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Continued Q&A from our March 2014 Webinar

Written by Brad Yoho

We will now continue to address the questions that we were not able to answer during our most recent home improvement webinar. The first question is actually a combination of three separate questions that we received from listeners.

Q: Are some personality types better suited for sales than others? How do you know someone is not overselling (or underselling) themselves? Is there a concrete type of test which can be administered to applicants?

A: All of these questions examine the same dilemma. The underlying genesis of which is “How do I find a superstar salesperson”.  This is like asking how do you achieve “instant success”. What you need to look for is those who qualify to perform the sales role for you, and then through training within your organization teach them skill sets which they don’t have at the moment.

However, some personality types are indeed better suited for this role. Those who enjoy and are able to interact favorably with strangers, at the same time are teachable and fit the job better. The problem is, that during interviews the proper behaviors are not always on display.  This is what we refer to as a “mask”. Most people have experienced mis-hires because they are misled by what they feel are great sales skills, when in fact it may be someone who simply likes to talk. This brings us to the third question regarding concrete tests or evaluations.

Tests are complicated and they are often criticized by state laws which claim they are used as a means to justifiably not hire someone because of age, gender, or race. For the past 35 years we have elected to use a behavioral profile which is self administered (takes about 8-10 minutes to complete on a computer), and helps us to identify the behavior we can anticipate from a new hire. This format produces a 23 page document which analyzes the most common behavior of the individual, the behavior changes which they undergo under extreme stress, and the issues of their behavior which they mask. It is based on the DISC system, and it empowers small business owners to acquire information which in turn helps them to:

  • Decide to hire someone who has the potential and behavior pattern to succeed in the sales role of the company
  • Avoid hiring those who do not have the skill sets or the behavior to meet the needs of the job
  • Aid owners and managers in terminating salespeople with insufficient skills or those who do not fit the organization or marketing style of their company
  • Aid owners and managers in avoiding rushing to rapid judgments, where they often miss applicants who have a strong chance to succeed.

There are four dominant profiles which we recommend for hiring, and one which often tricks interviewers into believing that they are a “born salesperson”, when in fact, they will not ask for the order. There are also other profiles in the mix that are extraordinary fits for different job roles within your company (administrative, marketing, management, etc.)

Q: Many people in the industry purely pay commission and traveling expenses to their reps.  Where do I find these types of people?

A: You did leave out one form of quasi compensation. This industry as an average spends up to $300 to issue a lead. These leads come from all forms of advertising: shows, events, internet marketing, canvassing, etc. – - and by the time these are watered down to an actual appointment for the salesperson, the cost is around $300. It is not uncommon for organizations to issue six leads per week to their salespeople ($1,800). Over a period of four weeks that’s $7,200. Over the course of a year it’s roughly $85,000. That’s what companies are investing in salespeople today. You can add to it the cost of training and other in house expenses that go with payroll.

Some companies offer their reps basic training expenses. A few offer upwards of $500 a week for two weeks of training.  But the truth is, skilled salespeople would prefer an incentive system which enables them to become high earners.

Regardless of whether you were able to attend our last webinar – - you will not want to miss the next webinar because it will address many of your questions that we still have not answered.

Q&A from our March 2014 Webinar

Written by Brad Yoho

Our most recent webinar was a huge hit! We have been inundated with requests to cover the topic of recruiting and hiring, and as such we made that this program’s focus.

We will now address some of the questions that we were not able to answer during the program.

Q: What is the best way to attract salespeople for a small business?

A: If you’re a small business (25 or less salespeople) you’ve probably utilized Craig’s List or similar sites and been inundated with resumes of those which have little value to your business or don’t meet your requirements. A more effective way is to first set up a highly specific job description for the person you want to hire, and reduce it to a simple explanation of the work required and the potential earnings. We call this process the “Who do You Know”. An example of this method is below.

Send it out via e-mail and snail mail to all those with whom your company does business, vendors, banks, even your customers. Post it on your LinkedIn network and share it with your Facebook and Twitter followers. You might even consider sending it to your network of friends. Then remind each of your salespeople about how you would give priority to someone like themselves. This should incentivize them to “spread the word”.

