COMMENTS
Great advice on not managing your sales force on a micro level. If an organization plans to do this, they need to make sure to hire only entry-level salespeople. Good salespeople rely heavily on their creativity to be successful.
Will Fultz
Will, sorry but you lost me. Can you expand upon your point? Thanks for participating in the conversation! I look forward to hearing more about your viewpoint.
Trish,
Sorry that I didn't make my comments more clear. The ratio study was very interesting, but I found your comments on what not to do, letting your reps use their best judgement, and not forcing arbitrary goals to be very insightful. This is what I was speaking to - as you shouldn't micromanage your people to a point where they cannot be creative on their own (or afraid to be).
Thanks,
Will
Trish.
At HubSpot, as you know, we do NOT have outside sales reps. We've thought about what the value could be. Our price point is probably high enough if the rep had their own network to draw upon and was excellent about generating referrals.
Do you think they should work WITH an inside sales rep to set appointments OR just manage their own schedule?
I'm guessing that most of your respondents sell a much higher cost service that requires a face to face sale.
-Pete
At Eloqua, we experimented with the ratio ranging from 2:1 to 4:1. I would agree that the demand gen model starts to break down beyond 3:1 for all the reasons listed in the article. If you're in very high growth mode in a hot market space, i think a case can be made for 2:1.
The other thing I'd like to comment on is the question of how much/little to try and control where a DG Rep spends his time across multiple Field Reps/territories. While you don't want to handcuff or micro-manage your DG Reps, at the same time, all field Reps need some level of DG support. The way we balanced these conflicting needs was to add a "balance bonus/penalty" to the DG Rep incentive comp plan, such that they could earn extra money by achieving a certain level of MQL production across all supported Reps (the "carrot"), but if they really underperformed in a given territory, there was a financial penalty to be paid (the "stick"). This approach left the decision with the DG Rep how best to optimize his incentive compensation, which was primarily driven by MQL/SQL production, but with a clear message that some level of balance across supported territories was also important.
Bottom Line: it seemed to work exactly as intended. Reps knew some level of balance was important, but weren't micro-managed as to where they spent their time to the point of hurting overall DG output and efficieny.
@ Will. Thanks for the response. Now I get where you are going and completely agree.
@ Pete. Although this would be a much longer conversation I would be happy to have with you, I would look at the decision of whether/not to add field reps in another way. First, I would define the Ideal Customer Profile of those accounts that I think would yield large enough or strategic enough deals to warrant this type of sales channel. Then I would focus my field reps on those target accounts and let them use referrals, inbound leads and good old fashioned networking to generate business. Just MHO.
@Rich. Fantastic feedback! I had never thought of that solution. I would assume it requires that every territory have an equal potential but if so, what a great idea! Thanks for sharing Rich.
Actually, Trish, the concept can work even when all territories are not of equal potential, which was definitely the case at Eloqua. The key is where you set the bars. In our case, the "high bar" that allowed a DG Rep to earn her balance bonus was 80% of her quarterly MQL quota across all 3 (or 4) Field Reps supported. Come in under 80% on one Field Rep - no bonus.
Conversely, the "low bar" was 60%. In other words, a DG Rep paid a penalty (negative bonus?) for every Field Rep that they were below 60% of quota on. The message here was the I don't care how tough the territory is, you've got all quarter, give it the extra effort to get to at least 60%.
Think of this as a "leave no man behind" approach to DG. Although a new Field Rep might get an extremely "challenging" territory, it was in our best interest as a company to do everything possible to help them be successful. The cost of slighly over-allocating DG resources pales compared to the cost of recruiting, training, ramping up, losing and then starting all over again for a $250k Field Rep.
Hope this helps explain how this approach can be used creatively and flexibly.
Cheers,
Rich
Ah, Rich...you had me buth then you lost me. Is it really fair to the rep to assign them a really tough territory and then penalize them their entire bonus if one territory does not yield at 80%? Ouch! What if you give them 2 tough territories? Double ouch!!
But let's put the question out to the rest of our readers. How do you handle this particlar situation? Obviously there are lots of ways to skin this cat. How are you addressing this issue?
Just to clarify, the Balance Bonus was on top of their monthly commissions tied to SQL production. So yes, if they couldn't achieve a minimum of 80% across the territories they supported, they didn't get the bonus. But they still got the rest of their incentive commission. To put it into perspective, the balance bonus was only a small fraction of their overall incentive comp package. It was really there to remind them that balance was important and would be rewarded, as poor balance across Territories had previously been a major issue for us.
But as you concluded, there are many ways to skin this cat. I'm also interested to hear what other readers have to say on the issue.