Sales Team Structures for Larger Distributors
Many larger distributors are having success with different sales structures that result in higher growth rates and lower total sales compensation costs, which means more profit and increased equity. Once you are headed past the $3 million mark, it might be worth thinking about the next evolution of your sales team and how you are going to scale ongoing growth.
You started your business by selling, then you added a couple more sales reps, but your profits aren’t necessarily increasing - and good reps are so hard to find. The traditional model of hiring reps on straight commission doesn’t seem to work for millennials, and those you do hire under this model seem to fail 9 out of 10 times, which costs you so much time and money. So how do you find new sales reps and what do you pay them?
Different Ways to Grow Your Sales Force
Rapid growth means having at least one person hunting for new business full-time. The more hunters you have to hunt every day, the faster you can grow.
This is where owners need to think strategically about their role in the business. At start up, you did the hunting along with everything else. Now maybe you sell and have some support staff, but how much hunting do you do anymore?
Owners and/or sales reps that can hunt often grow a nice book of business but then get bogged down servicing clients and selling products. Growth slows. Maybe it’s time to stop selling products and get back to selling the company to prospects to turn them into clients?
Team Selling Models
But who will handle all these clients and service them? This is where Account Managers come in. This is a team selling model where the Business Development Manager (BDM) acquires clients full-time and the Account Manager (AM) sells products to those clients. To round out the team, CSRs process orders and are in charge of on-time delivery while finance staff does invoicing and handles the money. Admin staff (CSR and finance) often handle orders from multiple Account Managers based on order volume.
It’s ok to have a mix of traditional sales reps paid traditional commission to continue to handle their “book of business.” BDMs who get paid commission but at a different rate than traditional reps and AMs who are typically paid salary plus a small commission bonus. Most distributors who evolve to this model seem to have a lower total sales compensation cost as a percentage of sales than the traditional commissioned sales rep model.
Now you can offer those millennials a career path that they might find appealing. Hire for sales but start them on salary as a CSR for a year to learn the business. If they want to make more money, move them to an Account Manager role where they can earn a small commission bonus. If they want to make more, they can become a traditional sales rep, prospect for clients, build themselves a book of business and gradually transition to commission for compensation. If they prove themselves to be great hunters and want to make the big bucks, they can graduate into a BDM role and hunt full-time.
How to Implement Change
This strategy requires an investment in people, as they need to be developed over a few years to reach their potential and have a career with your company. If your business is doing over $3 million in sales, you should have enough profit to start investing in this next phase of your business growth.
Start by hiring one Account Manager or promote your current CSR if they have sales ability and hire a new CSR. Train and mentor your new AM and then start passing off smaller clients for them to handle by themselves. Gradually move more clients to your AM as their skills develop.
Now, get growing again by prospecting for more A clients! Repeat by adding more AMs as needed. This is scalable, so continue to grow sales and profits. You also are diversifying your sales team which lowers risk and builds equity.
Learn more strategies for growing your promotional products business the "Right Way."