What makes a good sales manager in this industry? A lot of things that range from recruiting the right salespeople for your business to designing database systems that create permanent records of account activities. Sales management is much more a learned skill than one that is innate and, unfortunately, the best salespeople often do not make the best sales managers.
The Right Sales Manager
HME sales managers have two different roles. The first is to serve as a manager or overseer of activities, and the second is to serve as a sales strategist. Some people can function well in one role or the other; a smaller percentage are equally as comfortable in both.
Your sales manager's first responsibility is to ensure that the company's salespeople are performing the right activities in their territories. The typical salesperson spends four days a week in the field in front of customers and one day a week handling administrative functions such as account follow-up, completing paperwork, going to operations or sales meetings and dealing with customer service problems. It is the responsibility of the sales manager to set the standards for the number of sales calls that need to be made during the field sales days, as well as to oversee management of the sales team's administrative time.
I am thoroughly convinced that clinicians who serve as branch managers can handle this side of the sales management function if — and only if — they have had appropriate training on how to manage sales team activities. While most top sellers may be excellent at managing their own territory functions, they do not possess the basic attributes required to manage other sales employees.
Your sales manager's second responsibility is to develop sales strategies. This is the creative part of the sales management job. It seems that few clinicians possess this essential sales attribute, although for the best salespeople, it seems to come naturally.
Sales strategies involve the development of both maintenance (current customer) and new business (new customer, new program/service/product) strategies. These strategies range from the development of simple tactics, such as helping sales reps figure out how to handle weekly sales calls on top customers, to devising more complex plans to overcome competitive moves. The sales manager must develop these strategies, train salespeople on how to employ them in the field, and then monitor the strategies' effectiveness in the event that they need to be adjusted.
The ideal sales manager has the attributes that fit both overseeing activities and developing strategies. If you can't have both of these attributes in the same person at your company, then it may make sense to split the sales team's responsibilities.
One option to consider is designating one of your salespeople as a part-time or full-time field sales trainer. This arrangement offers the sales team a promotional opportunity and also provides support to the sales manager, who may be excellent at the management of activities but poor at the development of strategy.
The Right Salespeople
One of the sales manager's toughest tasks is recruiting the right salespeople for the organization. And even if you have the right salespeople, they may be in the wrong sales jobs.
There are several major considerations when hiring a salesperson. These include the type of sales job, the attributes of the salesperson and the extent of your company's dedication to support and sales training.
First, will the salesperson be responsible for a maintenance territory or a new business development territory? A maintenance territory is one where the majority of the customers are in place and you want the salesperson to maintain, or “farm,” these customers. A “farmer” is a sales employee who enjoys regular contact with the same customers and who can keep a warm blanket around these customers so that they continue to refer to your organization.
Farmers are also responsible for continually assessing competitive threats to the account and for coming up with new program/service/equipment ideas for accounts. Most clinicians who are interested in sales positions are, in fact, farmers.
The second type of sales job is new business development, or “hunting.” Hunters are a unique breed. They are much more comfortable with taking risks than farmers, and they are excited about the potential of converting new business. Nothing is more thrilling to a hunter than converting a new account.
Most territories have a combination of farming and hunting that is required. BUT, a hunter will get bored with territory maintenance alone, and you cannot push a farmer to be a hunter. So, you have to get real about the needs of the territory and consider a division of accounts based on the attributes of your salespeople as well as the needs of your business.
In hiring correctly, you must also consider whether the sales job is a “one-on-one” or a “system selling” job. One-on-one sales is the traditional type of selling to physicians, discharge planners and other clinicians. It generally requires the sales rep to convert one customer at a time.
The other type of sales is system selling. A system sell is a complex type of selling process with multiple decision-makers involved. Examples of system selling sales jobs are the creation of an HME joint venture with a hospital or the conversion of a managed care account. Few salespeople can handle both of these sales well.
Still another consideration is the opportunity that exists in the territory. HME sales managers have typically graded territories as A, B or C territories based upon a number of factors. An A territory is one that has a large demographic base and that also has a large potential for conversion to your firm. A B territory is somewhat smaller in terms of the number of accounts and the potential for conversion. A C territory is not that exciting. It is one that is relatively small in size or where the company has a bad reputation and there is not much of a potential for conversion. An A salesman would get frustrated in C territory, and a C salesman would be over his head in an A territory.
Incentive Plans
Assuming that you have the right salespeople in place and that you have a unique offering in the market, then you must make sure your company has an incentive plan, versus a dis-incentive plan, in place for your sales team. This includes the right non-monetary incentives.
