisons going back two years. For the foreign sales, she also wants a further breakdown into the other five categories.
Now Doreen can review each territory or category of sales to determine which of these are providing enough business to be of value to the overall sales. Later she will discuss each territory with the CEO and the marketing director to decide whether future potential sales warrant continued spending of time and money in each territory.
Next Doreen delves into the sales force. She finds that the company employs two sales professionals on the payroll and six customer service reps. There is a total of 500+ customers. The two salespeople work with 100 of these customers, are overloaded with work, and the other 400 customers never see a salesperson. They are managed by customer service reps.
Overall sales are lackluster to trending negative. The bright spot is government. The mass market is the top category, but sales are dropping.
The CEO and marketing director agree that mass market and online are huge future growth targets and that the increasing government business is alluring. The wholesale customers are solid and foundational and have potential for steady growth. Foreign is very small with almost no effort being expended to increase it. OEM is 100% on its own.
Meanwhile, Doreen is familiarizing herself with the product, how it fits into the marketplace, the competition, and clarity about how the six territories do business.
EVALUATING BUSINESS DISTRIBUTION CATEGORIES
TO OPTIMIZE METHODS FOR PENETRATION
We have more in-depth discussions on marketing and selling to various industry types such as OEM, government, etc., so we will take a broader view here.
Independent Retailers Serviced By Wholesalers
There are about 100 wholesalers of any note in this industry, and they service about 10,000 retailers. One of the two existing salespeople handles all 100. A review of that industry shows that this traditional approach is still intact but in danger of being disrupted by direct sales from manufacturer to retailer with independent reps, inside salespeople or both. Many manufacturers are also selling the same product they sell to the retailer on Amazon direct to the consumer.
The obvious advantage of selling consumers directly or cutting out the wholesaler is the additional margins. The disadvantage is the extra costs. Doreen decides that she will leave the current approach in place, as it is solid and dependable.
Here Doreen finds a completely incomprehensible sales effort. It seems the previous sales manager had landed most of these accounts personally. The current salespeople were not necessarily a good fit to take over these accounts, as they required travel and a completely new set of knowledge.
Some of these accounts were sold directly, some through brokers, some through feeders, and some through rack jobbers. Currently, there was no one qualified to call on the buyers with new products, new pricing, display proposals, or seasonal discounts.
Doreen got on the phone and talked to the buyers directly. In most cases they suggested that the company needed to hire independent sales reps, and many had recommendations. These independent sale reps worked on a combination of commissions (sometimes with guarantees), and additional payments for specific services (trade shows, events.) Most of these rep companies had multiple sales professionals in their territory who had specialized knowledge of grocery/drug, big box, mass market department stores, and more.
Doreen stuck her toe in the water and hired one of these rep companies to handle the largest and most out of control territory, the Southwest. The rep company required a $5000 per month minimum and 10% commission on most transactions. They also required that all current customers become their customer. Sometimes companies will negotiate that one or more businesses in a territory remain as company clients, with no commissions to the rep company.
Doreen’s responsibilities, as the sales manager, in this case were to maintain a relationship with the head of the rep company or his designated manager, set sales goals or quotas, visit the territory to go on calls with the reps, provide necessary collateral materials and samples, make decisions about shows and events in that territory with the help of marketing, and evaluate results.
Doreen quickly realized why OEM is totally on its own. Each OEM had found them due to a pressing need. They each have a customer service rep that they worked with. They ordered as necessary. The company knew nothing about their other potential needs, product changes that might enhance the customer’s products, or whether they needed to charge more or could get away with charging more.
She decided to call on these companies herself for a while. This way she could educate herself about all aspect of this part of the business and ask questions of the owners and buyers about other opportunities or other ways to sell more through company salespeople, reps, or some other approach.
The other salesperson handles the government business. He watches the bid information through various online apps, prepares the quotes, and has developed relationships with many of the buyers. The company product line is well suited to many government applications, and the company has barely scratched the surface of the potential here. The salesperson is steady Eddie, the clients love him, he does a great job of tweaking the product descriptions to the company’s advantage, and does a fine job on the bidding and the endless follow-up and paperwork. He handles about 100 clients.
A bit of research by Doreen determines that their current salesperson is the exception to the rule and should be protected at all costs. But he’s maxed out. To take advantage of this pot of gold, Doreen either needs more salespeople or needs to hire reps. She finds that there are many, many reps in this field. She calls some buyers in parts of the country where the company is not doing well and asks them for suggestions. They are only too happy to help.
Doreen decides to hire several reps, throwing plenty of spaghetti against the wall to see which, if any, sticks. She also finds that there are shows for some of these government agencies and starts traveling to walk the shows. This way she can look for reps, network in the aisles and the mixers, and get the lay of the land.
Doreen quickly determines that distance, freight costs, cultural differences, local and Asian competition, and resistance to American products make this territory too expensive to work. She decides to have her customer service team establish the relationships and get some experience.
With 100 of their customers now being handled by reps, another 100 by customer service, and 50 personally, Doreen must decide how to manage the remaining 50, and what to do about online. Online is more of a marketing function than a sales function. She needs to negotiate with marketing to determine what her role should be.
Doreen also decides that the company badly needs a CRM system. She wants to streamline the follow-up with new prospects, keep every customer feeling an intentional effort is being made to service them, and give herself better tools than the bookkeeping system offers for data and analysis.
WHAT KIND OF PERSON MAKES A GREAT
There is a major piece of advice on this subject that must be emphasized. You almost never turn a good or great salesperson into a sales manager. You run the risk of losing a top performer and it is rare that a good or great salesperson has the right skills to be a sales manager.
MAJOR SKILLS AND PERSONALITY TRAITS
OF A SALES MANAGER ARE:
Good sales skills
SALES MANAGEMENT IS A CRITICAL POSITION
IN ANY COMPANY
Sales management is a critical position in any company. It is a demanding job, usually requiring substantial travel and long hours. In addition, a sales manager has to be a great training manager and to know how to increase employees' motivation. But those who are excellent at this position usually find it very satisfying.
We will look at the details on other pages. See below.