Why Entrepreneurs Should Rethink Their Stance on Hiring Salespeople
September 4, 2014
It's no secret that most entrepreneurs have an engineering background. I've worked with and written about engineers-entrepreneurs for most of my career and love the way that they've always got a vision of the future.
Unfortunately, these visions all too often have a huge blind spot: a profound disrespect towards professional salespeople, the very employees they'll need to grow their business beyond the startup phase.
The problem is that most engineers believe the old saying that "if you build a better mousetrap, the world will beat a path to your door." Therefore, all a salesperson needs do is "take orders," and then only if there's no way to buy the product directly on the Web.
Furthermore, since engineers generally believe that the product they've built is not only "a better mousetrap" but "the best mousetrap ever," suggesting that a salesperson might be required to sell that product seems like a personal insult.
Engineers also tend to judge people based technical expertise. To them, salespeople are automatically empty-suited lightweights because if they were technically competent, they'd be engineers rather than salespeople, right?
Finally, many engineers are plugged into geeky pop culture which, when depicting salespeople, invariably uses the tired stereotype of the fast-talking con-artist. As one young engineer I knew once put it: "Salespeople are slimy."
This attitude, when carried into the corner office, tends to produce the following three ineffective business strategies:
Ineffective strategy #1: Precarious product positioning
The belief that truly great products should be purchasable over the web (and without a salesperson) often drives companies to develop commodity products that are easily imitated and therefore vulnerable to price wars.
Price wars kill profits. The only way to keep profits high in a commodity market is to spend (or have already spent) millions and even billions of dollars on branding and marketing, not to mention ongoing development.
Even when a company has deep pockets, this approach doesn't always work. For every commodity product that can command a premium price (like the Apple iPhone) there a dozen heavily-marketed products that don't cut it.
If a company lacks deep pockets, the only hope of becoming successful in a commodity Web-purchasable product lies in going viral, which is the business plan equivalent of "Step 1: Win the Lottery."
For small businesses and startups, the profit generally lies in corporate purchases, usually with some kind of customization. Such purchases, however, typically require a salesperson to shepherd a project through the maze of corporate decision-making.
Ineffective strategy #2: Weak hiring practices
Even when entrepreneurs do avoid the trap of a commodity business model, if they're generally dismissive of salespeople, they're unlikely to take much care in the hiring of them.
Rather than taking the time to find and hire salespeople with business acumen, psychological maturity, political savvy and industry knowledge, entrepreneurs with an engineering background tend to hire two types:
- Salespeople who correspond to the con-artist stereotype.
- Would-be salespeople who can function as "order takers."
In either case, the results are disappointing.
The "I can sell anything to anybody" fast-talkers tend to antagonize customers rather than win them over. In reality, a big part of the job of selling today is overcoming the stereotype and certainly not confirming it.
As for the "order takers," they simply do not have the skills required to make big corporate sales.
Ineffective Strategy #3: Inappropriate compensation plans
Because engineers don't respect salespeople or understand the process of selling, it seems insane to them that a top salesperson should make considerably more money than, say, an engineering project leader.
This dismissive attitude results in two strategic errors:
- Reneging on commissions. Over the years, I've received dozens of complaints from salespeople--mostly from small high tech firms--who were promised large commissions but subsequently "taken off the account" just before it closed.
- Putting salespeople on salary. As one engineer-turned-entrepreneur put it in a recent blog post, salespeople should be "just like every other professional, whether in your marketing, HR, or finance department." (Note the absence in the list of "engineering"!)
Failing to pay promised commissions is a strategic error because it drives away your most talented salespeople, assuming you've been lucky enough to hire one.
Putting salespeople on salary is similarly a strategic error because the only salespeople who' are willing to work for a salary are the ones who can't sell very well.
As somebody who's built a software product (at Honeywell) and sold it to a major corporation (Lockheed), I can say with some authority that selling a product at the corporate level is far more difficult than engineering it.
The reason that top salespeople prefer to work for commissions is that they're well aware that what they're doing is both difficult and essential. After all, when sales don't happen, companies die. Salespeople thus expect to be well paid when they get results.
What entrepreneurs should do
The three ineffective strategies described above produce predictable results: the inability of a start-up or small firm to make the transition to a larger company that can sell in volume.
It's therefore in the interest of entrepreneurs to 1) rethink the beliefs upon which those strategies are based and 2) change the strategies themselves so that they position the company for growth.
Of these two actions, the first--rethinking the beliefs--is by far the most important because strategies emerge from beliefs.
Step #1: Rethink the way you perceive the value of salespeople
Entrepreneurs who continue to believe in the "better mousetrap" theory will inevitably gravitate toward strategies that devalue the contribution of salespeople. Similarly, entrepreneurs who continue to think of salespeople as "slimy" will fail inevitably make poor hiring decisions.
There are two ways to change beliefs: 1) reframing, which consists of putting your current observations into a different context, and 2) reality-check, which consists of looking at a situation without pre-conceived notions.
The "reframe" in this case is to think about salespeople as entrepreneurs rather than employees. Entrepreneurs take on the risk of failure today in return for the promise of a bigger reward in the future.
This is exactly what salespeople do when they're paid on commission. They take the risk of failure upon their own shoulders. If they don't get results, they don't get paid anything (or a bare minimum). If they do get results, they should make big money.
The "reality-check" in this case is for entrepreneurs to consider their own experience buying from salespeople. Almost everyone in business has had a positive experience buying from a salesperson who "just didn't seem like a salesperson."
To a busy entrepreneur, the kind of salesperson who makes life easier and "takes care of things" is golden. When that happens, you don't worry about whether the person selling to you is on commission or not. You're just grateful to be well served.
Needless to say, that's the kind of salesperson who entrepreneurs should be hiring to sell their own products and paying them well to do so.
Step #2: Adopt better strategies to hire and motivate sales people
Using these new beliefs as a foundation, it's now time to execute strategies that will help the company to grow:
- Refocus on niche businesses. A small company is more likely to prosper when it avoids commodity markets where the financial resources of large companies give those companies a competitive advantage. Instead, entrepreneurs should look for markets where salespeople and the services that they provide make it difficult for large companies to compete with "cookie cutter" products.
- Revamp your hiring practices. Hiring the best salespeople requires both research and creative recruiting tactics. Ideally, you should be spending as much time and effort recruiting and hiring salespeople as you spend recruiting and hiring engineers. I discuss how to do this in my earlier post "How to Hire Top Salespeople."
- Set (and gladly pay) good compensation. Reward salespeople who consistently produce good results with big commissions and perks. There's a reason that sales commissions are as old as selling itself. They work.
Author bio: Geoffrey James is an award-winning columnist for Inc.com and the author of Business Without The Bullsh*t: 49 Secrets and Shortcuts You Need To Know.
* image by Startup Stock Photos