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Now there comes a point in time in every agents life, when a New Sales VP at your favorite Service Provider comes in and takes over your old Sales VP’s job. That’s a pivotal point in time in every sales agents life. The new guy is going to really want to kick the old guys ass. Make a big splash, improve some numbers quickly and leave no remnant of the last guys program.

Robert Duller’s power point flashed on the screen and you could hear the glasses in the room being placed back down on the banquet room cocktail tables. Eyes swung forward to the screen.

What typically happens now is the description of why the old plan or old contract was bad…and why a new contract needs to be created. In this instance, we’d received an ominous email about a month ago, quoting an obscure lawsuit filing that required a plan change so that they could be in  “compliance” going forward. At the time, we didn’t think much about it because the lawsuit was brought over price fixing on equipment, and well, we were in the services business.

“The old plan and the commission levels that were in it are too high and are therefore unsustainable going forward.”

Stake into our hearts. Our balance sheets.

“Now we want to let you guys know just how valuable that you are to us. So we’re going to take some time here and go over what will be required for the new plan going forward.”

Silence in the room. “Um..we already have a portfolio of clients here, did he just say, What will be required?

Unfortunately, yes. What ensued over the next 90 minutes was a complete dismantling of the old plan as we knew it.

Our commission payout percentages, client upgrades and getting paid on contract renewals. All gone in the first few slides. We had a multi million dollar portfolio of clients that we’d built over the past 4 years that didn’t seem to mean anything.  Commission percentages alone were dropping 75%. We had to qualify with hitting a number of deals as well as higher revenue commitments. We were stunned…

We also had a contract that had about 12 more months in it.

Now Robert was not the most popular guy in the room – or for many months after, but this happens all the time in Sales organizations. The new gal comes in and takes a look at commission checks that are going out to the partners and sees a great opportunity to take back some revenue. Its to be expected in some parts of the sales universe.

All the more reason to have a very good contract and one that you invest in having an attorney review and modify so that your business interests are protected. That means commissions, renewals and upgrades need to be protected in your contract if you are a sales agent. Paying someone $1500.00 to $2000.00 now to review your contracts and make changes and suggestions can save you tens of thousands of dollars down the road. Keep in mind that sales leaders will change, the person you sign your contract with will move on to another position, your service provider will more than likely have in house counsel and if things get dicey down the road, you will be paying your attorney by the hour if there’s a dispute. They will not.  Invest up front.

There have been many more  trips to Texas since then  to work on our new relationship. It’s a work in progress!

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Tagged as: Alternate sales partnerships active garage, attonerys, ayuda networks, commisions, gary veselka, invest, sales and maketing, sales commisions, sales partnerships, tina burke

Alternate Sales Channel contracts are relatively simple in concept, yet complex in execution and long term survivability.

Here’s why: Most companies already have a Direct sales team. People that they’ve hired, trained and provided benefits to and a salary. Those are hard costs that finance knows down to each sales person that they are paying a salary. Companies also know just how profitable each sales deal is, is not – or just how long it will take for a deal to become profitable. Finance takes into account:

• Marketing – as in trade shows, lead generation or web marketing.
• Training – any efforts like brown bags or flying people in for new hire orientations.
• Equipment –  Laptops, Lunches, Cell Phones, CRM licensing, coffee.

The pieces are complex to produce a sale and market research has conservatively  pegged the cost to hire of a new sales person between $200,000 and $250,000. Will they be good and sell something?? Hit the quota that was designed to cover the costs of hiring them?

In addition, just about every department in a company has to provide something in order for that sales person to produce a sale. It gets expensive. We haven’t gone into soft costs of cultural fit. Will this person get along with the rest of the team, be good in front of clients, be dependable, professional and a good representative of the company?

Expensive. Risky. Yet traditional.

What to do? There’s got to be a better way.

You need to go out and find a professional sales team. A group of individuals who understand your product and service and who are already aligned with your client base or the client base that you’d like to have. Find a gun for hire to get the job done.

Cheap. Risky. Non-Traditional.

How to find the ever elusive effective, professional independent sales producing machine?

Let me assure you, they do exist. But it will require a different mindset from Executive leadership, finance and sales to have an effective relationship.

