Setting Up a Tag-Team Sales Force

      A cabinetmaker considers whether to hire one salesman to generate leads, another to estimate, bid, and close. March 12, 2009

Question
I am looking into breaking up the sales approach into a team instead of having individuals generate leads and close solo. The lead generator would be on the road full time generating bidding opportunities, and the bidder/closer would take this information and put the bid together and actually do the presentation.

Both would need to be personable but have different skill sets. The lead generator doesn't need to have technical background in the field, they just need experience in sales (of anything, really - and plentiful. The bidder/closer would need technical experience and could be trained on a couple of closing techniques (not so plentiful but could be created from existing staff).

Do these positions have equal values? Meaning, do they get set up with the same pay and benefit structure? Or does one position have more value than the other? Do I run into an issue of possibly one member of the team not being happy with the other's performance level?

Or do I look at is as 3 separate positions - leads, bidding, closer? Most often the pricing is tweaked at the close with changing options around. We do predominantly residential, so it is not cut and dry proposals like commercial work. The specs are rarely spelled out in stone. That is why I was thinking of combining the bidder/closer position.

Forum Responses
(Business and Management Forum)
From contributor P:
You think too much. In my experience very few salesmen can close. Most likely the salesman will end up generating bids and you will have to close. I would say just mow through guys until you find a situation that works. Don't let them linger.

Finding one who is willing to work this is key. I would come up with a statistic that monitors their production. No accountability will result in you wasting your time. To find a guy who has a track record in woodworking is unlikely, as he is not going to be looking for work. But I have found it effective to have someone who generates leads/bids.

One of my former employees runs an alarm business (hundreds of employees) that his dad owns. His dad said that they hire as many sales trainees as they can on commission only, and one in a million makes it, but after they leave, he still gets the leads. Ethical? I donít know, but it works - they are one of the leading sellers in the country. They are a marketing driven company (think California closets, not as custom). You are a manufacturing driven company, so it is a little different, but the concept is useful.



From contributor A:
I think pricing/bidding should be separate from sales. You need to be able to give the salesperson some guidelines in advance so he can close, but to have the person doing the sale do the bid will only work if the sales position is not on commission. Otherwise you are asking someone to make a decision in their best interest and your best interest and their personal economic situation may weigh in on the pricing. It could work if the commission was based on some measure of net profit rather than gross sales.

A more qualified lead generator should be able to generate better leads so some skills in the industry, type of work, size and scope would help make a subjective decision on how hard to pursue the lead.



From contributor B:
I think the approach I would take is to set up the salesperson like a real estate agent. The salesperson is responsible for everything, from generating the lead to closing the sale. My thinking is a good salesperson will want this autonomy anyway. But you can act as the real estate office, providing admin resources, scheduling, document preparation, bids, etc. to the extent that the salesperson needs them.


From the original questioner:
I am only over-thinking this premise because the opportunity has been presented. I already have one and soon two headhunting companies finding prospects for me. I am getting leads on people with sales experience in all lines of work and product. All in some part of construction. That is why I am leaning towards hiring one of them to lead generate, and I will price/close for now till I find a pricer/closer.

"...Otherwise you are asking someone to make a decision in their best interest and your best interest and their personal economic situation may weigh in on the pricing."

The pricing system developed is cut and dry. No room for manipulation other than flat out not bidding a portion of the project. This would stand out like a sore thumb because everything is itemized. The pricing formulas are written by me and will continue to be until the day the business is sold.

Contributor B, that is the approach I tried first. Only problem is it takes a wide range of skill sets. Typically only found in owners and key right hand people of existing companies. Both very hard to come by.



From contributor D:
Contributor B, I think you are giving real estate agents way too much credit! At least in my experience. In fact, I think a real estate agent type situation is more closely aligned with what the questioner is trying to put together. (Which, by the way, I think is an excellent structure.)

Few real estate agents that I know generate their own leads. Yes, they have their own listings, but most of their leads come from double-agent situations, and through the agency where their license is held.

Absolutely no real estate agents close sales. Agents get the prospects to the closing table, and closing attorneys close the sale. With that said, real estate agents pretty much act in the capacity of what the questioner is seeking for the bidder in his 3-part contemplation.

