I was asked by Small Business Trends to offer some insight into hiring the first salesperson for a company. My comments are included in the Small Business Trends article “How to Hire Your First Sales Rep.” This is the text of the entire answer I gave Small Business Trends. Be sure to check out their article for more advice from other business owners.
A few years ago, we hired our first sales person (in a long time), and, not knowing what we were doing, it was definitely a learning experience. The biggest hurdle for us was coming up with a proper compensation formula.
We had no idea what to expect in terms of sales the salesperson would be able to achieve. We also wanted to make it lucrative for him to work for us. We initially set a high salary and low commission with a structure in place for that to be swapped as sales increased. The idea was to pay the way during the learning process but once sales started coming in to take him off salary and move toward commission.
To our disappointment, we never hit those benchmarks. Sales were coming in, but not as much as we hoped, and we found ourselves paying a higher commission than we could afford.
This led to several re-negotiations over the course of three years. As you can imagine, that’s not something that anyone wants to do and, inevitably, someone feels like they are getting a raw deal. It was literally trial and error for us.
Ultimately, we think we found something that would work for everyone, but it was a rough road. When hiring a new salesperson, it’s critical to know the numbers. Don’t give away the store just to bring someone in, unless you are absolutely sure they will hit every benchmark you set. Otherwise, you end up paying out more than you can afford just to keep someone in that role.
As for tracking, this is critical. There needs to be methods for tracking leads and conversions. For a business like ours, the conversions often come much later than the lead, sometimes months later, and we only handle a limited number of leads, so you can’t always track a month to month conversion rate. You have to look at the big picture. But you have to make sure you’re tracking leads, merging it with analytics data and making sure everyone is updated when a lead turns into a client.