This is why salespeople need a quota that they are beholden to. If you poll random salespeople, nearly ALL will say they want to make more money. Some will even say they NEED to make more. But then if you look at their activity, you’ll see the real truth.
If you give a salesperson a $50K base with a plan to earn another $50K in commission on their on-target earnings (OTE), many of them will adjust their lifestyle to live within the means of the $50K and work just hard enough to get another $20K to $30K in commission – not the full $50K. There was a guy I worked with years ago who was a $5K-a-month guy.
If he was behind that in OTE for that month, he’d really get after it and figure out a way to pull himself up to that commission level. If he hit it early in the month, he’d spend the rest of the month calling in sick, showing up late, taking long lunches or having “personal” crises that kept him from earning more. Yet he constantly pissed and moaned about how he needed to make more money, blaming the company for not doing enough marketing, not providing good leads, etc., etc. B.S.
Going back to my original point, if you create a scenario in your organization where a rep should be able to make $100K in OTE based on the opportunities you have, the marketing, your current metrics, etc., you need to hold them to that quota firmly or they’ll slack, giving you a lot less effort than they should or could, costing YOU lost opportunities.
For example, I was reviewing some numbers with an MSP client of mine. Year to date, he had produced 42 first-time appointments (FTAs) with new prospects and only closed four. Just abysmal. Further, three of the four that closed were assisted by the owner, so much so that the owner admitted that if he had not gotten involved, they would likely not have closed. Here’s why this should never have been tolerated…
This guy’s average MRR is roughly $2,000 a month, or $24,000 a year, not including projects. If he had closed at least 35%, which is the average among the MSPs we poll, he should have gotten 15 deals closed instead of two. That’s a chasm of 13 new MRR deals, which would represent $312,000 in ARR, not including projects or additional years’ growth, referrals AND the wasted gobs of money he was spending on marketing, pouring opportunities into a bucket with a giant hole.
My advice? Fire the dude. Now. Today. This guy is NOT a salesperson. I don’t know what he is, but he’s not in sales. By definition, salespeople SELL THINGS. He’s not doing that, which means he’s failing his job. If you had a help-desk person who was failing to close tickets, was slow, unproductive on all fronts AND was pissing off your customers to the point that they were leaving, how long would you keep that person around? Not very long if you’re smart.
This “salesperson” was essentially doing the same thing – driving off customers that should have closed. That’s no different in net outcome than an engineer who’s causing clients to fire you. I know it feels different, which is why the same effort and urgency wasn’t being given to this totally unacceptable situation.
I then discovered the real problem with the following question: “Does this guy have a minimum performance quota in order to keep his job?” The answer (not too surprising) was no. Further, my client had this guy working on operations, onboarding and some management.
His base salary was also nearly double what it should have been, which is yet another reason he wasn’t incentivized to close more new deals. Knowing this, we can’t blame this guy for the failure. He had no quota and no consequences for poor performance. In fact, there were no performance goals, metrics or standards, period.
Let me summarize this with a quick reality check for anyone running an MSP: your #1 job is to scale the business profitably. If that’s not your primary responsibility, what is? Doing the technical work? If so, you aren’t a business owner, you’re an employee. Get a job where you get benefits plus three weeks’ vacation and none of the risk and responsibilities that come with running a business. Are you doing administrative tasks or operations? I can hire those people dirt cheap, part-time if necessary – $50K tops.
Are you SO busy you can’t find time to work on sales and marketing? Then you better be flooded with money flowing in and big profits or you’re either full of crap about being busy or you are wasting a LOT of time on low-money work, no-margin clients or BOTH.
This is the greatest obstacle to maximum profits for every “busy” MSP: shedding the administrative, operational and technical work for the higher-paying, needle-moving job of getting new customers in the door. Marketing and sales.
You either embrace this or you don’t. Your choice. But your choice also determines YOUR income, YOUR success, YOUR life. There’s nothing more frustrating and disheartening than clinging to the hope of more and better clients, bigger profits and more stability WHILE ALSO clinging to the stubborn refusal to do what’s necessary to achieve those things.
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