Episode #224: Audit Our Salespeople Expectations

We hire people and they don’t perform as we expected. The time passes and the numbers are not rolling in. We thought they would be more proactive and more skilled at getting new business. We fire them and start over again. Except that in Japan, you can fire them, but replacing them is a different and difficult matter these days. Recruiting salespeople is horrendous, so the retain component is the mirror piece we have to master as well. Turning the tap on in the sink, with the plug removed, isn’t getting us anywhere and this revolving salesperson door is just that issue. We are wasting a lot of resources.

We are often the problem though. I have a start-up founder client who is a nightmare. I have interviewed all of his direct reports and finally the big man himself. Actually, I don’t want to work with his company. They can keep the money. He is the issue as to why they are having such significant staff turnover. He has a “plug and play” mentality with people. When you find a problem, you just hire someone in to fix it and then go back to running around like a headless chicken as before. In this case, the leader is the problem.

His expectations are unrealistic with the current state of the market. He thinks we are still back in the old days, when there wasn’t the same amount of job mobility and where people tended to stick around, because it was hard to get another job. He had key people jump and rather than try and fix the problem, starting with himself, he just wants to throw another body at it.

There are three areas where we need to audit ourselves and our expectations. Are we sure of what we are looking for in our salespeople when we hire them? If we hire a farmer and they don’t hunt, we fire them. Whose fault was that? Ours not theirs. We need to know at the very start are we bringing in another farmer here or a hunter? In Japan, farmers are much more numerous and so the chances of getting a farmer on board are statistically higher.

How can we tell which is which, in the interview process? Ask the candidate about their current client base. Where did those buyers come from? If they say through the marketing team’s efforts generating leads, the pool of “orphan clients”, their boss or from departed colleagues, then that tells you they are farmers. If they talk about how they recruited new clients, by beating the bushes and finding them then, you have a hunter there. This is not to say one is better than the other, but that in Japan you are more likely to wind up with a farmer than a hunter. Once you know that, you adjust your expectations and know you need to get busy feeding them.

Another case is how fast we expect people to get up to speed. When the months roll buy and the numbers don’t role in, we get frustrated. We need revenues and we need them now. The costs in salary, insurances and expenses flow out like a flood and the revenues from new salespeople comes in like a trickle. Where do we get our expectations from? Are they rooted in numbers, experience or hope. Often it is the hope component, followed by our personal experience and rarely are any comparative numbers involved. It is always dangerous to judge others through the lens of ourselves. “I did it, so they can do it too”, makes sense at one level, except when you uncover that very few other salespeople are like you. A better analytical tool is performance.

Take every salesperson who has worked for your organisation over the last five to ten years and trace them all back to Day One when they started. Track their revenue production monthly. In this way you can compare like for like. There will be some averages you can apply to give you a measuring stick, against which to gauge their output. If you have a sufficient number of people to look at, you can take out the worst and the best performer and form an average from those left. If you don’t have enough people, then a straight average is enough. This gives you quarter by quarter, what, on average, you should expect from your people after they join. This has nothing to do with what you did and so is a more objective means of defining performance and tempering your expectations.

The third thing to look at is your sales incentive scheme. American style 100% commission systems are not much in evidence in Japan, except in very dubious occupations, closely associated with skulduggery. Usually salespeople are on fixed salaries with bonuses. This is not a great system and so try to change it. A better case is where the base salary will be lower and a percentage of sales as commission is paid.

If your scheme is mainly to benefit your pocket, then don’t be surprised if people don’t get excited about it. I have a friend who is mean, when it comes to paying salespeople and has tremendous turnover, wondering why. I keep telling him why, but he is too greedy about getting the money and not spreading it around with his team, so he refuses to change. I just sit back and observe the regular carnage.

Foreign company leaders often complain to me that they brought in this really spiffy incentive scheme, but none of the salespeople seem the least bit motivated by it. I ask about whether there is a component that recognises bringing in new business? If you want hunters, but you pay everyone a straight commission, regardless of how they got there, then you will usually encourage farming. I also ask about the base pay? Usually these are very high, so in risk averse Japan, everyone is happy to keep doing what they have always done, rather than try something new. Those high base pays need to be reduced, so that there is more at risk for the salesperson, if they don’t hit their numbers.

The “number” or target is also important. If we make it too high, then people just roll over and give up. Our expectations can outstrip their own self-assessment of their individual capability. They start to suffer from imposter syndrome, where they don’t believe they can operate at that level, so they underperform to get themselves back to an equilibrium they are more confortable with. Getting the number right is an art more than a science, but getting it wrong becomes expensive.

Our expectations are often the source of our woes. We need to take a cold hard look at why we have our expectations, are they realistic and do we need to alter them?

Action Steps

1. Check whether our salesperson recruiting system is favouring farmers over hunters, when we are looking for hunters
2. Create some production norms we can measure new performers against, to get a better grip on reality, rather than being in thrall of our hopes
3. Structure the incentive scheme so that the salesperson’s target is reasonable and then increase their risk component of their package.