You also must recognize that people are motivated by different factors, which have been described as “personal needs” by Xerox Corp. as part of its sales training. They are:
Achievement: the need to get things done
Order: the need to have orderly environments and conversations
Safety: the need to avoid risk
Recognition: the need to be recognized for one's accomplishments or being
Power: the need to be in control of situations
Affiliation: the need to be associated with the “right” people
Take me, for instance. I have a high need for order and achievement. I seek situations where I can bring order to disorderly situations and where I can get a lot accomplished. If I were in an organization where I was prevented from these goals, I would be unhappy and leave. Find out the individual needs of your sales team and make sure that you meet those needs, then dovetail them into financial rewards.
The design of a meaningful sales incentive plan is a process that takes time and thought. The elements of a solid incentive plan can include:
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Base salary should be competitive, but do not overpay salespeople in their base.
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Bonuses can be a percentage of base salary or a fixed amount that is paid quarterly or annually for specific tasks. Bonuses work best for system selling situations.
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Commissions can be a percentage of gross revenue, net revenue or a specific payment for generating a particular equipment or service referral, for example, $100 for an oxygen patient or 2 percent of net revenue for CPAP business. Consider a quota for territories that have been operational for more than 18 months. A good rule of thumb on quotas is to look at net revenue for the previous three to six months and take the average of this total to develop a monthly quota.
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Equity can be earned based upon performance in both public companies or privately held HME businesses. There can be nothing more powerful than stock ownership to tie top-performing employees to your company.
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All salespeople need an expense budget to cover such things as automobile expenses, entertainment, training/education and other costs common in working any territory. When companies set expense budgets too low, this can be a negative motivational factor for an employee. Work closely with employees to develop meaningful expense budgets, and change budgets as territories grow or decline.
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Other incentives might include automobiles and allowances or perks such as gym memberships. Incentives need to be determined based upon performance and can be exceptionally motivational for salespeople who are interested in these options.
Account Management and Reporting Systems
Too few companies have fully developed sales management systems. The basics that need to be in place include weekly reporting forms, account management tracking systems and expense tracking systems.
Typically, weekly sales reports should be completed by the end of business on Friday each week. Conduct sales meetings either in a group or individually (depending upon the size of the sales team) each Monday in which results for the previous week are reviewed, along with an assessment of the upcoming week. Your sales manager should be responsible for monitoring activities to make sure that salespeople maximize their field sales time each week.
Account management systems can be set up either manually or electronically. An example of the data that might be required from salespeople ranges from basic account information to more complex profiling of customers (e.g. communication style, organizational and personal needs). Teach salespeople how to record account information so that it is minimized and meaningful. Too many sales reps record far too much detail, or far too little, on their accounts.
Once the design of the information needed in the account management system is in place, the next step is to decide how you want to collate this information. There are several basic software options available, as well as more complex Internet-based solutions. Some organizations have salespeople record account information into their intranet systems. Each of these options has its own pros and cons, and you need to consider carefully which system makes sense for your organization.
Before choosing any of these options, decide on your budgets. And, think about the level of computer expertise your salespeople have and the types of account reports that you would like to generate from the data that is saved.
The last element you need for your sales reporting is an expense tracking system. Get input from the financial personnel in your company on designing these systems, and then complete them in formats that are easy for sales employees to follow. Salespeople need to record expenses for each customer. The system also should have the capability to track total entertainment expenses annually to ensure that salespeople are in compliance with any related state or federal expense criteria for individuals.
Last but Not Least: Sales Training
One of the most common problems across the spectrum of HME businesses is that their sales teams are poorly trained. Sales training is a very complex business, one that is much more complex than most of us think. Remember that training is a process — not an event — and it requires an ongoing commitment to your sales team. Training can come from employees, consultants, public courses, trade shows, reading trade magazines and a wide variety of other sources.
Get a sales training plan in place. Set up both initial and ongoing training for your sales teams that includes, at a minimum, the following subjects:
- Product/service information
- Competitive data
- Customer knowledge
- Selling skills
- Reimbursement
- Territory organization
Sales training is an important part of good sales management. Along with having the right sales manager, hiring the right salespeople, incenting them correctly and creating systems that can help to monitor and direct their activities, you can maximize your company's sales performance.
Attributes of Salespeople
| Hunters | Farmers |
|---|---|
| Risk-takers | Typically risk-averse |
| Love the thrill of the hunt | Like to see the same customers over and over |
| Not phased by rejection | Rejection hurts |
| Very creative | Not as creative |
| Push themselves outside comfort zones | Enjoy their comfort zones |
