Many companies have growth as their objective and sales must make an important contribution to this. Expanding the team is a logical step to realize more sales, but with only extra people there is little chance of success. What should management pay attention to for the highest return?
The need for more sales with management often stems from strategic changes: a large new investor, merger or acquisition, new products / markets or a change of leadership. The expansion of the sales team has consequences for both existing and new sales, so a coherent growth plan is important. Because more is not always better. We list a number of pitfalls:
Growth costs money and that is why management sometimes keeps its hand on the mark. In terms of costs, this is probably not unwise in the short term, but in the long term this can be detrimental to earning capacity. In this perspective, costs for new employees are an investment in, for example, future market share.
CRM is an important tool for assessing sales teams in many organizations. When it comes to expansion, however, they ignore this instrument and rely on instinct and gut feeling. If growth goes too fast, resources are wasted due to a lack of support. Profitability and market position are endangered if expansion is too slow.
Return-on-Sales or Efficient Frontier Benchmark calculations help determine the optimal size of the sales team.
With expansion, there is a risk that too many sellers will be active in the same area. New or inexperienced sales professionals will then focus on low-hanging fruit to achieve quick results, at the expense of customers with better chances in the longer term.
With an optimal staff distribution, the turnover from 2 to 7% can be higher without further effort. Companies can determine the optimum distribution with three variables: the potential of the area, the existing customer base and the workload. With the right division between workload and earning opportunities, sellers focus on the most lucrative customers.
Division of tasks
The expansion of a team also leads to more administration and management. There is a risk that sales professionals will take on too many of these tasks, putting their core tasks at risk. According to American research, the average vendor spends 8-10 hours on internal administration, 5-7 hours on customer service and 7-11 hours on travel. Expansion of the sales team also involves a growth in support staff, so that sales people can focus better on their customers.
The remuneration of sales professionals must be in line with the strategic business objectives. But what was previously effective and profitable does not have to be in a new phase of growth. Three elements of effective pay:
a) Simple: sellers can easily calculate their earnings based on their performance
b) In line with business objectives: market share, profitability, turnover
c) Immediate: success or failure has an immediate impact on their salary