Too many sales people, argues Dominic Grudzien of recruitment specialist Harrison Scott Associates, are paid on turnover, and not according to the profit they obtain.
In the many years I have been recruiting, one of the things I have never been able to fathom is the number of sales executives who are paid on turnover and not profit. Although admittedly there has been a slight shift of emphasis on awareness of profitability in recent yeas, the majority when asked the question about what profit they generate, really do not know.
Ask them for their turnover and it is not a problem. In fact they get quite frustrated at times because certain key information is withheld from them. It is like awarding the Premiership title to the team that has the biggest ground or the most fans as opposed to the team that has earned the most points. So where does the problem lie?
People will no doubt take issue with some of my comments, but surely everyone will agree with me that if you are not in full possession of key information - that is profit margins, how can you seriously enter a negotiating position with your customers? It is akin to entering a boxing match with one arm tied behind your back. Everyone today goes into a buying situation expecting some form of negotiation, as both parties are there to get the best deal for their respective companies. You can be sure that the print buyers the sales executives face across the table are fully aware of their margins.
So how can a representative go into a meeting without knowing how far they can go? Perhaps all print sales executives are mind-readers! Seriously, it has got to hamper people's ability to get the best deal. The old adage, "knowledge is power" has never been truer.
So, what is the answer? A change in mindset and attitude. In my company, and most other successful recruitment consultancies, all consultants know what they cost and what revenue they need to generate to be profitable. This is done not to encourage greed, but rather to give them the necessary information to make informed decisions when involved in negotiations for multiple assignments.
I find it difficult to comprehend why this is not the case in most print companies. I accept and recognise the fact that it is not always either appropriate or possible to know precisely what profit a job can generate in an initial meeting. Being aware of overall profitability has surely got to be one of the primary functions of a sales executive.
As Richard Husband, Sales Director of K2 says: "We always encourage our sales people to be aware of profitability. They have total accountability for their respective accounts and with this comes a responsibility to ensure that they have a commercial awareness as to what is an acceptable level of overall profit contribution. Each situation is based on its own merits, but as long as they operate within the agreed parameters set down, we believe in the capabilities of the people we employ. In fact, it gives them a greater sense of worth to the company."
The kudos of winning major blue chip accounts is all well and good, but I wonder how many decision makers out there can honestly say that they generate the profit you initially expected?
I know of numerous cases where all that initially glittered did not turn into gold. If only some of these decision makers could turn back the clock, they would have less grey hair and healthier bank balances.
In my experience, the best sales people we represent are, in the main, the ones who can really relate to the bottom line and talk properly about profitability.