Mike Huber
American MTS

You may have heard the saying that goes: “In business, nothing happens until somebody sells something.” Just about every aspect of a company’s operations revolve around the sales process.

Many growing companies in our industry have someone, whether it’s the owner or others, out meeting prospective customers and regularly selling products and services. The most recent Management Pulse Survey on sales compensation and strategy looks at how some EASA members manage this role how these individuals are compensated.

Finding new opportunities
Having responsive service and performing quality repairs are vital for a company to retain customers. But circumstances beyond our control, such as plant closures, turnover of key contacts replaced by someone loyal to another company, etc., can lead to loss of revenue. This revenue must be replaced for positive growth or even to stay at the same operating level. Unless you’re in an area that is experiencing rapid growth of new manufacturing plants, attracting new customers can be a challenge, especially when faced with customers that are loyal to their existing repair service center.

We have found that there are five primary ways to find new sales opportunities:

1. New facilities opening
2. Having a diversity of products and services that lets a customer utilize some of our services but still stay loyal to their existing repair center
3. Turnover of maintenance or purchasing personnel that will favor our company
4. Failure of a customer’s existing repair service center to provide the quality and service they require
5. Increasing awareness of the full line of products and services offered to our existing customer base

Need for outside salesperson
All of these situations require an active presence in the marketplace. We have found that traditional marketing techniques such as email blasts, direct mail postcards and phone calls are only mildly effective. The real establishment and growth of a sales relationships require face-to-face meetings with customers from an active outside salesperson. One meeting will probably not be enough to convince a potential customer to give you a try. Success typically requires persistence and tenacity to build trust and get that first opportunity.

Matching person with compensation program
Finding the right outside sales person and compensation program can be a difficult challenge. They will be out on their own most of the time and you must trust that they are working hard to represent you well and build business. Arriving at the proper mix of guaranteed vs. incentive income that motivates someone to continue to pursue new business without someone giving up too soon requires patience. If your compensation is too heavy on commission, the salesperson may become frustrated before he adequately builds a customer base. If it’s too heavy on salary, you may start questioning the value you are receiving to the point of letting someone go to cut your losses. It can be very difficult to keep paying a salary month after month that exceeds any margin you make from the salesman’s efforts.

Survey findings
The most recent Management Pulse Survey indicated 71% of respondents currently utilize outside sales personnel with more than one half of these paying a combination of salary plus commission. Around 22% pay sales personnel straight salary only. Total compensation for sales staff at the majority of respondents is either more than all other employees (10%) or at least more than all but a few management (51%).

Using manufacturer reps is another way of selling. The upside is that they already have an established customer base and you only have to pay them when they sell something. The downside is that they are working for other companies and may not be as focused on your products and services as you might like. You must also consider how their current line fits in with your company. You probably don’t want someone who is focused on low end products if you’re a high quality operation. Maybe the lack of control with this approach is why 86% of those responding do not currently use them. Of those that do, the majority of service centers take care of billings and collections themselves.

Route driver sales is a traditional method that is less common today and very difficult to stop once started. Once customers are trained that you will be showing up on a certain day every week can turn into an expectation. If you stop coming by and instead ask them to call you anytime they have a need, will they? Will a competitor step in and take over? Unfortunately, as more motors have become “disposable” and much heavy manufacturing has gone elsewhere, the expectation of picking up multiple motors at each route stop has changed. Sometimes your truck may be out all day and come back with only one or two small motors. Maybe that’s why this traditional method is now only used by 38% of respondents. Of those that do utilize routes, a full 70% have the sales person running the route.

The last survey questions dealt with house accounts. Almost 56% of the companies that have sales employees also have unassigned house accounts. Of these, 40% are called on by the owner/sales manager with an equal number not called on regularly by anyone. As customers have cut maintenance staffs to the bone, many supervisors are now very hands on. Stopping what they are doing to chat with vendors is probably not high on their list of priorities.

Thanks to all those who participated in this survey. The results provide insight as to what others in the industry are doing in this area. It is another great tool EASA provides us to help better understand and manage business. 

Categories: Technical topics

Tags: Management Pulse

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