How Do You Know If You Need a Sales Manager?

Those of you who are already sales managers know how critical your position is. Those of you who are thinking about putting someone in the position, think twice and tread carefully. And for those of you who want to become a sales manager, don’t wait until you’re offered the job (or worse, already in the job) to prepare for it.

Having said all that, not every company needs a sales manager. Now I don’t mean that you shouldn’t have someone managing the salespeople. I just don’t think every company needs a dedicated sales manager.

How do you know when your company is ready for a dedicated sales manager? And how do you know when someone is ready to become a sales manager? Two important questions that have a real impact on your bottom line.

Is Your Company Ready

If you have less than 8-10 salespeople, you probably don’t need a dedicated sales manager. As I mentioned, that doesn’t mean you shouldn’t have someone managing the salespeople. It’s just that you don’t need a full-time one. Here’s why.

There is a management concept called “span of control.” The experts (whoever they might be) tell us that a manager, any manager, should have no more than 8-10 people reporting to them. This is their span of control. As the number of people reporting to a manager exceeds the magic number (10), the ability to “control” whatever is going on gets weaker and weaker until control degenerates into chaos. Chaos isn’t good.

You’re probably experiencing some level of chaos if your company has more than eight salespeople and no sales manager. Another sign that your company is ready for a dedicated sales manager, besides the number of salespeople, is that senior management is going bald before getting a chance to go grey and is developing a noticeable twitch around the left eye.

If you are ready for your first dedicated sales manager, the question is, should you fill the job internally. This could be one of the worst mistakes you’ll ever make. I’ll tell you why later in this article.

Economic Folly of Full Time

If you have less than eight salespeople, you probably can’t afford a full-time sales manager. Let me explain.

The sales manager’s remuneration has to come from somewhere and that somewhere is the salespeople.

Let’s assume you have five salespeople, and your new sales manager wants an income of $100,000. Let’s also assume that you have a 20 percent gross profit margin on whatever it is your people sell.

Now, for you to be able to pay your new sales manager his or her $100,000, you have to increase sales by $500,000 (20% of $500,000 = $100,000). That means each of your five salespeople must sell an additional $100,000 just so you can afford to pay the sales manager.

These salespeople are probably already whining about their sales quota as it is and now you’re going to ask them to sell $100,000 more. That’s a hard sell!

Here are three solutions:

1 Bag-Carrying Sales Manager

One solution to this dilemma is to have your new sales manager continue selling with a reduced account load and sales quota. Providing an increase in base salary can offset the resulting loss of income due to the smaller sales quota. Typically, the increased base usually amounts to $250-$500/month/salesperson.

Alternatively, and the method I prefer, is to give the sales manager a percentage of each salesperson’s sales. Now the sales manager’s income is somewhat dependent upon the performance of the people he or she manages.

2. Virtual Sales Manager

Another solution is to engage the services of a professional sales management consultant who can act as a part-time sales manager until you’re ready to acquire a full-time one. There are a few firms who offer this service (such as ours), and it might be worth checking out this option to see if it can work for you.

3 Do It Yourself

A third option is to keep on doing it yourself, or if you’re not doing it now, start doing it. I know you’re probably pretty busy with other things like running the company and dealing with suppliers, etc, but managing the people who manage the sales (your salespeople) shouldn’t be treated lightly. That’s why I authored a set of e-books specifically for people and companies in this situation.

Going Full Time

If you’ve decided to install a full-time sales manager, the question now becomes, do you promote from within or do you hire from outside.

My first choice is to promote from within if – and it’s a very big IF – you do it properly. By properly I mean you don’t necessarily promote your best salesperson into the position. You need to determine if he or she is ready for the responsibility and is a good fit.

Too many companies make the terrible mistake of promoting their best salesperson to sales manager only to lose this best salesperson and get their worst sales manager. Don’t go there!

If you don’t have a good internal candidate, or if promoting from within is going to cause interpersonal strife and resignations, then you’ll need to look outside the walls of the company for a suitable candidate.

Who to Promote?

Some senior salespeople feel they have earned the right to become sales manager without ever doing a thing to prepare themselves for the position. Perceived entitlement is not a good reason to give someone this critical job.

Other salespeople may want the job because they’re close to burnout and/or simply want out of the daily grind of being a salesperson. They’re tired and they want to move on and if they can do so without changing companies, so much the better. Yet another poor reason for promoting someone.

So, whom do you choose from within?

Look for the salesperson who:

  • has been preparing himself or herself for the role
  • exhibits the best business sense
  • has taken courses
  • has read books on the topic
  • shows the strongest tendency towards teamwork
  • goes out of his or her way to help others
  • will be accepted by the sales team as the best candidate

These are just some of the things to look for. If nothing else, trust your stomach. It will alarm if you’re about to make a bad decision.

Bottom Line

I started this article by acknowledging that the sales manager’s position is a critical one. It’s much like being a coach of a sports team. Just as good coaches build strong winning teams, good sales managers build strong winning sales teams. So, choose your coach wisely. The success of your team (and your company) depends upon