Are you moving from a “flat is the new up” mentality to a more optimistic outlook for sales in 2009? Have you used the down economy as an incentive to shift sales strategies and reduce cost of sales? How has this affected the all-important “people” side of your sales organization: candidate profiles, hiring, and compensation? These are critical elements in new sales organizations, when sales reps are making first impressions and testing assumptions, positioning and messaging with your customers. Even in established companies, it is not enough to define job descriptions, ideal candidate profiles, and comp plans once; it’s a good idea to revisit them when market conditions, customer preferences, and company goals shift.
I spoke to David Sterenfeld at Corporate Dynamix this week to discuss these topics as well as get his general thoughts on Sales 2.0. David and I first “met” when I was a new sales manager at Oracle, building the fastest growing sales organization in the company in the mid-1980’s and he was a Southern-California-based recruiter. Hiring managers in the know told me that David was the guy who could help me build an organization of Oracle-worthy superstars. As I was in the San Francisco Bay Area and David was then in Marina del Rey, our meeting was virtual – which was less common then than it is now, but appropriate given my sales division was selling by telephone. I chose to work with David at a time when my job depended on fast growth.
Several years ago, David followed his dream of relocating to a golf Mecca and re-established himself in Scottsdale, AZ. He remains the “go-to guy” for many a sales manager in Silicon Valley and all over the western United Sates, further proving that strong business relationships don’t require meeting face-to-face. Over the years, I’ve called David many times to get his perspective on the job market and trends in hiring and compensation. This time, I asked him what he saw coming in the second half of 2009.
Anneke: I’m hearing reports from some clients and partners that the economy is starting to recover. Are you seeing this reflected in an uptick in hiring?
David: Yes I am. I saw this beginning the first week back after the July 4th holiday.
Anneke: That’s great news! Do you think this is a harbinger of more good things to come?
David: Yes. Because I believe hiring is a lagging indicator. What I’m observing in my clients is a more positive view toward their ability to achieve their numbers. And they’re much more forward thinking and looking at revenue instead of backward-thinking, looking at expenses. That’s translated slowly into additional job openings.
Anneke: How has the economic downturn affected hiring profiles and compensation?
David: Most of the openings in the first six months of this year and through July have been replacement hires. Very few companies are in expansion mode. These companies have used the downturn as a reason to cut expenses and in some circumstances clean out the bottom 20% of sales people. After layoffs in Q1, most companies did not hire back in Q2, but they are starting to do so in Q3. However, they are requiring that candidate profiles be very close to an exact fit to their specifications. They are being very stringent about the criteria. For example, if managers have five hiring qualifications, candidates need to have four out of those five. If they do find the right person, though, they now have budgets to hire back.
Anneke: What about compensation? Has the economy had any impact on sales rep earnings?
David: I haven’t seen compensation affected at all. Sales people’s base salaries have stayed consistent for the most part, but as always, most of the compensation is made up on the back end as commission. There aren’t that many variables to change around. However, in some cases, quotas may have been adjusted downward to make the on-target number a little more realistic because of the downturn.
Anneke: What about sales organizations? Do you see more inside sales groups starting up? Are field sales teams shrinking?
David: Field sales teams are shrinking, but not necessarily because of the economy. I see field sales organizations declining because of other factors including Sales 2.0 methodology, and more products being sold to the SMB market, in a hosted environment. When the cost of a product is lower, companies can’t afford to have a large field sales team and they try to do as much selling as possible by phone and Web with a lower cost sales organization.
Anneke: In my interview with you for my book, you indicated that you were seeing a rise in the hiring of multi-talented hybrid reps (inside sales reps who can visit customers when appropriate or necessary). Is this still the case?
David: Yes. In fact it becomes more and more the case as the larger enterprise companies look to build their own hosted or online solutions. Startups selling Software-as-a-Service (SaaS) have already embraced the hybrid or “inside/outside” delivery approach.
Anneke: Are you seeing any other emerging trends?
David: I’m seeing a different trend following this recession compared to the downturns following 9/11 and dot com crash. Unlike in the past, companies have continued to spend money on lead generation specialists. In 2002, businesses stopped hiring lead generation or sales development reps during tough times because they thought of these positions as an expense rather than a revenue producer. Instead of hiring pipeline-filling professionals, they hired more experienced, senior field sales people who unfortunately didn’t do a good job at prospecting. In this downturn, I have not seen that happen. Most sales managers now understand the importance of sales development in the sales cycle.
Anneke: You recruit all over the western United States, mostly for technology companies. Where geographically do you see the best availability of sales talent? And where do the most cost-effective candidates reside?
David: The San Francisco Bay Area, which is 75% of my focus, has the best availability of talent both in terms of people aggressively and passively looking because of all of the technology companies located there. A number of my clients are moving their inside sales organizations from Northern CA to lower cost of living locations in CO, NM and AR. But I don’t know how successful they are going to be because the talent pool is limited in those locations and it’s very difficult to recruit there. It certainly will be less costly and salaries and commissions will be lower, but the sales results are unknown. I wonder if being removed from corporate headquarters and the visibility of a VP Sales will affect their effectiveness and efficiency.
Anneke: What are your biggest challenges in attracting the best candidates for your clients?
David: My biggest challenge is addressing the fear factor that candidates have of being the last person in and first person let go in a shaky economic climate.
Anneke: What advice do you give your clients for how to best work with recruiters?
David: Most managers in this economy tend to very fearful for their own jobs and favor hiring reps who can come up to speed fastest to ensure their own personal safety. I would advise them to hire the best available sales athlete they can, because this will serve them better over the course of a year than worrying about who’s going to hit the ground running in the first 90 days.
Anneke: What do you think of the emerging Sales 2.0 trend? Is it generally recognized by your clients? Is it here to stay?
David: Sales 2.0 is recognized by my clients – both the venture-backed start-ups as well as the established companies – and it is definitely here to stay, largely because customers have embraced a new way of researching information, interacting with sales people, and buying. I believe that as old line, legacy organizations take a look at their ability to sell downstream, they will have to change the way they sell. It will be customer-driven.
Anneke: Do you personally practice Sales 2.0? In what way?
David: I have been a virtual headhunter for 20 years. Most hiring managers are happy that they don’t have to spend the time to meet me and we can accomplish our work together via the phone and e-mail.
Anneke: What works better for you– the phone or e-mail?
David: The phone enables me to ask more pointed questions and gather additional referrals. But e-mail has become a huge tool for me to work 24 by 7 and communicate any time of day or night. Also, my client base is fond of BlackBerries and laptops and is used to working long hours answering e-mail.
Anneke: Sounds like selling in the way the customers want to buy, a key tenet of Sales 2.0!
Anneke: Is there anything else you have to share with the Sales 2.0 community?
David: As more and more companies jump on the Sales 2.0 bandwagon, more and more sales people will be organically grown and there will be a new generation of sales people who will be ideal hires over the next 5 years. Today in many cases we’re trying to put square pegs into round holes, as company sales models change.
Are you hiring sales staff in the second half of 2009? How have you aligned your hiring profiles, recruiting processes and compensation plans with your Sales 2.0 practices?
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