$30M sales team mistake…

recently a business owner approached me with a $10 million year sales team was asking me what I would do in their situation to scale up to 20 30 40 million or more and they were making a big mistake I see a lot of sales teams out there use so in this video I'm going to go over what that biggest mistake was and also the other advice I gave them to implement with their team to scale it now you can use those same lessons with your team so if you see my screen right now here's really

a basic overview of what this company's key metrics were for their sales team okay so they were doing about 1,300 sales a month they had 50 reps 10% close rate $800 aov they had a lot of part- timr and some full-timers on their sales team they had no outbound team so really this isn't like the full data points of their organization and their sales team of course but these are the data points that really outline the main problems now if you take 150 units about 1,300 units a month divided by 150 reps I believe is

about 8.6 units per month per rep and as you're going to see this metric is a big issue right here so the big fundamental mistake that I alluded to earlier that the sales team was happing was essentially was their complexity or sorry their income to complexity ratio so here's the easiest way to really explain this would you rather have four reps and a hypothetical example four reps at 25 units a month per rep a piece so as a total of 100 units a rep at a 10K product doing a million a month so easy way

to say it would you rather have four reps to do a million a month or would you rather have 10 reps to do a million a month right would you rather have four reps doing 25 units a piece of 10K or 10 reps doing 10 units a piece of 10K hey it's the same amount of money right and if you're paying these guys let's say 10% commission it's the same amount of overhead so which would you rather have or does it even matter this it just like hey like whatever gets me there I don't care

well um as you probably could imagine you would much rather have this one right here okay now why is that so the problems with the 10 rep example okay and the problems with more complexity than than is necessary is that you have number one lower recruiting power so why would you have lower recruiting power well here's the deal in this example these four reps that are selling you know approximately about 250 Grand cash collected a month if they're commissioned they're going to make way more money than these reps okay and in fact they're going to

make about what not I mean it's uh more than 100% more I mean 2.5x basically right so they're going to make substantially more on the same comp structure is the these reps so if if you go out to the recruiting Marketplace and you're trying to recruit new reps for your company which company do you think they want to work for obviously they want to work for the one where they can make two and a half times more okay so then on top of that you're going to get higher churn with this example why are you

going to get higher churn well because the reps are making less money and more more often than not a lot of times the efficiency in these organizations isn't very good so so in other words the reason the rep count or sorry the unit count per rep is very low is because the sales Ops or the show up rates or the live call counts are very good the marketing is not very good so the Reps have a lot of time to sit on their hands and do nothing and eventually they're not making money they get bored

they leave right whereas with this one you're going to have much lower TR because they're making more money they're busy you have less reps to focus on so they get more attention from the managers more growth etc etc okay the next problem with a bigger sales team to do the same amount of all right is you have more management overhead so in general you need about one manager for every 8 to 12 reps okay and that just goes for almost all teams but in sales it's true about one manager for every 8 to 12 reps

it's not a hard and a fast rule but it's a pretty good general rule Thum well like this and in this example you could still pull these off really with one manager but let's say you 10x both these companies now you're talking substantially more almost double the amount of management overhead for the same amount of Revenue so that's d double the amount you're digging into your margin for the same amount of Revenue because you're going to need twice as many managers and they're getting overrides or however you're accy them of that right so you're going

to have way more managers all right the other thing is too I mean if you ask me I want the highest revenue employee per employee possible so if I have less people it's just less headaches right it's less one-on ones you have to do it's less people you have to manage with your payroll uh less commission trackers you have to keep track of and that that's also going to mean less operations and less Finance staff and all of that stuff to deal with it so obviously you want the least amount of people in your organization

to do the most amount of Revenue that doesn't mean at certain points you can kind of Blitz scale and build on a lot of uh bring on a lot of folks and kind of naturally build a little bloat just because that's the season you're in that could be fine but if given the choice you're always going to want this example up here for these reasons that I gave so what did I tell this business so this is a core problem this business owner have right so what did I actually tell them to do to fix

it okay so the first thing I advised this business owner was really to do a management restructure so what I mean by that is when this company was first asking me for advice they had no clear like top- down leadership or management it was just kind of like Blitz scale there was all these reps it just very very inefficient stuff all over the place so I wrote out a fictitious example of what this should look like using an 100% team I know that team was 150 but 100 was just easier to do and so what

you have here is you have a director at the top and then you have these are the managers and then the these are the Reps okay so what's really key here is this director their primary skill set and this person obviously has to be a superstar their primary skill set is obviously they have to be great at sales okay but on the on the split side they need to also really be good at the systems and then also recruiting hiring training and managing the one to 10 people and so what I mean by that is

what this person is going to make them such a superstar and why it is a pretty hard hire is essentially what you're looking for is you're finding this one person who can recruit hire train and manage these sort of entrepreneurial kind of like almost like you think of them as many CEOs who have their own profit Division and then you just find that one person and then they go hire the next 10 sales reps and sort of manage their business under the business right now this so this person needs to be strategic systems scripts but

