The growth and development of people is the highest calling of leadership.” – Harvey S. Firestone
Introduction: The Leadership Challenge in Sales
Picture this: Your top salesperson, consistently exceeding targets, is promoted to sales manager with the expectation that their winning formula will elevate the entire team. However, within months, the team’s performance dips, morale suffers, and your once-thriving star now struggles in leadership. What went wrong?
It’s a scenario that’s all too common in businesses of all sizes. Many high-performing salespeople fail as managers because selling and leading require entirely different skillsets. According to research, more than 75% of salespeople promoted to sales management roles will last less than 2 years in the role and will return to a sales position.
Sales leadership excellence isn’t just about closing deals; it’s about cultivating talent, building a cohesive team, and driving sustainable success. In this article, we’ll explore what makes a great sales leader, how to motivate and retain top performers, and how to build a leadership pipeline for long-term growth.
Why Top Salespeople Often Struggle as Managers
The Individual Contributor vs. the Leader Dilemma
Sales is inherently about personal achievement. Top performers are often competitive, self-motivated, and relentless in pursuing their goals. However, leadership demands a different approach:
- From Competition to Collaboration: A leader must prioritise the team’s success over individual accolades.
- Empowering Others: Effective managers inspire and develop their team members rather than focusing solely on personal targets.
The Pitfalls of Promoting the Best Salesperson into Leadership
Promoting your best salesperson into a management role might seem logical, and many top salespeople see it as a logical career progression, but it often backfires:
- The ‘Super Rep’ Syndrome: They might try to do everything themselves instead of delegating and coaching.
- Poor Delegation and Micromanagement: Without proper leadership skills, they may struggle to trust their team, leading to micromanagement.
- Challenges with Motivation and Conflict Resolution: Excelling in sales doesn’t necessarily equip someone with the skills to manage interpersonal dynamics.
- Failure to Develop Others: Great salespeople often have a “just do it my way” mindset, making it difficult to train others effectively.
- Short-Term Focus vs. Long-Term Growth: Sales leaders must think about sustainable growth, not just this quarter’s numbers.
For a deeper dive into this issue, read my article “Growing Pains – When Is it Time to Fire Your Top Salesperson?”
Alternative Paths for Top Performers
Although top performers often see sales management as a natural progression in their careers, not all can, or should be, put into leadership roles. You don’t want to lose these top performers because they feel disappointed, so providing clear career pathways that allow them to excel without taking on leadership responsibilities is essential:
- Specialist Roles: Offer positions like key account management, product evangelists, sales trainer, or strategic sales roles that leverage their expertise without requiring them to manage others.
- Recognition and Rewards: Provide avenues for career progression and recognition that don’t involve management titles.
- Address Their Ambitions: Have open conversations about their career goals and align opportunities with their strengths.
How to Prevent Leadership Failure in Sales
Rather than assuming that top salespeople will make great managers, businesses must actively prepare and assess potential leaders. Here’s how:
- Leadership Training Before Promotion – Provide training in coaching, delegation, and team development before transitioning them into leadership roles.
- Gradual Leadership Exposure – Allow top performers to mentor junior reps, lead small projects, or contribute to strategy to assess their leadership capacity before formally making them managers.
- Use Leadership Assessments – Evaluate emotional intelligence, coaching ability, and leadership potential before making a promotion decision.
- Create Leadership Development Programs – Formalise the process of identifying and developing future sales leaders.
- Encourage Self-Awareness – Help top salespeople understand that leadership is a completely different challenge, not just an extension of their sales success.
When done right, companies can develop strong sales leaders without losing their best revenue-generators to ill-suited management roles.
The Skillsets Required for Effective Sales Leadership
From Selling to Coaching: A Mindset Shift
Great sales leaders shift their focus from personal achievements to developing their team’s capabilities. This requires a fundamental change in mindset:
- Coach, Don’t Sell: Prioritise mentoring and guiding team members over closing deals yourself.
- Celebrate Team Successes: Recognise and reward collective achievements.
Key Leadership Skills
Emotional Intelligence
Managing people involves understanding and responding to emotions – both your own and those of your team. High emotional intelligence enables leaders to:
- Build strong relationships.
- Navigate conflicts effectively.
- Create a positive team environment.
See my article, “Embracing Emotional Intelligence: The Heart of Leadership Success” for more information on this area.
Communication
Clear and open communication is vital for building trust and transparency. This includes:
- Active Listening: Truly understanding your team’s concerns and ideas.
- Consistent Messaging: Ensuring everyone is aligned with the team’s goals and strategies.
For a deeper look, see my article: “Leading with Confidence: Mastering Communication to Inspire and Unleash Peak Performance”
Empathy
Empathetic leaders understand their team members’ perspectives and needs. This provides a supportive environment that encourages growth and development.
- Inspire and Motivate: Tailor your approach to individual motivations.
- Build a High-Trust Culture: Be transparent in goal setting and hold yourself accountable.
You might also find these articles to be helpful: “Mastering Difficult Conversations – the Power of Compassionate Communication” and “The Power of Accountable Leadership”
Strategic Thinking
Aligning sales strategies with overall business goals ensures that the team contributes to the company’s success.
- Set Clear Vision: Articulate where the team is heading and why.
- Data-Driven Decisions: Use analytics to inform strategies and tactics.
Delegation, Coaching, and Accountability
Effective leaders empower their team by:
- