As your company adds outside salespeople, there’s more conflict over customers. What would you do?
As you’ve learned from running an independent building material company, there are always problems. But there are bad problems (like not enough revenue to squeak out a profit) and good problems (like too much business for your crew to handle). Like many LBM dealers, you’ve been battling the second problem. In a nutshell, the strong market has had everyone on your team stretched to capacity.
Despite low unemployment, your company’s culture and reputation in the market has made it relatively easy for you to attract and hire good people at virtually all positions. You’ve been especially blessed when it comes to outside salespeople. At least that’s what you thought when you made the hires. After all, your existing team of four outside sales reps had more business than they could handle—literally. That’s why, when you were choosing between two equally qualified candidates to join your outside sales team, you decided to hire them both.
The positive impact was felt immediately, when your two new reps brought in orders from existing builder customers who weren’t getting the service they needed from their regular rep. Unfortunately, these strong positives were offset by some strong negatives. Here are two examples.
Example 1: Tina, one of your two new reps, was ecstatic when she made her first sale, a framing and millwork package to Gone Home Builders, a small custom builder focusing on entry level homes. George was their longtime rep, but his sales to bigger customers meant that Gone Home Builders was being ignored. George was fine letting Tina take it over…until she returned with an order that included some healthy margin products. “I got them started with us,” George complained. “Just because I’ve been busy, you let the new rep waltz in and take it away. That’s not right.”
Example 2: When you had four outside sales reps, the territory boundaries were clear. With new subdivisions going up beyond your established market, you thought dividing things up would be easy. You were wrong. “You always told me that when and if that empty land south of town was ever developed, that I’d have first shot at it. Now that the builder is finally pulling permits, you’ve given it to Jack—and he’s only been with the company for six months. I’ve been here 18 years,” Alex complained. “Sure, I’m busy, but fair is fair.”
Before making the new hires, you made sure that George, Alex and the other two outside sales reps understood that there’d be some growing pains. They agreed then, but now that its real and actually affecting them, there’s some talk of one or two of them leaving for the competition—and taking their book of business with them. What would you do?
1. Stand your ground All four of your existing reps were spread too thin, with more business than they could handle. Remind them of that, thank them for all they do, then get back to work.
2. Give a little Sit down with each of the four original reps individually. If they can make a case why an account truly should be theirs, then give them a small over-ride on those commissions.
3. One too many. You know that four reps was too few…but maybe six is one too many. Watch the numbers for a couple of months, and consider letting go the lowest performing new rep.
4. Redirect. Consider having one rep focus on a specialized area, like installed sales, light commercial jobs, etc. Take advantage of this opportunity to grow your business.
See how your judgment compares with others in the industry at LBMJournal.com.
Final results will appear in The Buzz section of the January 2019 issue.