also very good at sales and also very good at recruiting and and harboring entrepreneur Ral Talent that's why you know it's a little bit of a unicorn hire but you only need one these folks on the other hand they just really need to be good at two skills which is number one they need to be good at sales and obviously the sales training and sales technique and all that stuff and then they need to be good at finding great sales talent and just building a team right that's really it they don't have to necessarily be

a strategic highlevel systems process is oriented as this individual because this individual is also going to be the person coordinating with marketing with sales Ops and really kind of being the glue and the highest executive on the sales side of the entire organization this person can kind of be um you know they have to be somebody who's not just a lone wolf sales rep they got to be somebody who's pouring into their sales team they're a great sales coach but that's really what they are they don't have to necessarily be systems brain they're not going

to be redoing the script or redoing the CRM or anything like that okay so then from here so obviously as you could see here every single one of these people you would have and if if this team got much bigger you'd have to make kind of co-directors or so on and so forth but as I drew it out here this person has I believe this is eight or 10 direct reports right so they have their team they're kind of still like managing a sales team they're managing a team but you know obviously it's at a

higher point of Leverage because every single person they're managing they're hiring the one or they're managing the one person that can do the 10 and then here these people would hire or sorry hire would manage the 10 people on how many 10 is but you can imagine each of these people will be assigned a group of 10 okay just imagine I'm circling 10 and this is all proportional so the reason this is so important to go back to our original problem which was the improper efficiency of the overall sales team is obviously you have the

one to time method here but then the other thing that you have here is you have proper rep to management ratio right so generally again for every 8 to 12 reps that you have you don't need necessarily a whole new sales director whole new division but you do need a coach to be able to pour in to those people okay so the next big thing that I mentioned with this business owner was eliminating the part- timers okay so this one's very very simple but the issue with part-timers is number one they're not if you're all

in on the opportunity you're totally bought into the Mission Vision uh Mission Vision Values of the company the culture and you're all in on the opportunity this is your way to make income you have to make this work and you're just focus day in and day out on one thing and one thing only which is getting better at your sales calls you're obviously going to do better right I mean it's just focus right so the lack of focus for the Reps when they're doing part-time they almost always get worse results sure there's exceptions of certain

reps that are just complete Savages and they're just kind of doing this on the side as they're doing their own business but still I don't even like that for us any rep that we have has to be full-time there's no part-time bull crap or anything like that the other issue with part-time reps is it takes 100% of management bandwidth for only 50% of the output so like if I have a team of six and two of the a parttime a lot of times with those part-timers I still have to spend this much time with them

so I'm spending equal amount of units per my time with a rep who's only going to produce at most 50% of the output because they're part-time so you see how like as you you know when you're hiring like one or two sales reps you have limited direct reports you don't feel that as much but in a bigger organization it creates so much inefficiency which as we covered earlier was coming up in this company's metrics it also just brings down the culture it doesn't make it as much of a high performance culture if you have these

people who are half in half out there parttime and it creates more unnecessary complexity so that's pretty self-explanatory the next thing we dove into was the aov so this company had products as high as 5K now in this industry I know that they can sell really as high as 10K I would say probably in this industry I'm not going to say what it is just for the anomy of this person but it was you know 58 to 6800 is really the gold standard of where I like to see companies at in this industry their aov

was 850 bucks now they had Pro they had products as high as 5K but their aov is only 850 bucks so what's going on with that well the main thing is that they had too many packages so they had like a $500 option A $1,500 option a $3,500 option a 5k option okay so when you have too many packages here's the big thing that you have to realize sales reps they don't sell the thing that makes them the most money or the thing that therefore makes you the most money because they're commission you know based

sales reps they don't sell they don't sell the thing that makes you or them the most money what they do is they sell the easiest thing there is to sell because it's very easy just from a status uh standpoint to be able to come away from the deal and say well you know they didn't have money but I did take what they had and gave them uh you know I I was able to process and get a unit I took what they had but you know they couldn't have done the 5K and the thing with

reps is the reason thisen happens is because sales is a grind and our brains and just our bodies and who we are as humans we always trying to naturally conserve energy so what happens a lot of times on these calls is and this is why I don't like giving front-end reps backend reps is different but front end reps multiple packages is unless the packages are very distinctly different and also both very premium what happens when they have multiple packages is you get to the end the prospect gives some resistance you know a financial objection and

instead inad of calling it out working through the objection and doing the hard work to get the premium sale which is what the the the offer that the prospect probably should be in what they do is they just take the easy Road out and essentially just H you know I'll just downsell them or I'll just give them a crazy ass payment plan so what happens when you know that that's why this phenomena happens is really just the energy comp uh conservation of the Reps and so in my companies and all the companies I consult I

really recommend and that if you're really just to have one package okay but if you're going to have two make them very far apart like for instance in this example 5K and 3500 why even have the two things that are that close if somebody could do 3500 they could do 5K like what are you even doing and it just gives the rep such an easy way to again sell the easiest thing there is to sell because in that way they don't have to handle objections they don't have to get exhausted and they're just conserving their

