Sales Hiring

The Riskiest Hire? Your First Sales Rep.

The Riskiest Hire? Your First Sales Rep.
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For most entrepreneurs, the first sales rep is their riskiest hire, especially if it's a bad one. According to SalesPeak Recruiting, the cost of a bad hire can be over $500,000.

Related: Hiring Checklist: The Top Qualities to Make a Winning Sales Team

This came home to me recently during a meeting I had with a business owner in my Vistage group. Her name is Marla, and she knew she needed to hire a sales rep in order to grow her business.

Her decision to hire her first sales rep was a good one. However, the hiring process Marla was following was clearly flawed. She had interviewed a candidate known to a couple of people she knew, and she was ready to make him an offer. That was her process, if you can call it one!

I started having flashbacks back to when I was running my own company and had my own lack of process for hiring my first sales rep. My process had been just as flawed as Marla's and had actually led to several bad hires, costing the company time and a lot of money.

So, to keep Marla from repeating my mistakes, I started asking her questions, many of which she hadn’t yet asked herself; and, just as I expected, she didn't have the answers. At the end of our conversation, she said she realized that, before moving forward, she had a lot more work to do.

Here are the seven steps I recommended to her, and recommend to you, to decrease the risks in hiring your first sales rep.

1. Define what you want your first sales rep to do.

Develop a job description. Do this by analyzing what you are currently doing in sales and what you need or want to offload. In Marla's case, she needed a “hunter,” meaning someone who could go out and find new clients, not grow existing ones. She and her team were already accomplished at growing existing accounts; what they needed was more clients. She also identified certain tasks she would be willing to retain for herself, such as writing proposals.

2. Decide how fast you need this sales rep to become productive.

I know the answer seems obvious: quicky! But this question will get you thinking about what the new hire needs to bring to your company on the very first day. What "first-day" qualities will speed up the rep's productivity? Once Marla started thinking about this question, she was able to list several criteria, including current “potential buyer” relationships for her company’s consulting services.

Related: 5 Inside Sales Hiring Tips for Growing Companies

3. Define what 'productivity' means for you.

“This [the definition of productivity] is your recipe for sales success. It takes into account the mix and quantity of behaviors,” says Mark McGraw, president of Sales Engine in Atlanta. So, develop leading indicator metrics, such as networking meetings, referral asks, first conversations and first meetings. Then, determine the quantity and time frames needed for each of those activities.

4. Develop a list of behaviors to avoid.

This should be a list of behavioral questions that will uncover behaviors which typically lead to failure. They might include the lack of a sense of urgency and a lack of organization. Your list's negatives might also describe a rep who's not motivated by money, and who's someone with a negative attitude and poor work ethic.

5. Ask your top candidates for a presentation. 

Once you have narrowed your candidates down to two or three, they should have enough information to put together a 30/60/90-day plan of how, if they're hired, they will approach the new position. I recommend doing this for all sales rep positions, even if these candidates are new to sales. See how their presentations match the productivity recipe you've already developed, and understand the differences. It may be that these presentations present some good ideas that haven’t crossed your mind.

6. Assess your top candidates with a tool that is specific to the sales function.

There are a number of such tools available, but one that I have often seen is CPQ Sales Assessment. This tool is great for assessing not only direct sales reps, but also indirect sales and customer-support candidates.

7. Make sure you have the right compensation plan, and don’t make the plan too complicated. 

McGraw also recommends that business owners determine what the sales rep's total compensation should be. Then, based on the length of the sales cycle, the owner should determine the split between base pay and variable compensation (commission and bonuses). The general rule is, the shorter the sales cycle, the smaller the percentage of base pay relative to total compensation. As the sales cycle gets longer, the percentage of base pay increases.

Related: It Works for Sales. How to Set Up a Funnel for Hiring.

Are you already past the step of hiring your "first" sales rep? Try applying these steps to every new sales rep you decide to bring into your company.