Sure, there are exceptions to every rule. Some of the best real estate agents work further up the prospecting end, and further down toward the close. But in the end, a typical agent gets leads thrown in their lap, shows a few properties, helps a little in the negotiations and education of the prospects, gets a signed commitment contingent upon 100 variables, and turns the deal over to the title company and underwriter who are the true closers of the deal.

My opinion on this may be wrong. It is based solely on the 3 houses that I have purchased personally. I was never impressed with the agents and always wondered what in the heck did they do that deserved those exorbitant commissions? I guess they needed those big commissions to carry them through times like these.



From contributor B:
Great points. I concur with your assessment of real estate agents in general. Although in my experience, the good and successful real estate agents do in fact generate a lot of their own sales leads, through word of mouth and networking and just being active in the housing market. And they are completely involved in the sale from start to finish.

The more I think about it, the more I like your division of responsibilities. In large part because you no doubt are working to create a structure for sales, and one that may be scalable and manageable.

I think the presentation/closer position is the more valuable and difficult to execute position, and therefore that person should be better-compensated. Creating a sale possibility or lead is relatively easy. It can be done with direct marketing, or some sales program targeting home sales in a specific price range, or any number of other methods that will yield a certain percentage of leads.

Winning over the customer, convincing them to spend $50k with you instead of someone else, and closing the deal, that's much more complicated, and requires a more diverse skill set.

What I'm working on setting up here is a structured bidding system, because generating bids can be very time consuming, and as the sole lead generator/closer for our business, I shouldn't be spending 20 hours bidding some large project. So the idea is to have an admin person with some cabinet knowledge produce the bid; then I can spend an hour or two reviewing it to make sure things look right. This will also create a cross-check, to make sure nothing is missed or under-bid. A structure like this might work for you as well, then your closer/presenter can be more focused on the other aspects of their job and you don't need three separate positions.



From contributor B:
One of my favorite books is 'Naked Economics,' by Charles Wheelan. He goes into some detail about real estate agents, who he calls "A particular breed of scoundrel who purport to have your best interest at stake..." Because they get a fixed percentage of the sale, the incentive for them is to close the deal as quickly as possible, with as little time invested as possible, regardless of price. If they put a lot of time into a sale, it really doesn't pay off. It's a great read of a book, with lots of insight into business, and life in general.


From contributor T:
Contributor B, developing science for estimating labor presupposes that any given activity always takes the same amount of time. How do you go about corralling variation in how long it takes someone to do something?


From contributor D:
My method for developing that science you speak of is: bid the job, and say lots of prayers!


From contributor J:
Gads, you guys. It's gotta be stressful worrying about this minutia you seem to have to dissect. Life can be a lot simpler than what you're making it out to be. That said, I think good marketers and salesmen are a different breed than "bidder/pricers." Each probably more effective if kept to separate tasks. Real estate agents and salesmen in general need a different set of scruples to be very successful. When I was an agent I was predominately a lister, but also closed binding contracts occasionally. Sales tended to compromise my scruples, though.


From contributor T:
Another word for minutia might be systems. The kind you need for a one man shop are probably different than the kind you need when there are more people involved. All things being equal, I would put my money on the systems approach.


From contributor J:
I was just expressing a generalization of what I read in some of these threads. Easily arguable, I think K.I.S.S. should help guide a system, not minutia. Every shop, large or small, does needs a strong system, but admittedly, small shops can take more liberties with their system. What a gross misrepresentation of our shop size - there's 2 of us :-)


From contributor B:
Contributor T, I think you and I are thinking of bidding in different terms. There's no science to develop, as I see it. We do component pricing and it's pretty easy to determine an average material and labor cost for, say, a face frame, an empty carcass, or a loose scribe... These things should take, on average, the same amount of time. The oddball stuff, yeah - a more experienced person would need to derive that cost. Even then, though, there can be a framework for determining that cost.


From the original questioner:
Pricing can be scientific and predetermined. Once set up systematically (almost) anyone can bid a project. Adding onto the database as things you have never done get added. There is a lowest common denominator of any item you may build and sell from your company. Everything from that point is a line item up charge or percent up charge. For construction there are only 5 shapes to price. Straight, angled, curve, ellipse, free form in the vertical plane, horizontal plane or both. Modifications, wood type upgrades, hardware upgrades, finish upgrades, accessories.


From the original questioner:
Hired first lead generator, starts first week in September, and in negotiations with designer/closer. Fingers crossed...

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