Words of wisdom on team management from our founder, Jim Fowler.
Owler Founder & CEO provides his insights on how to best manage a sales team, particularly a start-up team. Check it out.
Before founding Jigsaw I was V.P. of Sales at three different companies, and a bag-carrying sales rep before that. I learned a couple of sales rules the hard way. One of my favorites is: Fowler’s Rule of Fives
For every five sales reps you hire:
- Three will fail
- One will barely get by
- One will do80% of the bookings
The Fowler Rule of Fives is a classic Pareto Principal (80% of performance comes from 20% of the investment). And yet, this concept still surprises many Sales V.P.s, Executive Teams and Boards of Directors. Many have a hard time believing and/or accepting it. This rule applies more to start-ups than mature companies, but I believe it is directionally correct for almost every sales organization.
If you agree with the rule the actions to take become clear:
Step 1 – Fire your failing reps fast
You must measure your sales team’s performance very accurately (using whatever pipe management technique you wish). Without numbers its impossible to tell who is failing and why. More importantly, you won’t have a way to fire them fairly or with dignity. It is essential to fire your non-performers fast so you can replace them with performing reps.
You must use your early pipe metrics in order to quickly sniff out your reps that are going to fail. Don’t use close percentage as your measurement. It takes too long to generate for most sales cycles and it lets bad reps to hang around for months (or sometimes even years). More importantly, if a salesperson can’t set-up meetings with the right people early in the sales cycle, I can guaran-damn-tee that they won’t be able to close the deal later in the sales cycle.
As important as it is to have metrics, it’s equally important to communicate how performance is evaluated. Make sure your reps understand and buy-in to your success metrics from the beginning. This makes it much easier to fire the reps that fail. The decision is then based on numbers, not whether you like them or not.
I recommend you find a way to make a hard decision on a sales rep by the end of their first ninety days. By the end of ninety days you know – you may just not be ready to admit it yet.
Step 2 – Prepare your CEO, peers and Board of Directors
Your primary function as a sales leader is to build and scale a sales team. What are they going to think when you start quickly firing three out of five? The answer is something very bad – unless you prepare them in advance. You must get it in your mind that 60% of your sales hires are going to fail. Then, you must get it into the mind of your CEO, your peers and your Board. Make sure they understand the math and your plan in advance. As your company matures your sales rep failure rate will go down. You’ll learn how to hire and train reps who can sell your product.
Step 3 – All Hail the 20%
Take great care of your rock stars (the 20% of your reps who do 80% of your bookings). Never listen to a board member or finance person who says: “We can’t pay someone that much money (or give them that much stock)”. Make everyone understand exactly how much 80% of your bookings are worth. I bet someone is trying to recruit your sales superstars right this minute. You must prevent this.
Step 4 – The Other 20%
One of every five will book enough business to justify their continued employment, but just barely. These cases are the hardest to manage. This is a grey area, with no binary answers, other than you have to work hard to turn your B Players into A Players.
Here is another consideration for the 20% that are on the ragged edge. Some sales reps can prospect like crazy, but can’t close. As you tune your sales machine you may find that you have a place for sales reps that can appointment-set or present a solution, but can’t close. It is to your advantage to allow your closers to perform as much late stage pipe work as possible.
The Fowler Rule of Fives is scary. It is in our nature to protect our team, and our personal reputations. Three failures out of five are hard to accept. I challenge you to take a deep look at your sales team. If The Fowler Rule of Fives doesn’t apply to you I offer my congratulations. In my experience you are a rarity. If it does, I hope the above helps you think through what you need to do.