You can quickly tell which sales managers have gotten to their position because they were true professionals, and which got to their position because of politics, by asking one question. When they answer the question it also tells you what they think about their customers. The question? “What do you think about paying salespeople for add-on business to existing accounts?”
The political sales manager is against it because the controller, CFO, and other executives who have never sold are against it. To them, commissions are an expense and not an investment. At one Fortune 500 company I worked at, the new and sixteenth sales manager in four years, came in and took away 90% of the salespeople’s accounts and gave them to in-house service representatives.
Eighteen months after this happened, the company lost several thousand customers that it never got back. One of the managers told us later that the reason the sales manager did this was because when customers added on new products to their accounts, the company didn’t want to pay the salespeople a commission because “they didn’t really work as hard to get the add-on sale” and by letting the service people take care of add-ons there were no commissions to pay. Companies give lip service to the “churn rate” (customer turnover), but often undercut the people who could keep the customers to begin with.
Sales managers should be advocates for their salespeople
The professional sales manager will fight management to make sure salespeople are paid their full commissions. These sales managers really had to sell, meet quotas, and make customers happy. They understand the value of customer retention. Not only are your customers happy with all the work you do, but they give you referrals within their organizations and to friends in business. They buy more without a longer selling process. They rarely negotiate for a better price or terms like a new customer will. If they leave their company, they will often take you with them to their new company.
These sales managers know that it takes a professional salesperson to understand the nuances of selling: a word spoken or not spoken, a glance of the eyes, a clearing of the throat, hesitation in answering a question, or a subtle handshake. Because of the on-going relationship the salesperson has with her customers, she can read these nuances in the right context and save many accounts. Professional salespeople pick up these clues on every contact, on every add-on, with the customer.
What a free agent salesperson can do to your business
Is customer retention important? Why do you think companies have always tried to get their salespeople to sign non-compete contracts. Customer retention is not maintained because the customer has your service or product. It’s because of the relationship the salesperson has with the customer. They don’t want their salespeople taking their customers with them when they leave.
How important to the bottom line is customer retention? The Harvard Business Revue found that the average organization loses 50% of its customers every 5 years; and the cost of replacing them can be 6-7 times more expensive than winning them in the first place. Studies have proven a 5% increase in customer retention can result in profit increases of at least 20% and as much as 80%. Is the commission paid for the add-on business worth it? You decide.
Customer retention is built by communication. It’s built by educating the customer about how you can help them reach their goals. It’s built by relationships. There is no shortcut to keeping the customers you have. It’s hard work that a good salesperson makes look easy. Good salespeople know the value of customer contact – because they know that every contact sells.
About The Author:
© 2009 Jerry Hocutt. Read more articles by Jerry at his blog http://footinthedoor.squarespace.com/journal and listen to a free preview of his CD/MP3 audio program Cold Calling for Cowards® at http://www.footinthedoor.com/freepreview.html.
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