No Managed Services Provider has ever had the problem of having too many good employees. Finding and retaining top talent as an MSP can be very difficult, especially when it comes to your sales team, which is a key area to focus on if you want to grow your business.
On this episode of MSPradio, we chat with Mike Schdmitmann of 4-Profit about finding and retaining top sales talent for your MSP business. Mike has extensive experience as a sales professional and working with MSPs to help them build successful sales teams.
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Nate: All right, welcome back everyone to another episode of MSP radio; I am your host Nate Teplow. We’ve got a great episode lined up for you here today. We’re going to be talking about hiring salespeople, retaining them and building the ultimate recipe for creating a productive sales team.
Before we get into it I have to remind you to subscribe to our podcast on iTunes. If you go to the iTunes store and search for MSP radio, you can subscribe there. We are also available via the Stitcher app for android users as well. Also Tweet us and follow us on Twitter using the handle @follow Continuum. And if you use the hashtag MSP radio we will be checking back to see what you have to say about the show.
So as I mentioned, today we’re talking about sales; specifically how to find and retain true sales talent that really helps accelerate your profitability as an MSP. So I am joined here today by an expert in sales hiring and sales retention. He’s got over 20 years experience in sales management and he’s helped both resellers and vendors improve their margins and increase their profitability through effectively hiring sales professionals.
So I’ve got Mike Schmidtmann on the line. He is a Business Coach at 4 Profit. Mike, how are you doing today?
Mike: Great! Thanks Nate, great to be on the program.
Nate: So before we get into it, I just have to mention that Mike, you are actually speaking at our first ever user conference this September. It’s called Navigate 2014; hopefully all the listeners know about it by now but can you give us a little hint about your session at Navigate?
Mike: Sure. Thanks Nate. I speak at quite a few of these conferences and I love the community. I can’t wait to do this; as a matter of fact you are doing a good job of publicizing this because I’ve gotten probably six or seven pings already saying, “Hey, I’ve seen you there, look forward to seeing you.” So I am very excited to be there needs and to participate in your conference. I will say this that I have worked probably over the years with hundreds of MSP’s and solution providers and I have never seen one who had too many good people. Generally speaking, they have a very good business, they built it but they are struggling in a key area and they have trouble attracting and retaining talented people and so that’s where I come in to help.
Nate: Yeah, that’s great. That’s something I have heard a lot too just speaking to MSP’s and other guests on this radio show and whatnot but yeah, hiring good, not only sales people but good technicians, good even just administrative people within the team can be very difficult for MSP’s. So that would be great topic at Navigate. Definitely come see Mike Schmidtmann speak there and we are going to be touching a little bit on the sales hiring process and sales retention process or at least, Mike’s process here on the show.
So Mike, can you give us a little background of just your experience, how you got started in sales and in sales coaching?
Mike: Great. Well thank you Nate. Actually, when I got out of college, my brother and I bought a bar up in Maine and we so are business owners and so I know what it is like to make payroll and have to worry about paying the bills and growing the business.
I had some people come in one time and they were just high rollers peeling off hundred dollar bills and I said, “Well, what kind of business are you in?” And they said, “Well, we are in sales.” And so I was hooked. I moved over to sales over 25 years ago and fortunately I got hooked up with a great training organization, Linear Business Products so I started selling office automation back in the 1980s. And my first product I sold was an 80 pound word processor; how would you like to bring that around for a demonstration?
Nate: Yeah, that sounds like fun.
Mike: It run $6000 and it had 32k of RAM so I have been in this business for a long, long time and seen it. But what Linear did so well was train people how to identify, find, attract, retain customers and build a business. And so I’ve made it a practice for 25 years I’ve been in this solutions provider business in one shape or form, so computers, telephone systems, MSP’s, I work with a lot of companies and the core issues remain the same; how do we attract people? How do we build a business? How do we serve our customers? How do we make a profitable business? And I was lucky. When I was in Washington DC I had an opportunity to start my own business there as part of another organization. I started with one salesperson and in eight years, we grew to be the largest hire/reseller on the East Coast. So I had 18 salespeople, too many managers, we are a $30 million business and in a the eight years we were there we made $11 million in profit so all these things are important Nate, so I am going to resonate with your listeners. Great sales people help you build a business, great salespeople help bring you gross profit and profit to the business and if you have a great sales team, a lots of good things can happen.