Next, set up a recruiting bonus based on points; “x amount of points” for recommending someone for an interview, “y amount of points for the interview”, “x amount of points” when/if the individual is hired.  Then convert those points to some form of a bonus which is paid out periodically.  If the hiree remains with your company for a year and sells profitable business, engineer a small bonus for the referring salesperson.

However, you must supplement this with a strong system/method for indoctrination and training, and create an environment which continues to stimulate their interest.

Q: Are some personality types better suited for sales or can they be found in all personality types?  What are some key traits or tips on what to look for?

A: Here are the 3 major keys and they are far from tips:

  1. Can they do the job? This requires that you have an interview process which will uncover their ability to work with the kind of leads your company proffers, the kind and style of the customer base you serve, and the ability to effect decisions from those they present your services to. Here it might be beneficial to have some form of aptitude test and for the moment set aside how much they know about the particular product you sell. You need salespeople who understand how to sell in the home, how to effectively present a product to fit the prospect’s needs and values, and how to reduce this to a short cycle close. A brief series of “aptitude questions” is a start. Do they have some background or experience in selling products to homeowners, understanding presentation methods, and following scripted sales techniques? A caution: we do not recommend hiring from your competitors, this is usually unwise and costly.
  2. Will they do the job? Compensation alone is not the primary driver. You may have individuals in your organization who earn six figures.  This doesn’t mean the new candidate is willing to work as hard, cover evening and weekend appointments, or even do the follow-up that’s necessary when a job is sold. As far as identifying this element, analyze how many jobs they have had in the last decade. There’s a great deal of difference from someone who has had 4 jobs in 20 years than someone who has had 4 in the last 10 years. Establish reasons that they did not stick with the job they’re in or had. Don’t be swayed by excuses such as “When the economy went bad…” or “When a new manager took over and changed policies…” or “How customers have become more price conscience”. These things are happening all the time and it’s how effective the individual is in dealing with them that really determines whether they can perform the task for you or not.
  3. Do they fit the organization and its model of operation? Unfortunately this carries with it some big ifs. For example, if the owner or manager has weak recruiting skills they usually end up hiring weak salespeople. If an owner or manager with a low degree of aggressiveness hires a super aggressive salesperson will the tail wag the dog?  You need to make sure that you establish the “pecking order” in the hiring interview.

We will address more questions in the next blog posting – - and make sure to be on the lookout for more information on our next webinar!

The 12 Immutable Laws for Hiring Salespeople

Written by Dave Yoho

The cost of a mishire is seldom an item on your balance sheet.  When you take into consideration advertising, basic training, the time of the trainer, the expenses attendant to the trainee’s early development, the cost of developing prospects, and the administrative support which attends these costs, the investment in the recruit becomes sizable.

A sales force may be subject to turnover due to the retirement, burn-out, or relocation of salespeople.  While that is a given, a large majority of salespeople “turn-over” because they were a mishire.  A home improvement sales force operates in a complicated environment with the need to sell customers on a short cycle.  In-home selling requires that a salesperson competes with others selling what is often perceived as the same product or service at lower prices.  So how do you grow a sales organization while reducing mishires?

Let’s take a look at the 12 Immutable Laws for Hiring Salespeople.

  1. Hiring the right salesperson takes twice the time you expected and much more time than you have.
  2. Self-starters — seldom do.
  3. After numerous interviews or few applicants, less qualified candidates look better
  4. The ideal candidate — usually isn’t.
  5. The majority of resumes received seldom match the job description in your ad.  The best resumes are frequently a product of creative writing and vivid imagination.
  6. The best candidate for your job is probably already working for someone else.
  7. “What ever happened to what’s-his-name?” is the sequel to last year’s great hiring story.
  8. The true cost of “mishires” doesn’t show up on your P&L.
  9. Your “gut feelings” work best when they indicate it’s time for lunch, and seldom when it comes to choosing the best candidate.
  10. Unless the interviewer has been trained in the recruiting process – mishires become the rule rather than the exception.
  11. Poor performers seem to surface soon after the draw or training guarantee expires.
  12. A candidate’s true behavior is usually masked during an interview and can be discovered either by a behavioral profile or by disappointment after training has been completed.

Eliminating mishires is next to impossible, but you can reduce them significantly by following a sound, structured hiring system.

How Much Was That Last Mis-Hire?

Written by Dave Yoho

We recently met with a client who was producing more business than he ever had. Revenue was up nearly 6% over last year (and they are not a small company). Nevertheless, profitability was down.

