Too little is almost always better than too much, both in life and in business.
And too little is virtually always always better than too much when it comes to managing sales guys.
Sales guys are famous for being lazy and greedy folks with a good line of bull. The good ones will say anything true (with a spin of course) to get a sale. The bad ones will say anything to get a sale.
If you have the task of managing a group of sales guys, you will almost certainly hear these 2 things from them:
- We need more leads
- The leads we have are crappy
Now, if you are a small business owner and your sales force is telling you that they need more leads and that the current leads that they have are crappy – you quickly translate that into one thing:
The sales guys are whining about leads which means I need to spend more money on better marketing so the leads aren’t crappy!
Or in other words – when you hear about the sales guys needing leads, a siren goes off in your head that flashes red telling you to spend money.
But it has been my experience — my experience 100% of the time without exception — that too few leads for a sales guy is always better than too many.
Why?
Well, first – it has been my experience that each sales person is only going to work as hard as he needs to due to the 2-4-6-8 problem.
And in the event that you spend money on getting leads in the door, at some point, the sales force will begin to experience the “I am so full I can’t take one more bite” phenomenon but they will not tell you — and money that you spent on leads will go to waste.
And finally, when the leads are scarce and crappy (according to your sales force), it has been my experience that there are always those sales guys with a little (or a lot) of the back alley factor pulsating through their veins and those are the guys you want on your team anyway.
Now.
The real trick if you are in charge of hiring and motivating a sales force is to understand these general ideas and then maximize your sales by keeping each individual sales person lean, mean and hungry.
I can’t take full credit for the “too little is almost always better than too much” idea, I learned it from a small business owner – and then read the same concept in one of Bill Gate’s books… but I never realized it until hundreds of sales guys were all screaming at me:
We don’t have enough leads and these leads are crappy!
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{ 3 comments… read them below or add one }
Tying it all together nicely sir. Now for the commentary:
Any good salesman will tell you that there is no such thing as a bad lead. There are less good leads than others, but there are no bad leads. However I don’t think you can say 100% of the time that to few leads is better than too many. Let me explain with math(stupid engineers brain in a salesman’s body):
If you have a salesman with a peak close rate(C) that can manage X number of leads to produce Y number of sales like so:
X*C=Y
Now if a salesman has less leads then he could reasonably be assumed to be able to spend more time on each and possibly raise his close rate a bit. But I don’t think that it would be a linear relation (cutting leads in half doubles close rate) ie (x/2)*(C*2) would still equal Y. Lets say that it is half that though – so that if you cut the leads in half their close rate goes up by 50% so now you have (x/2)*(C*1.5) = (Y*.6666) or a 1/3 cut in closes.
Lets use the same fuzzy math in the other direction. Lets assume again that doubling the workload would cut the close rate in half (X*2)*(c/2) still equals Y but again reality steps in and reminds you that it wouldn’t work like that. If a salesman is over loaded with leads – and I’m assuming that they know what they’re doing – they’ll start ignoring those with the lowest perceived close chance – the long shots. So lets say it cuts it by half of that then and you’re at (x*2)*(c*.75) which would equal (Y * .6666) or again a 1/3 cut in closes.
So now that I have it all laid out lets take those again to the logical conclusions knowing what you and I know about salesmen. Because of many things – including the 2-4-6-8 problem and the Back Alley Factor – the good salesman will focus EVEN MORE on the leads closer to closing when overloaded with leads because HE WANTS TO COME OUT OF THAT BACK ALLEY WITH THE CLOSES. I’d say that a good salesman can maintain his close rate or even close to it with more leads than they are used to which would allow for that one or two more deals closed to make a difference.
(phew, sorry about all the math) Now I’m agreeing with you that most salesmen are going to beg for more leads and more leads until they get all the easy closes done and then have to actually work at it. So yes your rules work in the general case (same for the 2-4-6-8 rule which works in the general case) but I will argue to my grave that if you manage to the average case instead of to higher quality standards you’ll never improve. Hold the salesman up to the top guys as a standard and get them to step their game up or ship out. Do you want Ricky Roma or Shelly Levene (gratuitous Glengarry GlenRoss reference)? If you have both which do you want to move to the other’s level or do you want them both at the mean?
Wow I’m not sure if this all makes sense or not but we definitely should continue this conversation.
Excellent thoughts.
Analytical, precise and I for sure won’t jump up and down and say “you are wrong and I am right!”
But here is my acid test that I curse/bless you with at this very point in time.
If you have lived this curse/blessing already, then I will just have to smile and shrug. Maybe my experience was a one off or I did something wrong or whatever.
One day… you are going to be in charge of exactly how much $ is spent on leads/marketing.
And every dollar that you don’t spend on a lead goes directly in your personal pocket.
And if your salesman sell “more stuff” you personally make “more money” less the amount of money you spend on leads.
And if your salesmen don’t sell “more stuff” or “any stuff” then you make zero money – or even worse, lose the money you spent on leads/marketing.
After you have been doing this for a period of time…
My experience tells me that although “too many” and “too little” leads are both “bad”…
Having too little is better than having too many.
The balance between spending on leads and close rates is a fine one for certain – and having been in that boat for a brief amount of time while selling cars then yes I do understand. But I also watched a GM grow the team from 4 guys to 8 and not buy more leads and watch those 8 positions turn over and over and over as they couldn’t close enough to make themselves a paycheck because the GM was keeping the extra lead dough in his own pocket.
I don’t think there is a perfect number or ratio or solution at all. Salespeople can manage different numbers of leads effectively, the market will justify how much you can spend, the rest is hoping that you have enough salesmen or leads to be “Just Right”