Are Your Salespeople “Growing a Market”…Or Working a” Bread Route”?
A common concern I hear from business owners is their salespeople are not effective at selling net new customers. New customers, if serviced properly become lifetime customers with current and future revenue opportunities and contribute to creating sales velocity. In addition, they make up for account attrition, you know …customers who go out of business or just go away. (another future blog needed as customers do not “just go away”) New customers result in additional commissions for the salesperson right? Since new customers are so key to every businesses current and future sales revenue goals and can add additional commissions then why are sales people not closing new customers?
One of the leading reasons I have personally experienced why salespeople are not growing their markets is ; they are working a bread route.
As I have shared before one of my first jobs was a route salesman with Frito-lay. Fresh out of college I drove an 18 foot step van full of Frito-lay products to my grocery stores, convenience stores, bars, and anyone else I could open. Frito-lay made the sale of new accounts one of my key indicators along with selling additional store placement displays and gaining shelf space. The one route sales guy who would beat me to my grocery store accounts was the bread route delivery person. They would always amaze me at how fast they could get in and out of a grocery store and move on to the next account. They started very early in the morning like me, but were often done with their route by 2:00 pm. The bread route driver was focused on visiting his current accounts, accounts he and his company have relationships with, finding out what they needed and filling the shelves. They had very specific routes and timelines and if the driver executed his or her route effectively they made a good living. The bread route driver made enough income serving his current customers that he did not need to open new customers.
Fast forward to today and I see bread route drivers in all kinds of businesses. These are salespeople who call on a bank of current customers who should need additional products and or services and if they work their route they should meet their personal income goals. Current customers are the easiest to deliver products to because you and your company have a relationship with them. They welcome you in, if you ask for an appointment they make themselves available…heck, they even reply to voice mail and emails!
Selling new customers requires connecting with new people you do not know, new companies you may not be failure with and risk. No salesperson likes rejection and every time you attempt to start a discussion with a potential customer, (someone you could sell but you are not currently selling) you risk rejection. In addition, since you do not have a relationship you often experience frustration through a lack of returned phone calls and emails, trying to get past the gate keeper, trying to determine the buyer’s process and criteria and so on… all the while needing to make your sales objectives (and commissions).
So how do you know if your salespeople are growing their market or working a bread route? I have a few questions…
- How many net new clients have they added in the last 6 months, last 12 months?
- What % of their monthly commissions is the result of net new customers over the past 6-12 months?
- If your salespeople report on sales calls, what % of calls are net new potential customers?
- Do your salespeople have “everyone” in a particular market that has ever bought from you? Or do they have a fraction of the total number of accounts?
- When you conduct four-legged sales calls with your sales people, do they take you around to current customers and drive by a number of potential new clients, or do they add net new targets along the way?
So what’s your gut telling you right now? Are your salespeople working a bread route or growing your market? How did your team score with the above questions? Below is how I have viewed the responses to the above questions when I have helped clients.
How many net new clients have they added in the last 6 months, last 12 months?
I monitor the number of net new clients. As a general rule and can vary based on the maturity of your industry and the frequency with which your team introduces new products….if a salesperson is not adding at least 5% of their total number of customers every six months, ….they are working a bread route.
What % of their monthly commission is the result of net new customers over the past 6-12 months?
In addition to the number of new accounts I look at the revenue those accounts contributed and also how that revenue grew the salesperson’s commission. Again whether or not you have a history of launching exciting new products designed to solve the markets unresolved problems or new product flops , the maturity of your industry, the experience and training of the salesperson…I look for at least 5-7% (ideally 10 %+) of commissions coming from customers they have opened in the last 12 months…if they have little or no commission from new customers…they are working a bread route.
If your salespeople report on sales calls, what % of calls are net new potential customers?
Winning new customers requires a great deal of activity. I am not however advocationg activity without focus as I have discussed prior as another problem salespeople often encounter. The rule I have used in multiple industries is 20 unqualified prospects should turn into 10 potentials, and from that 10, 2-3 proposals and 1 new customer. If your salespeople are not trying to connect with at least 20 new accounts per month ( 5 per week) ….they are working a bread route.
Do your salespeople have “everyone” in a particular market that has ever bought from you? Or do they have a fraction of the total number of accounts?
If all your customers are lumped into one group and not segmented based on key accounts, targeted growth accounts and you have not identified targeted net new accounts… they are working a bread route.
When you conduct four-legged sales calls with your sales people, do they take you around to current customers and drive by a number of potential new clients, or do they add net new targets along the way?
I enjoy working with salespeople in the market. I enjoy interacting with salespeople, their customers and potential new customers. If you work with your salespeople and they take you only to happy customers and drive by potential net new clients and have not started or attempted to start discussions with them…they are working a bread route.
So how did your sales team fair? Are they growing a market or working a bread route?
As long as they hit their sales numbers do you care? Should you care?
If your salespeople frustrate you by poor execution in closing new business, it could be because they are working a bread route. In my next post I will discuss how to change that behavior and drive net new customer revenues for your sales team.