Conversely, if you do not have a good sales team, it’s almost impossible to grow your business. Now you can serve customers and people can love you; if you don’t have a great sales team you will never grow to the potential that you could and you’ll never have an economic asset that people will want to buy. So when the end game comes to you; whether you want to sell it or maybe take cash out of the business, or go public or any of those fun things, that only happens if you have a sustainable sales team so that is what I help companies do.
Nate: What you think in your opinion makes a good sales rep? You talk about building a good team but what qualifies as someone is a good salesperson?
Mike: I wish there was a secret sauce that you could just identify. I would say this that the different sizes and different types of business Nate have different types of people that are successful. So you can think of somebody selling a copier, that’s a different skill set than people who are selling aircraft carriers. So the bigger the sale, the more complex the different personality.
When it comes to an MSP though, there is a very defined profile and I called it the Mark of Zorro. So the Mark of Zorro is a person who is somewhat assertive, very extroverted, very low in patience; so they want to go out and make things happen, they are okay at paperwork but they are not great at it so of course this drives engineers and most MSP owners crazy because they are very good at technical things. But nonetheless, that’s the profile for the MSP that works so they are aggressive, they are all going but they need to talk to a lot of people. They are also well networked so in the questioning that we do in the recruiting process, we recruit for those skills; how do they build a network? How do they identify customers? How do they make additional appointments? How do they overcome rejections? And if you have a good recruiting process, you can identify those skills which gives you a great ability to when you hire somebody, to bring somebody in and have them be successful.
Nate: Yeah, that’s true. I think a lot of MSP’s get caught up in trying to find someone with technical talent and they think it’s more of a technical issue or technical needs that they need to fill on the sales team but from what you’re saying, it sounds like they need more for salesperson versus a technician.
Mike: Right. And I am all for technical capability; as a matter of fact, nobody likes a salesperson that doesn’t know anything. Having said that, no matter how technical you are, you’ve got to be able to sell and many technical people just aren’t very good at doing that. So you’ve got to understand business issues. You’ve got to understand why people will want to talk to you, you have to provide a solution that makes sense.
I will say this too Nate; in this industry, there is in sales a 38% turnover. That’s baseline turnover, it’s 38% but most of that turnover is in first year salespeople. So if you get somebody say two years into the business, that turnover is less than 10%. So if you give them two years, they will stay but to the turnover of first year people is probably 17 to 80% so it’s just like a hamster on the wheel. And many MSP’s inadvertently, they waste tens and tens of thousands of dollars on people; they hire somebody, they bring them in, they give them grants and guarantees, they last for a few months and then after six, seven months, the go away or they are fired for nonperformance and they start the whole process again and it’s amazingly and it is terribly expensive for these MSP’s to be flushing dollars down the toilet month after month after month with no productivity.
Nate: Yeah I agree. I think you almost don’t even realize how much money you are spending to with all that churn. And I think just to summarize what you are saying, I think it is easier to teach a salesperson technical expertise than to teach a technical person how to sell.
Mike: That’s true. And if they get an opportunity, they can always bring a technical person in; as a matter of fact, that’s a pretty good selling approach. I always council a salesperson; if you don’t know something, admit it. Say, “Look, I don’t know the answer to that question but let me bring the owner of my company in.” So if you can somebody who could just gets the appointments and get the opportunities, and there are thousands of them out there. There are so many businesses that need what the MSP’s have to offer. So there is an enormous need and it’s growing. So these companies need to focus on their core business. They don’t have time to fool around with technology. It’s getting more complex. They need more tools, it’s more expensive to maintain and no matter who you have on staff, they are always running around with their hair on fire trying to fix things; they can’t be up on all of the certifications, they can’t be up on all the technologies so you can see outsourcing it to a great MSP is a good business decision for most small and medium-size businesses.
