Has anybody out there had any experience -good or bad- with hiring a salesperson to sell remodeling jobs?
We’re a high-end builder/remodeler with 3 partners. In the past all of our work has been sold by one or another of the partners, with the recent exception that our estimator, who we’ve been grooming for years, has been coming on sales calls and shows a growing aptitude for the role.
But what I’m talking about is placing an ad for, (or more likely, talking to a headhunter) and hiring someone from outside “the family”, who would expand our network of leads using the same formula that we have for years: schmoozing realtors and architects, chatting people up at cocktail parties, class reunions, etc., etc.
Of course, most of our work comes word-of-mouth from satisfied customers, but we need to start new branches on that tree, and also free up the partners for the role of “project executive”. Our ideal job size is 500K+, but we end up doing plenty of smaller projects.
And how would we compensate him/her? Pure commission? Pure commission with a specified draw against that commission for the ramp-up period? How does it work if he or she sells a loser? We work cost plus, but, of course, are held to account if our budget proves to be significantly low. What is an appropriate commission? Other ideas for compensation?
Thanks,
xcarp
Replies
(Salary + car allowance) plus performance bonus"commission" that's paid out in 4 quarterly payments against the dogs he/she sells. It's a combo of insurance & TinMan sales.
I'd run a scenario of 2 to 4 sales per month over 24 months to see if I could live with the money that would be paid out. Throw in 3 real dogs and one break even to keep it real. 'Hope that helps.
Best to you and yours, Chris.
Some say I know too much? Can you ever?
How do you intend to put your salesman in contact with the right people?
When I think of sales I see someone who is spending a lot of time cultivating relationships with clients/customers. A direct face to face relationship discussing needs and your ability to meet them. I am having a hard time visualizing how a salesman would function in your industry.
Granted every home in town is a potential client...but door to door for buidling, renovations, and remodeling is very hokey.
I would like to understand more about how you would have a salesman function in order to better offer advice.
same formula that we have for years: schmoozing realtors and architects, chatting people up at cocktail parties, class reunions, etc., etc.
That's marketing, not sales.
SamT
Anyone who doesn't take truth seriously in small matters cannot be trusted in large ones either. [Einstein] Tks, BossHogg.
"That's marketing, not sales."
SamT:
Okay, I guess I can agree with that. So are you saying that we can't expect a hired gun to generate his/her own leads...or are you just correcting my nomenclature?
Okay, I guess I can agree with that. So are you saying that we can't expect a hired gun to generate his/her own leads
In a sense, yes, but I'll get to that in a bit.
or are you just correcting my nomenclature?
More like trying to correct your (aim? thought patterns? considerations? disconnects?) . . . something.
From: http://www.crmmastery.com/weblog/2003/10/13.html. With some editing for our discussion since there is no readily available universal definition for "lead."
In your case, you find Leads by shmoozing with Architects and Realtors and party invitations. You might be getting Prospects by word of mouth marketing by past clients, Architects, and Realtors
Something else to think about; What qualifications will a salesman for your company have to have?
Understand drawings and prints.
Familiar with construction.
Ability to estimate.
Etc?
Finally and most important; What do you hope to gain by hiring a salesman?
Of course, most of our work comes word-of-mouth from satisfied customers, but we need to start new branches on that tree, and also free up the partners for the role of "project executive".
More sales with less sales time by the partners.
A good salesman expects a commision of 10%, about the same as an Architect or Realtor. If he only makes one sale in a year, that would be $50,000.00. What is your current marketing budget? How many more Prospects could you expect if you allotted $50,000 to Marketing.
Of course that would mean even more sales time for the Partners, and you don't want that. How about first spend $10,000 on really improving your Prospect screening system and kicking out 90% of the tire kickers? Pay a Bob Kovaks type another 10 grand to improve your estimating system and cutting that bottle neck down.
This would leave only $30,000 for marketing, but I think that even I could turn that into several sales in 2 months or less, but I would be working from a Marketing stance with the actual sale being only secondary.
ps: What's a "Project Executive?"SamT
Anyone who doesn't take truth seriously in small matters cannot be trusted in large ones either. [Einstein] Tks, BossHogg.
Edited 2/15/2007 4:07 pm by SamT
I spent 20 years in sales, the last 10 as outside sales of custom installed home theaters and whole house A/V. From my experience:
You hire a salesperson to chase the leads developed by your marketing. If you are expecting a salesperson to create and then close their own leads, in my opinion that is not a salesperson. That's a partner.
The skills required to generate leads are different that sales, so is the compensation. A good salesperson wants to be able to see where their leads are going to come from, before they agree to take the job.
If your marketing is good enough, closing sales is much easier, as much of the resistance to the sale gets broken down by the marketing. It sounds as though the first thing you folks need is marketing. Once the number of leads generated by the marketing exceeds your capacity to chase, then you hire a salesperson.
Good luck.
You nailed whatI was fishing for with my questions. I wanted him to walk himself into this revelation. Nice post.
Aw shucks. Thanx fer the praise.
xcarp,
Be careful, many who sell cannot conceive well or they may lack experience with the actual mechanics of construction so they could offer more than can be delivered..
You're looking for a very specific bird. One with Skills in sales, and the ability to follow thru.. It's important that the sales person remain in contact with the owners thru the project in order that the owners don't feel they were "sold" something. In addition referrals always seem to go to the contact person. If the last time the owners deal with the salesman is when he receives the check and get's their signature there will be a good possibility of an adversarial relationship rather than a friendship created..
To a degree a good salesman should have some level of project executive, he can mediate conflicts best because he developed the relationship which got the job.. He should be held accountable for the profit of the project and his commision should reflect that profit to motivate him to bring in profitable deals and avoid deals that offer little for the effort expended..
Car allowance, a keep the wolves from the door draw and a significant percentage of the profit to repay the draw and car allowance.. In the end a great salesman makes money for the company not costs the company..