Putting the right team on the field is crucial, especially in sales, where differences in individual performance are greater than in other functions. Studies in B2B contexts find that rep performance in similar territories often varies by 300 percent, while in retail stores selling productivity typically varies by a factor of three to four. In other words, there are salesstars in many firms.
But focusing on hiring only “the best,” as many firms say they do, is not the best approach, for multiple reasons. Given the time and management resources required, most firms just can’t afford to hire stars in all sales positions. When firms are polled about their recruiting criteria, over half say they look for “selling experience within the industry.” This means that you and your competitors shop first among each other’s stars. And research indicates that stardom is not easily portable, especially in sales. Sales tasks are determined by your strategy and target customers, and selling behaviors are heavily influenced by your control systems and culture. Those are firm-specific factors. When you hire a star, or when a competitor hires one from you, that salesperson leaves all of that behind.
The truth is, you’ll never have enough stars for all positions. In fact, you don’t want stars in all sales jobs. In any sales context, some activities exhibit high performance variability but little strategic impact. Others may be strategically important but exhibit little performance variability – because the tasks are standard, because your firm or industry has reduced variability, or because your business model simply limits the bandwidth of performance variance. Think about the difference between sales personnel at Nordstrom, where personalized service is key to strategy execution, versus Costco where low price and product availability make selling activities less complex and variable.
You want stars in selling areas that have both high impact and high variability. In areas with low impact or little variability, you don’t need stars and should not overpay, either in money or time. The real goal is to build and allocate the right portfolio of talent. Attention to three factors can help you do that.
Focus on how the salesperson makes a difference
Key activities will change as your market changes. In subscription-based businesses like software and many consumer Web services, sales activities with high variance and impact early on are about customer acquisition. But as the market matures, key activities tend to shift toward account management, reducing churn, working with engineering on custom applications, and up-selling or cross-selling additional services. Allocation of talent should also change.
Focus on behaviors in selection
Sales managers are excessively confident about their ability to evaluate candidates via a few interviews. But studies across job categories indicate only about a 14 percent correlation between interview predictions and job success. The best results, by far, occur when recruiters can actually observe the relevant job behaviors. Technology is making this increasingly practical to do via game-like simulations, virtual video environments and online media that allow for more behavioral assessments by more people at your firm with less travel and time. The real constraint in many companies is the sheer lack of assessment skills by many sales managers. That’s why links with good HR people can help. Sales managers should know the sales tasks that make a difference. But HR managers typically know more about the tools and techniques for assessing behaviors relevant to those tasks.
Be clear about what you mean by relevant “experience”
Many managers believe there’s a trade-off between hiring for experience and the amount of time and money they won’tneed to spend on training and development. But hiring talent and making that talent productive in your business context are very different things. In sales, “experience” can refer to any (or any combination) of the following: previous experience with a customer group (e.g., a banker or broker hired by a software firm to call on financial-services prospects), or a technology (an engineer or field-service tech hired to sell a category of equipment), or a geography, territory, or culture (e.g., someone who knows and has credibility within the customer’s organization). The relevance of each type of experience varies with your strategy and sales tasks, not those of a generic selling methodology.
In appraising talent, some managers “know it when they see it,” and many don’t. Talk about hiring “the best” is too often a cover for evading more fundamental issues that drive sales performance. Want to grow profitably? Start by requiring your people to clarify sales tasks, the relevant selling behaviors, and what they mean by experience.
Frank V. Cespedes teaches at Harvard Business School and is the author of “Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling” (Harvard Business Review Press), from which this article is adapted.