9 Things Small Business Owners Need to Review With the Sales Department

It doesn’t matter whether your sales department consists of one (yourself) or several people, if there are company salespeople or independent sales people on commission, if you have a sales manager or you are the sales manager. You need to take some time before the New Year to review your department.

1. Sales Management:  Do you have a sales manager? Or, as in many small businesses, the owner is usually the sales manager.  Regardless of which category you fall into, you need to evaluate yourself, or your sales manager, as a sales manager. Before you can evaluate, do you have an idea of what sales management is?  Here is one definition:  It is a discipline which is focused on the practical application of sales techniques and the management of a firm’s sales operations to include talent development and leadership. Is your sales manager leading and coaching your sales team?

Are you, as the sales manager, leading by example?  Are you finding new distribution channels?  Are you offering new creative ideas for your sales team or you do not have the time?

2. Distribution Channels:  As a leader, the sales manager should be concerned about distribution and how to increase it. Too often we wait until we are desperate, to explore new channels of distribution. As the sales manager this should be a primary objective and goal.  This demonstrates leadership, creativity and aggressive thinking. What are your primary distribution channels and percent of total volume from each? Do you have new distribution channels from past years? If you have not identified potential new distribution now is the time to identify them.

3.  Key Accounts; who are they and how many account for 80% of the business?  This is one of the most important pieces of information that should easily roll off your tongue without thinking. This gives you your risk factor.  The fewer the number of accounts that make up 80% of your business the higher your risk factor is.  I tell my clients that you do not want any one customer/client to be more than 20% of your total business. What are the top accounts that represent 80% of your business in the past 5 years?  Do this for each year. 

4. Evaluating outside sales personnel:  Are they in-house, independent, or a combination?  Regardless of the type of sales personnel, you should evaluate them all.  There will be some variations in how you evaluate them based on the type of sales personnel you have.

a.) Achieving sales objectives:  If you did not set sales objectives you should have.  These objectives should include number of new accounts, number of reactivated past accounts and increase in sales from previous year for each account.

b.) Experience:  Experience can be both a positive and a negative. Try to establish the experience level of your sales personnel. Determine how much experience they should have and then use that in the future when hiring sales people.

c.) Enthusiasm:  There is something to be said about the fact that if you are enthusiastic about your company and your product, that enthusiasm is transmitted to your buyer and they will buy.

d.) What is their “Elevator Pitch?” Everyone in your company regardless of their position should have an “Elevator Pitch.” They should be able to, in 30 seconds, give a summary of what the company does. You need to establish one that everyone in the company can use and you need to constantly reinforce the pitch. Your sales personnel should be able to develop their own based on their style of selling.

5. Competition:  Do you, and/or your sales manager, know who the competitors are and how your company compares to them as far as strengths and weakness?

6. Compensation:  Is your compensation program in line with the industry? For most small business owners, I recommend a subsistence salary and good commission or overrideWhat is your average compensation to each sales person? Also, look at the lowest income producer. If your lowest income producer is well below others, maybe it is time to cut him or her loose because you are not happy.  It is likely that they are not happy either.

7. Customer/Client trends:  Accounts are trending – how do you trend with them?

8. Programs:  Are your programs creative or just the same repetitive program used over and over?

9. Pricing:  Do your sales recommend pricing? Is there sales, profit, logic and market sense in your pricing?

This is not intended to be an all encompassing review. We know that all small business owners need to step back and review these points as they relate to their business.  Make some notes and lay out a plan to address your weaknesses for the upcoming year.

Please accept our gift and sign up for our e-book.  These 9 things for your review on sales management are fully expanded and are an integral part of my e-book:  Small Business Owners; Annual Financial and Business Checkup that will be published in November.  Sign up now to receive a free copy when it is available.