Issue link: https://read.dmtmag.com/i/100911
SALES MANAGEMENT Recruiting, Teaching, Management & Compensation of Salespeople #9 BY GRAYSON SCHWEPFINGER Before we move on to some thoughts on management I would like to point out a few additional points regarding compensation. Regardless of what kind of pay program you decide to use, straight commission to straight salary, it is going to have to meet the laws regarding minimum wage. I strongly suggest if you have any questions regarding your pay programs legality you double check with your accountant or lawyer. A while back there was a program that had become somewhat popular where the salesperson acted as a so-called independent contractor. By claiming that you did not actually hire the salesperson, he worked on his own, you are not responsible for paying income taxes etc. etc. Because of its complexity and the fact that it gave you very little control over the salesperson this program is seldom used today. My last thought on commissions regards draws. Since the time it takes to obtain lender approval seems to becoming longer and longer every year some dealers have agreed to advance draws against then uncompleted deals. My only suggestion here is to tread softly and work this one deal at a time. Before we move on I would like to make a comment regarding this entire series of articles. These were never meant to be an answer all series. I am writing them in the hopes that they will help both new and old managers with techniques and answers that I have developed and observed over the years. I have tried to cover what I have observed as the most often made mistakes or problems. With that said, let���s move on to management. The first thing to understand is that I do not mean to infer in any way by any of the following remarks that your sales management is not currently successful. Most sales management in this industry has come up through the sales ranks and has little or no formal management training. Because of this, the old saying comes into play, JANUARY 2013 26 THE JOURNAL ���When you are up to your rear in alligators, it is difficult to remember the objective was to drain the swamp���. Most sales managers are kept busy just trying to keep up with what is happening on a day-by-day basis. They don���t have time to study how to increase their management skills. I mean to show techniques and programs that are proven to keep your people focused on sales and help you to ���drain the swamp��� faster. Secondly, I am writing this and presenting it to you on the assumption that we share certain common beliefs, such as: 1.If you don���t train your salespeople as to exactly what you expect, and how to achieve it, then you have no right to criticize their results. 2.Until your sales staff sells every prospect, at maximum profits, there is room for improvement. 3.Sales training is an ongoing requirement that never stops. If you aren���t training your people how to sell more, then it isn���t fair to blame them if you are not satisfied with the job they are doing. Very few salespeople fail on purpose. They fail because nobody shows them how to succeed! If your people knew how to sell more, they would be doing it! Even Tiger Woods has a coach! What should a dealer do instead? Realize that there are three ways to make more money in our industry: (1) The least effective, and most commonly used, is to increase advertising to get more traffic so your salespeople talk to more prospects. As close as I can tell, the national average for a salesperson is that they will sell one out of twenty people that visit the location. It has always defied logic to me why any businessman would increase advertising to bring more people to their location so their sales staff could lose 19 out of 20 prospects that show up. (2) A second way to make more money, which I think makes much more sense, is that before anyone spends thousands of dollars on advertising they first should offer training to their people to increase closing ratios. Training should teach your people how to sell more professionally. If they improved their selling skills so that they only lost 18 out of 20 instead of 19 out of 20, then your dealership experiences a 100% increase in business with the traffic it now has! (3) The third way to make more money is to increase the profit ratios. You should teach salespeople how to respond to price pressure so that they don���t have to give all your profits away to make the sale. If you retail a $50,000.00 item with a 20% markup, that means you realize a $10,000.00 gross profit. For every $500.00 your sales staff can keep, rather than giving away in discounts, they have saved 1% in selling price but realize a 5% increase in profits. In a tight market you must sell a larger percentage of a smaller pie. In a downturn, the secret to survival and profits is to have a professional sales staff that knows how to profitably close more than the competition! When the industry is doing well, it is not time to stop training. Why spend advertising dollars if your people not only don���t sell your prospects, but simply add to the their information base so the prospect can buy somewhere else? Spend it instead on increasing your closing and profit ratios. Until next month, Good Selling! T J Grayson Schwepfinger is a nationally known speaker and member of the manufactured housing Hall of Fame. He specializes in sales and sales management training and can be reached for comments or more information at his e-mail schwep1@aol.com or his phone 610 533 4969. And his Website ��� graysonschwepfinger.com.