Now if this was a function of increased marketing spending then that would be one thing, but upon examining the operating statements from the last 5 years we saw a disturbing trend. Every year since 2006, revenue had increased and profitability had decreased. Worse, no one in the business seemed to know why.

They had not made any radical changes in their business model, and marketing expenses had remained relatively consistent. So what was happening?

We asked the client whether or not he knew the number of salespeople that had left the company over the previous calendar year. He said he did not. It was of no surprise to find out that turnover was through the roof.

I should point out this is not an attempt to denigrate our client. The situation that is being presented is not an isolated incident; in fact, there are more companies that we work with who do not have a handle on their operating statements than there are that do.

Because sales were increasing, and marketing costs were stagnant, the client figured that there was nothing wrong with turnover among his sales force. To a certain extent he was right. Some turnover is healthy, because it weeds out non-producers and keeps people focused. However, too much turnover will lead to exorbitant costs that in many cases are hard to track when you are calculating your year-end operating statement.

Let me ask you a question: do you know the average cost of a mishire? This relatively standard projection catches a lot of companies off guard.

The simple fact of the matter is that while the science of selling can be taught, not everyone can exceed in it. This is where behavioral profiling becomes useful.

The profile does a better job than any hiring assessment we have found at matching someone to a job and predicting future success. In our 40+ years of using the DISC Classic behavioral profile, we have found their to be a 80-85% success rate in determining an individual’s behavioral style.

Behavior is neither right nor wrong, it just is – - and every behavioral type has a specific match when it comes to a job role. The question is whether or not it is the job you are hiring for.

Or, you can choose to go by intuition, and experience has taught us that even the best HR personnel can make significant hiring errors – - and these errors can lead to exorbitant turnover costs.

For more information on behavioral profiling, you can contact Brian Nelson at brian@daveyoho.com or call our office at (703) 591-2940.

Review of the Summit: Going Green in the Home Improvement Industry

Written by Dave Yoho

The continuing review of the Home Improvement Summit next brings us to what may currently be the biggest opportunity for remodelers and general contractors. Green remodeling is taking the industry by storm as consumers are focusing more on conservation, both for environmental reasons and monetary ones.

One of the proponents of this movement within the industry is Terry Ferraro, who is the President and CEO of Pro Materials Direct, a distributor of specialty products to home improvement companies.  They currently serve over 40% of Replacement Contractors’ (magazine) top 100.  Since 1975, when he first joined Alside, he has dedicated his career to the industry.  His distribution company, American Wholesale Supply, has branches in 7 southeastern states.  He is a founder and director of EBank, a founder of Magnolia Windows and Gutter Protection Products of America.

Terry terms these as “Greenovation” jobs, and he believes that they are rapidly becoming the most profitable jobs for many home improvement companies.

In the surveys that his company conducted, nearly half of all the green specialists said that their green business was doing better than their traditional remodeling work.

One way that many remodelers are finding success is through weatherization programs that help homeowners lower their heating costs.

NARI recommends making energy efficient upgrades as a way to prepare for the season, and many remodelers are also offering winterization programs to help them reduce energy costs.

Terry gave a sampling of companies from within the industry that are having success with green remodeling and I will share a few here:

“Our Home Energy Makeover Sales have the highest closing percentage of any product that we sell. They have the highest gross profit. Almost 80% of the jobs are paid by cash or credit card. They have the lowest cancelation rate. Over 90% of all Makeover jobs are installed and there is little or no service after completion.”
- Scott Alsup, Sales Manager, Taylor Construction, Atlanta, GA

“We had a kitchen lead the other night and we were the homeowner’s 5th estimate. Our salesperson left with an $8,200 home energy makeover sale. Two days later we ran a front door replacement lead and sold a $7,500 eShield Attic Insulation job.”
- Randy Hamilton, President, Erie Construction

“We started running eShield Home Energy Makeover leads about 6 weeks ago and only handed out 10 demonstration kits to our sales  force. Within 2 weeks all 77 salespeople wanted to run those leads.”
- Mel Feinberg, President, FHA Home Improvement, Hollywood, FL”

In addition to home energy makeovers, real time energy tracking will be the energy buzz words over the next 24 months.

Feel free to contact Terry Ferraro directly with any questions regarding this blog posting.

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