Nate: So Mike, we’ve got to take a quick commercial break here but we’re going to be back in a minute. Mike is going to give us a little more info on his recipe for hiring a good sales team. I think we did a good job outlining this dilemma for MSP’s. Clearly there is a need to hire salespeople. Next we are going to talk about how to actually hire these salespeople, develop your sales team and ramp up your sales to truly grow your business. So we will see you in a few minutes after this commercial break.
Nate: All right welcome back everyone from our commercial break. You are here on MSP radio. I am your host Nate Teplow and we are talking with Mike Schmidtmann. He’s a business coach at For-Profit, also a speaker at Navigate, our first ever user conference.
So we are talking about the sales dilemma for MSP’s, the issues that they have, trying to hire good salespeople and we’re going to start talking now about Mike’s process, how to hire these people, how to build a true sales team. Before that, Mike we were actually speaking before the show, you told me this interesting story about Arnie Bellini and a talk he gave at IT Nation. Do you mind sharing that with our audience as well?
Mike: Sure, sure thing Nate. The IT Nation last November Arnie polled the room and asked everyone; “How many of you came into this business from an engineering background?” And probably 2000 people raised their hands. Then he asked, “How many of you are from a sales background?” And there weren’t five people in the room that raised their hand, I was one of them so I was 20% of the salespeople in the room. So that got a good laugh from everybody but it speaks to, as you say Nate, the dilemma that your audience faces. Many of these very hard-working, skilled individuals know technology and that is why they build their business. They’ve got an “entrepreneurial seizure” as they say. They spun off, they opened their business and they glue because they are good at what they do and the customers like them and they grow to a certain size. And generally speaking, that’s in the million to $2 million range perhaps but then no matter how good they are, they stop and until you get a sales engine, you’re never going to grow past that point. And so what I do is going back to my restaurant and bar days, there was a time when we started offering homemade baked bread in the hotel. And I learned how to do it from this Baker and I would bake the bread and we would time it so the bread came out of the oven right when we opened the doors to the restaurant. People came in and what’s a better smell in the world than fresh-baked bread.
But I found that I’m not really a Baker. If I followed the recipe exactly, it worked great; the bread came out well and everybody loved it but if I improvised or if I run out of an ingredient or Einstein here decided to experiment somehow it was disastrous! And so I found that if you don’t have time to really learn something in-depth, you just grab a great recipe and run with it and so I did that with the bread. And what I want to do with your audience Nate is teach them how to bake bread in terms of recruiting and trying to recruit salespeople. So it’s a step-by-step process. I would just like you pour out the sugar and the flour and the salt and knead the bread just to step-by-step how you bake bread, you can hire people the same way and it all starts with how would you identify the target person you are doing, how do you attract them to the company? How do you screen them? How do you do the checks to make sure that they are a good fit for your company? How do you hire them into the company? And how do you get them on board and ramp? So it’s step one, step two. And I think the reasons that MSP like this process, these are engineering types, they like processes, they like checklists. So my process is very checklist oriented, very step-by-step and all you’ve got to do is execute a series of very simple steps; step one, step two. But if you do, it will give you predictable results every time. You don’t have to improvise, you just follow the formula and it works.
Nate: How long does this take usually? Is there like a time? If I am using your formula and going step-by-step, how long can you expect until I start hiring a good rep?
Mike: From the time you post the job postings, probably three or four weeks. So a week or two to post it, a couple of weeks to gather the resumes together and start screening etc., etc. I think once you get a resume that you like, and of course, getting referrals is a good way too. You don’t have to post these ads. I teach a lot of processes about how to approach people who are not looking for a job and sometimes the best salespeople are the ones who don’t have their resume out but nonetheless, from the moment you start talking to them, generally 2 to 3 weeks is the process it takes and it is a step-by-step process; four or five specific steps that they take in their… but again it gives you predictable results at the end. I would say this as well Nate that where the most MSP’s go wrong, in other words, when I look at what they are doing now, what are they doing wrong and many of them do what I call two interviews and an offer. So they will see somebody one time, it looks good. They would bring him in a second time. Well, they’ve asked all the questions, they’ve got the next logical step is to make an offer. And that’s really not a very good process. One, it doesn’t attract the candidates to your company effectively and the second part is you haven’t really screened them effectively. So my process has more steps. It takes a little bit longer but it gives you much better results at the same time. So one is the MSP’s don’t talk enough people and then secondly, because they don’t talk to enough Nate, they get desperate. There is a saying that, “Bad breath is better than no breath” and then they say, “Well, I don’t have the good candidates but I need a salesperson so let’s hope this person does well.” And that’s a really bad hiring process.