First you need to have a good product or service. Obvious, but true.  It’s going to have already been through testing and you’ll need to have some operational history under your belt. Then you’re going to need a good sales contract from finance.

Finance should be ecstatic to design one for an alternate sales channel team. Here’s why: An alternate channel sales team isn’t costing the company an upfront dime. Finance isn’t paying a per headcount salary before one sale is made. No laptops, no flying in for new hire training. (Most independent agencies will fly themselves in for training if your product or service is good enough, see operational history above.) Agencies have their own CRM software that they pay for to manage their business, their own cell phones and their own lead generation. They bring you clients and relationships that you are looking for without the hard and soft costs.

Second, you need to have a good sales contract for these organizations. Executive leadership needs to recognize that these are clients that you wouldn’t ordinarily have. The end clients are typically well qualified and already trust the sales agent. The sales cycle will be much quicker because the sales agent has already gone through the dating stage and they are making a heavy recommendation for your product or service. They are also going to be self motivated to know everything about your product or service.

Now the tricky part.

How do you pay an independent sales person to sell your product or service?

You can do that as a one – time payment that’s paid after the client has paid their first bill. Its generally understood that with one time payments, you own the client 100% going forward and that you have no more obligation to the sales agent after they’ve been paid. That can be a double edged sword when its time to renew your product or service and needs to be thought out with management.  The second alternative is to pay out a monthly residual payment. If you go this route, make sure that it’s a payment that you can maintain over the length of the contract. Its perfectly acceptable to ask the sales agents perform additional tasks in exchange for a higher commission percentage. For example, sell more deals, participate in renewals and upgrades. This way, you also incentivize  the agent to stay involved and support your client over a long horizon of time without the added cost of customer service. You also avoid the potential of that agent moving your client away to another service provider when the original term is up.

Be prepared to spice things up with your existing sales team. Adding an alternate channel sales team always causes sparks and creates competition. You can design a program that is inclusive or competitive. Inclusive would mean that if both your sales person and the agent were working on a client, then Finance would decide to pay each person. This is a little more work on Finance’s part because they have to factor in the cost of what they are paying their sales people into the deal. An Exclusive plan would essentially mean that whoever signs the deal makes the commission. As you can imagine, this requires a good rule book with a strong sheriff for the town.

Last, don’t play with people’s money.

That means a few things. Make sure that pricing for your product or service is level across all playing fields. Meaning, make sure that the direct team has the same pricing as the agent team. Hold steady. Give everyone the opportunity to make the sale.  If you do promotions, make sure that everyone has access to them to offer to prospective clients. This will make your entire sales channel strong and consistent.

On the back end, don’t ever change commission payments before the term of the contract has ended.  Pay people on time and consistently and make sure that if you hire a new head to take over your sales organization, that s/he takes care of all of the people who have done a  good job for you already.

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Tagged as: active garage, Alternate sales partnerships, ayuda networks, backend sales commissions, clients, front end sales commissions, sales agents, sales commissions, tina burke

This was probably the eighth or ninth time we’d flown back to Texas over the past 5 years to see these guys. This time, it was to meet with the New VP of Channel Sales who had some “exciting announcements” for all of the companies who were in their current partner program.

My business partner and I eyed one another over the rental car.

“What do you think the big announcements going to be?

“Well let’s see…I bet its going to be a new commission program, more resources…and maybe a year end contest for all of us!

“I’ll add a new portal to that list. They haven’t had one of those…to make us more efficient of course.”

“How could I have forgotten the portal?  Perhaps a new area manager as well for us, to meet with us more regularly and make us more efficient.”

We laughed over the repeated list, turned on the air conditioner in our rented Chevy and pointed our car down the I-35.

We actually like this company quite a bit because we had so many of the same great values. For example,

Procreation! They had a great product offering, and we had many clients. Together we had made many happy clients. Great Communication! Sure, we’ve fought over commissions, but we always manage to email or call about them, resolve them and then make up.

Finances! They didn’t have to pay a sales representative a salary or spend one marketing dollar for us to bring them a good, qualified highly closeable opportunity. We got a great commission percentage in exchange.

Open, honest dialog: We flew back to take product trainings on our dime and were able to bring real client feedback that they adjusted to.