energy if you do have multiple products on the front end a great example is if like you have a 10K product and let's say a 50k product or you have a 10K product and maybe it's just 30k or even like 25k that's they're both premium and they're both different enough to where then usually the Reps will make a little bit better judgment because either way they're going to get resistance with either one but where you really see a lot of trouble is if you have a 10K product and a 1K product I know this is

terrible handwriting 10K and 1K you'll get a lot of people who just really needed pushed into this they needed a more aggressive payment plan some encouragement something to coax Their Fear a little bit but the rep takes the easy way out and does the 1K and then comes to you and they're like I got the 1K and I I have a different video on this I'll post it on the channel but um almost always this example even if you think it works in a perfect world and never does you almost always always always lose money

and it's because of this right so if we can get oh and I just really hit the first packages thing but number one if we can if we consolidate the comp packages we'll likely increase the aov a lot of times again when I see companies who are doing this for instance I'll have them remove their 1K product and automatically their revenue goes up we don't even change anything else we just remove the option for the down sell and what do you know they get more 10ks okay so removing the packages aov is automatically going to

go up then also U part of the reason this is happening as well is just poor train too much inefficiency there's no qc's on these down cells so what I mean by that is if you do have a downsell you need the manager qcing to make sure the person who was down sold that was a proper downsell they weren't qualified for something higher that they should have been put into well with this company obviously as we already went over there was no proper management going on so that didn't happen Okay so the fourth thing is

the MDR process so in this company this is how their system actually worked they had marketing and they were creating all buyers leads right and so this is how they were able to feed so many reps with such an inefficient um sales engine is because their front end in terms of their marketing and their buyer production was so phenomenal okay so they had marketing that was going to the buyer leads and then basically what they would do is use email and SMS to get them to book a call and ultimately show up right so very

very simple somebody sees marketing they become a buer Le email an SMS drives them to the call what's really interesting though is they had a 90% drop off from buyer to uh not even show but to book a call so 90% of people were becoming buyers and not even booking a call so the most obvious thing to do here if you watch my channel you probably know is to add an MDR process keep erasing stuff to add an MDR process and then having basically Setters right Setters mdrs the same thing MDR is a marketing development

rep so they're that's that's traditionally in the high ticket space What Setters are they go after people who are uh leads generated by marketing be it buyers or opt-ins or Etc and set them for appointments because it's very different from sdrs so we need an MDR to essentially call this lead all right book a triage or do a triage on the spot ideally they answer the phon you do the triage on the spot and then get them to show up so as a result what what would I expect from something like this I would say

less than I mean equal to or um or sorry up to about 25% of buyers to set buyer to set so I would say you could probably get this number because it's buyers as high as 25% because you could really approach it with such a customer service frame like imagine if something somebody purchases something all I got to do as a Setter is is send them a text and say Hey you know have some questions about your purchase just want to make sure you received everything okay and you got access to all the bonuses I'm

just making some stuff up it's very easy to get buyers to respond so yes you could probably get up to to about 25% buyer to set even if you got an extra 10% that would double the lead flow of this business right I've seen with buyer Falls up to 25% which is a huge opportunity so if you had 25% at a 25% lift to the current appointment volume you get about 32.5% that would be a 3X in the appointments with zero ads now how would I actually build that outbound team well when you have such

a big organization you already have 150 reps again you got to find the one person to hire the 10 in this example you have to find essentially the first hire to build this outbound Department would be this person okay because you need this person to then hire these 10 people to then hire this 10 people right that's as a CEO or a Founder how you would build that department without completely losing your mind okay so that's why you still got to use the 1 to 10 process so as we finish out here if you look

at the combined potential of all of this stuff right if you double the aov you're going to double the revenue pretty pretty obvious right if you double the efficiency like if you can take it from eight reps per closer per month which is where it was and just add in some of the things I talked about so far to get into 15 or 16 reps you're also going to double your Revenue which is not just doubling your Revenue you're going to get a much bigger increase in profit so instead of a double in profit you

might get a 2.5x in profit because the only thing you're pay it's there's no extra marketing spend there's probably not that much overhead and so you're actually to get a much big trickle down in terms of profit and then keep in mind because we're doing um because we're we're achieving this through increasing the sales efficiency we're actually probably going to have less overhead in the department and less unnecessary expenses and Etc Okay then if we 3x the appointments I would say that's probably a 20 to 25% increase in profit immediately and then obviously a potential

for a 3X Revenue down the road you know that's not going to happen overnight but obviously it's going to give you three times the appointments if everything stay constant that's three times the revenue why are you going to get a 20 to 25% increase in profit immediately because you can trim back the ad campaigns that are the lowest row ads of the entire whole which will probably help you eek out more profit and have Less ad spend that you're allocating out there right so the fact that you won't need to be as relying on ads

will in fact in this type of funnel reduce the ad expenses so that's all for this video guys hope you enjoyed