Nate: No, definitely. I think it’s better to spend the extra two or three weeks finding the right person than bringing someone on board just to get them started and then finding out a few months later that they are just not a good sales person or not doing what you expected and that’s going to cost you much more in the long run as a business.
Mike: You are exactly right Nate. They end up spending tens of thousands of dollars more in the form of salary draws commissions, they are giving these guys travel allowances, they are paying for training, giving them technology equipment to use, it’s tens of thousands of dollars and then six months later they burn it and you have to start all over again.
Nate: I know a lot of people have their own, there’s a lot of theories on sales hiring processes and they have their own formulas. What’s unique about yours?
Mike: I think all good processes Nate have something in common. They help you identify good people, they have a good selection process to screen them, they help you create offers that are attractive so they want to join and then you have an on boarding process. So my process; I think what makes it different Nate, if I had to say.
First of all, there is a lot of good programs out there so I am never going to claim I am the only process that works, I would not say that but I will say most processes, the most famous one is called “Top grading” and top grading sounds terrific. As a matter of fact I have met the authors of the book but it’s very time-consuming, they have numerous four hour interviews and most MSP’s don’t have time to do it. Most of these programs are not designed by people who have been in the industry. And since I have done exactly this for 25 years, I know exactly what the industry is, what questions to ask and how to do it.
So you might say… I’m not going to say is totally innate, there are lot of good programs out there Nate, they really are but this is tailored to our business and the people that come in, these are specific questions that determine are they not good for… I am not talking is they are good real estate agents or good car salespeople or good anything else, pharmaceuticals; this is perfect for MSP’s, it is MSP specific.
Nate: So switching a little bit more to the team aspect, what do you think is the key or a key component of building a strong sales team?
Mike: That is a great point and I think to some degree you develop your strategy around the talent. So for example, when Pat Riley was coach of the LA Lakers, his talent was a run and gun, very fast up-tempo offense. When Pat Riley became the coach of the New York Knicks, he didn’t have the talent to do that so he had a much slower… It was around Patrick Ewings, it was a slower style what he adapted his selling approach around the talent. So I think it does make sense to hire talent first and then figure out how to direct them.
And I have seen cases Nate where you could have different types of salespeople on the same team. So for example on my team I had some extroverts and some introverts. I had some people who had great product knowledge, I got people that networked well I had a different skill sets that each of the top people, and I have a lot of high-performing people. Matter of fact, the average income on my sales team was close to $200,000 so I had a lot of very high-performing sales people. But they were all different in their own way and so to answer your question, a sale team does not have to have two, three, five ten carbon copies of each other. You can exploit the individual unique characteristics and take advantage of your salespeople but I’ll say this is that as much as Pat Riley, when he had his LA team, he formed it around that and when he is in Miami he forms his team around the talent he has. Get the talent first and then build a strategy around utilizing the talent to your greatest advantage.
So every team is comprised of however many need salespeople. Just hire the best absolute talent you can and then figure out how to make them productive.
Nate: Yeah, that is interesting. And I think going back to your analogy, it’s not just about hiring the best talent but you want people who can complement each other just like you don’t want five guards on the court at the same time; you need someone who is taller, you need a center, you need someone who can grab rebounds for you, you want the same on your a sales team. You was different talents, obviously the people who are most talented at what they do what you want to different talents to complement each other so you can really work the most effectively as a team.
Mike: That’s a great point and Nate. As a matter of fact, if you want to help me on my presentation, you’re welcome to come up on stage with me as far as I’m concerned you are exactly right.
Nate: Yeah, I love sports analogies; I try to make them frequently on the show.
Another thing and this might be a good point deduction but another sports analogy I have used whenever we talk about marketing is MSP’s, they don’t do a ton of marketing. I think they are afraid of marketing or just unsure of how to get started but something that I like to say is that salespeople with no marketing is like having wide receivers with no quarterback.