Support – We had the same account manager for over three years. He was making his numbers and we were doing well together, we were efficient in bringing  and installing clients together. Everyone was doing well.  We were in a good period of time together, way past dating, and maybe four years into the partnership.

As we checked in to the hotel, we walked in with Frank from Solutionet. Frank beat us out last year for the number one partner, and we really wanted that title back. Aaron, the number three partner from DriveDebt was also there in the lobby. A good friendly competition between the three companies was in play and we all smiled and laughed at one another in greeting. “Wonder who’s gonna get numero uno this year??!! Frank was all about the joint marketing opportunities that he was able to create with these guys and Aaron was all about being able to access and utilize the partner ecosystem. It was a healthy business enablement program for everyone.

We milled into the banquet room with our drinks and watched the AV screen roll down from the ceiling. New guy in slacks and a button down strolled up to the dias. “Welcome everyone, I’m Richard Duller and I’m going to walk you through the new program. By now, you’ve already been made aware that we’re changing the program with the email that you received inviting you to the conference. Essentially, the past program was unsustainable.”

Collective “Uh-oh!

“We’re going to walk you through what the new program is going to look like going forward.”

Something told us all to buckle in, changes were ahead…

Stay tuned for part-2 of this post…

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Tagged as: active garage, Alternate sales partnerships, ayuda networks, customers, data center services, gary veselka, Sales and Marketing, tina burke

“I need to get your thoughts on what I’m thinking of doing!”

It was my long time colleague Gary on the phone. We’d worked together at Qwest for four years in the shoot ’em out years of early 2000. Gary ran the sales and operations team that supported the direct sales teams for the Global Account organization for the West. We sold it… and he installed it.

“Sure, whats up?? “I’m thinking of taking a job as a Director of Sales over in the Agent channel.”

Now back in the day..announcing a career move like this would be like Sara Palin suddenly choosing to become a democrat.

“Um…”

“Before you think I’ve gone completely nuts, hear me out. I’ve been in this position for five years so far, done really well and don’t get me wrong, but I am so tired of babysitting entitled sales reps! I already have 3 kids under the age of 12 at home and these guys are so undisciplined about just the basics that its completely infuriating day in and day out. I’m over it – and I really like the company because we’ve got a great product. Slogging it out this way every day trying to get sales people to really work hard for the numbers truly sucks though.”

I started to laugh in commiseration … “Don’t laugh…can you tell me why you did it so long ago?

Well..the truth is that I had been sitting on General Manager calls every week for months listening to the sales numbers that were being posted .. and the alternate sales channel teams outsold the direct sales teams four to one, week in and week out. The CEO of the company loved it because the alternate sales channel was much more profitable – no base salaries to pay or headcount turnover.   My own direct sales organizations numbers were anemic and I could empathize with Gary’s frustration. Years ago, I had also grown weary of chasing my sales team with EKG paddles.

“Gary, I think it’s a smart move and I’ll tell you why…”

1. Independent sales agents are highly motivated to make things happen because there’s no salary check auto-magically coming in the mailbox for them from corporate every two weeks. Agents have to own their own destiny without the safety net of a base salary.
2. They have to hunt clients, treat their clients like they are family, absolutely find the best solution for them, sell it, install it and then take care of it long term by themselves.  That bakes in responsibility if that agent wants to survive long term. What I’ve found is that they are aggressive, they hunt for their own relationships and they are very entrepreneurial in actually helping their clients.
3. They also take responsibility for producing their own results. Its refreshing…and quite a big behavior change. These guys truly own their own business and take a lot of pride in producing autonomy for themselves and a livelihood for their families. Its like walking out into the sunshine after you’ve been chained to a wall as far as I’m concerned. You’re also going to be the Director who brings in pure profit, and not a headcount and resource drain for the CEO.

More and more companies are moving in the direction of cultivating and growing an alternate sales channel. They get the benefit of a highly motivated sales team that they don’t have to pay a salary to and access to business that they would have been competing for…  Its good business for everyone and helps to keep the business climate healthy.

“Gary, I think it’s a great move and that you’ll truly enjoy it”.

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Tagged as: alternate channel sales, ayuda networks, clients, Entrepreneurship, gary veselka, motivated, qwest, responsibility, Sales and Marketing, sales partnerships, tina burke