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As you may know from previous posts, I’ve been on an aggressive campaign to find and hire our next sales stars at Everon.  Hiring salespeople can be tricky business, and the cost of getting it wrong is pretty high.  To try to increase my odds of success, I’ve put together some interview questions that help keep my on track and evaluate my candidates objectively.

I’ve found that each of the questions below has a “right” answer and a “wrong” answer, and I get punished if I don’t respect this.  The challenge is that salespeople can sell, so they’ll make every answer sound good - don’t fall for it!

Here are the key questions I want to get answers to, in no particular order:

1.  In your previous sales positions, were you responsible for the entire sales cycle (prospecting to closing the deal)?  Correct answer: yes.
2. How did you build your client base?  Correct answer: cold calling, networking, etc.  Anything that shows proactive prospecting versus “our company gave us a lead sheet each day” or similar.
3. What percentage of your income came from commissions? Correct answer: greater than 50%.
4. Have you ever owned your own business before?  Correct answer: no.  You are looking for a salesperson, not an entrepreneur.
5. How much money do you need to make for this to be an attractive opportunity?  Correct answer: six figures.  Any salesperson worth their weight wants to make six figures.  If they say anything less than this they are not hungry enough!

There are obviously manner other questions I ask in the interview, but these five are the five that really determine if a person makes the cut or not after they have passed the culture test.  If you’ve got some other ideas that you use, please let me know!

MRC

I’m in the process of really ramping up our sales and marketing efforts at Everon, and I’m always on the lookout for great ideas on how to do so most effectively.

One of the things that I’ve found in all great sales organizations is that they have a sense of urgency to achieve their goals every day.  I guess this could be said of any great organization period, but it seems more tangible in sales organizations due to the direct tie to revenue.

But how do you create that urgency?

There are numerous ways, but I heard one today that surprised me.

One of the new members of my sales team just came to Everon from AT&T’s new web services division.  He left them, even though he was making a lot of money quickly, because they ran such a sweat shop that he never saw his family.

I’m not advocating taking such extreme measures to create urgency like AT&T has, but many of their techniques can be applied very effectively when toned-down a bit.

The specific technique I heard from my rep today is that they make every one of their sales reps cold-call all day on Mondays, with the directive of setting 13 in person appointments for the rest of the week.  If they don’t set at least 13 appointments, they have to come back in to the office on Tuesday and continue cold-calling until they do, rearranging any of the appointments they just set on Monday to clear their calendar to make more calls!

That’s extreme - but I can tell you that they are getting results!

As I said before, I’m not advocating being this aggressive.  However, one of the rules of effective selling is that you should have a defined purpose for every call.  AT&T has very clearly defined that purpose, and so they get the result they are looking for.

I guarantee that if you sit down with your sales reps for a day and listen to their calls, very few will have a well-defined purpose for their calls, and therefore they will get less impressive results.

How can you put this lesson to work for you?

You should work with your sales team to define a specific list of possible objectives that will define each and every call.  Then, make sure that every person on your sales team is calling with one of those objectives in mind, and with specific criteria that will determine if they met their objective.

Results will improve, and so will sales.

MRC

I had an interesting conversation with a friend of mine in the industry recently - we were discussing sales and marketing strategy. It turns out that we have very different approaches.

His is to try to get fewer accounts, but to get bigger accounts that spend more money with him on average. He is working under the philosophy of growth by “selling more to your current customers”.

My approach on the other hand, is to try to get many smaller customers, each spending a less significant amount of money with us.

At first his strategy would seem to make more sense, but I would like to make the argument that it’s the wrong approach. Why? A few reasons:

1. Any time you have a larger percentage of your revenue coming from a smaller number of clients, your risks of a significant problem increase dramatically. If any one or two of your clients decides to leave, it can have a major financial impact.
2. I assume that most of the people reading this blog are selling to small businesses. If that’s the case, you need to be completely honest with yourself by acknowledging that your customers would rather not be spending their money with you. Nobody wants to pay for IT management and support services, they have to pay for it. Since that is the case, they will always try to get the lowest cost solution over time. Therefore, the bigger check they are cutting to you each month, the more likely they are to start analyzing those expenses and figuring out how they can cut them. It’s a funny paradox.
3. If you ever decide to sell your business, a smart purchaser is going to consider the above and lower your valuation. Think about it: if you were looking to buy a managed services business doing $5 million in sales per year that was made up of 10 clients each doing $500k per year versus a managed services business doing the same $5 million per year but made up of 100 clients each doing $50k per year, which would you consider a more risky purchase? In the first scenario, losing just one customer can completely wipe out your profits.

The net result of all of this? I believe that smart MSP’s will develop sales and marketing processes that allow them to affordably target thousands of small businesses as potential clients, not dozens. I’m not suggesting that it’s a bad thing to sign up larger clients, but I don’t think that should be the basis of your strategy, and I think you should do your best to not allow any one client to become more than 8% or so of your total revenues. I also completely support trying to sell what makes sense to your current clients to bump up their spend with you a bit over time, but again, I don’t think this is the foundation of a growth strategy.

Finding more clients is the foundation of a growth strategy!

MRC