Nate: You need someone to throw them passes. You can’t expect them to go out there and through process to themselves for your need that, that same kind of support system just like you would on a football field.
Mike: That’s a great point Nate. Let me just kind of drill into that point a little bit because I am working with a company right now that is on the West Coast and they decided in their infinite wisdom to really take everything away from the salespeople. They said, “We want true hunters.” So they don’t have any leads at all and whatever marketing they give, they give to our inside sales team, they don’t give the marketing. If they get referrals from other people, they kind of developed a referral agent program so they bypass the salesperson on that.
A salesperson really has four ways to get business, four and this company has taken three of those four away from the salespeople saying, “Well, we want to them just to market a cold call on their own.” Well the predictable results: a third of their salespeople sell zero, zero every month. They’ve taken everything away and their turnover is believe it or not, 70%! So what’s happened? Again, it sounds great on paper like most ideas do but in practice, it kills you. So to get back to your point if you want a salesperson to succeed, and remember that turn over in the first year is close to 70%, how can you raise that? How can you get that higher? I had sales turn over as well. I wish I could say, to use a sports analogy, I didn’t hit 1000 on my new hires either. But I hit pretty darn good and the reason we did was we found a way for these new people to be successful. So as you say, marketing to some way so you can do lunch and learns, you can do…
I like education-based marketing. Because you are educating your customers, you’re giving them ideas and there are so many ideas out there that these people need to be embracing. For example, just last year, a lot of people did well with the XP conversion, XP is going out… That was an opportunity to educate your clients about what that meant and how time-consuming it is to refresh all these systems and how if you haven’t managed the services you can do that on their behalf. So it’s a win-win for everybody but they are constantly in this business, new ideas, new business impacts. There is regulatory changes and so educating customers in a marketing way helps the sales team. It gives them opportunities; it’s a nice nonsalesy way to build a relationship. But I agree with you, having the salespeople pays off to you in higher retention, higher success on the salespeople.
Nate: Yeah definitely and I agree with you on the point of needing to be educational. And I think that’s where MSP’s fall short, is if they don’t get this whole marketing concept, it’s really just about sharing our expertise. I write MSP’s and even their staff, they have a ton of expertise and technical knowledge but they don’t share it effectively and just educating your clients in the simplest ways like with XP or security concerns or whatnot, that goes a long way and it helps you actually generate more business and you’ll get more opportunities for the sales team.
Mike: Right. Well think of it Nate, let’s say that MSP’s that come to your conference, many of these people are very highly skilled, they are really knowledgeable, their customers love them! And yet most of the customers, most of the clients who need them the most don’t even know who they are and that’s a sad fact and that’s where the salespeople come in because by exposing potential new people to the wonderful results that these MSP’s can provide, you are doing a service to the community plus your helping grow the business so that’s that catalyst that really makes the business move forward I think.
Nate: Yeah, absolutely. So everyone, come to Navigate 2014 and learn more about growing your business just like Mike suggested.
Mike, this was a great conversation. I am sorry to have to cut off but we are running short on time here. Great tips here on how to grow your sales team, the sales issue and thank you for joining me here on MSP radio!
Mike: Sure, thanks Nate.
Nate: And if our listeners want to learn more about what you do, your business and your coaching practice, where can they go?
Mike: When I am part of the For-Profit organizations so www.for-profit.com. And then I’ve got my personal website. You can immediately see when you get on that website that I like to have fun and goof around and make things entertaining so there is www.MikeSchmidtmann.com and it plays off with famous people who are insulting Mike Schmidtmann. So I felt that was funny; so whenever I see somebody famous I get my picture taken and ask them permission to insult me.
And the session is fun like that too! Reggita has been through this. I like to have fun, we give away things, we have games we play but I like to make learning and education fun and if it is, people learn better, it’s more engaging way too. So come to my session and be entertained, maybe learn something at the same time.
Nate: Totally I agree. Education is the best way to educate. So Mike thank you again for joining me here again on MSP radio and thank you listeners for tuning in. We hope you enjoyed the talk with Mike today about building a sales team and how to make it work for your business. So thanks for tuning in to MSP radio and we will see you all next week.
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