Time and money. The two are intrinsically tied and if you are trying to get something done you are going to spend one or the other.
When your core business is going well you focus on that and are very quick to make decisions regarding the tools and resources we need to get the job done. Conversely, when money is tight or the economy slows down, you will be more likely to inspect every purchase from airline tickets, to office supplies, to personnel before purchasing.
When it comes to personnel we need to spend both or it becomes more expensive in the long run. Let me explain.
If cash is flowing and you need to add people you sometimes become too aggressive and let the quality slip. If the economy is good and there are people available you sometimes don’t perform the due diligence required and you burn and churn people. Put an ad in the paper or online and get someone in the territory! They don’t get the attention they need or the manager is not committed to them and they fail. Three entry level reps turning in a sales territory can cost in the area of $100,000. The statistics show more than half of the reps in the field are below 50 percent of plan, which would support a turnover rate of about 50 percent.
If things are tight and you have a few open territories, you might decide to let the other reps cover it or worse, leave them unattended. Even two low-level territories that you would normally get $350,000 from in a year will cost you $140,000 on the equipment transaction at 20 percent margins ($700,000 X 20%) that plus the erosion of the service and supply base another $70,000 based on a 25 percent turn and 40 percent margin ($700,000 X 25% X 40%). It is not easy to net $210,000 and here you are leaving it on the table.
The solution: Spend the time to hire the right person through an extensive interview process. I like three with one non-sales executive in the mix such as a trainer or HR executive. Spend the money to be competitive in your market. Make the investment in the people and ensure that your management team is paying enough attention to make that person live up to what they told you when you interviewed them. We all know there are no magic bullets, so your culture needs to be one where you can make quick decisions about people who misrepresented themselves or are just not willing to do the work necessary to succeed.
Our two basic resources are time and money, use them wisely.
