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A Cheap Sales Force Is An Expensive Problem

From time to time I hear from entrepreneurs who want to grow their revenue without investing in a sales force. Some want to put no money at risk, but they want the results that only come from real investments. They want to be cheap for different reasons, but it’s often a resistance to paying before they get results or because they’ve been burned by salespeople that didn’t produce.

Regardless of the reason for not investing, a cheap sales force is really more expensive sales force. You may believe that commission-only salespeople, independent agents, or very low paid salespeople will help you grow your business and reach your goals, but they won’t.

Commission Only

Commission-only is a compensation structure that works in some industries, and mostly only where the sales cycle is short enough to allow the salesperson to be immediately compensated upon making the sale. It isn’t easily applied to long-sales cycle, complex sales where the salesperson might take months to build a pipeline and start winning big deals. Running down the commission-only road costs you time–time that you can’t ever recover.

Sometimes independent agents work. But if they represent you along with a lot of other products and services, you have very little control over how much of their effort is really made representing and selling on your behalf. More lost time and more lost opportunities.

Very Low Base, High Bonus

You may be tempted to try a very low base, very high commission strategy. But getting compensation plans right is more complicated than simply basing the base pay on how little you can get away with paying. If the compensation structure prevents you from acquiring the talent you need to compete and win, it’s an expensive sales force. You’ll spend time, effort, and money without producing the results you need.

Don’t believe that this means you should pay any price for the talent you need. Getting the talent you need requires a thoughtful, well planned, and well executed compensation structure. Your budget is a consideration, but there isn’t any way to build a professional sales force without making the necessary investment. The cheaper you are when it  comes to investing in a professional sales force, the worse your results will be–if you even produce any results at all.

Questions

What is the primary reason some people don’t want to invest in a professional sales force?

What are the real costs of an ineffective sales force?

How do you afford a sales force when you have real financial constraints?

How do you design a compensation structure that produces the real results you need? How much is that driven by real constraints and how much is imagined constraints or personal resistance to paying?


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  1. [...] blogger S. Anthony Iannarino recently wrote an excellent post, A Cheap Sales Force Is An Expensive Problem highlighting two good reasons why it is not a good idea to cut corners when it comes to hiring a [...]