Many companies do not consider the high cost of under-managing or ineffectively managing the sales function. If the sales system is like a boat with a hole, it does not matter how fast the salespeople “row.” Below is our list of the hidden and not-so-hidden costs of ineffective sales management.
1. Headaches – If you have a sales function, you will eventually have issues and need some management. Without a solid sales manager, these management headaches usually get bumped up to the CEO.
2. Turnover – With no one to mentor or manage salespeople, issues will fester until eventually someone quits. Each of these exits will cost tens of thousands of dollars in recruitment and lost sales.
3. Staff under-performance – You know the old saying, “What gets managed gets done.” Well, if nothing is getting managed, nothing is getting done (at least on some fronts). Since an incremental sale here and there can put significant money on the bottom line, a seemingly small misstep add up to quite a bit of missed profit opportunities.
4. Fall behind trends -Technology and sales have been permanently linked, and someone in every organization needs to keep up with this rapidly changing landscape. If it’s not the sales manager, then whom? Missing out on a first mover advantage or getting significantly behind a trend can really cost you.
5. Holes in the sales process never get fixed – Great sales process is the hallmark of great sales organizations. However, every sales process has holes or develops them. The sales manager is responsible for keeping the selling process finely- tuned. Paying a team of salespeople to use a half- broken process is like sending loggers to cut trees with dull saws.
6. Can only hire experienced (and expensive) salespeople – Great salespeople are expensive to hire, so it’s preferred to hire an inexperienced future star and train them. However, without someone specifically assigned as a permanent mentor, would-be stars will fail. Some companies have tried assigning new salespeople to the old pros, but this only works for a while. Eventually, the old pro realizes they are not getting paid for training (or the success of the new hire) and returns to selling their own clients. Add up of the lifetime cost of paying $25,000 – $50,000 per hire per year more simply because there is no mentoring system. Over the lifetime of a company, this could add up to millions of dollars.
7. Old-timers get lazy – You cant fight human nature. With no sales management in place, the seasoned pros will find the easiest way to hit their targets and stop working hard. It’s not their fault, it’s just human nature. We have seen organizations discover salespeople working less than half the time, holding second jobs, or delegating much of their work to kids/spouses if the management is lax.
8. Resources are stolen from other functional areas – Just because an organization lacks a sales manager doesn’t stop the work of a sales manager from popping up. When it does, someone has to do it. People, most likely the CEO, are yanked from their real jobs to fight the fire de jour. This reactionary management cascades into different issues as problem A is solved but creates problem B.
9. Don’t know what you don’t know – The function of sales adds the most profit to the organization, so under-management is creates expensive issues. These issues may not be readily apparent, but they are there eating away at your profit.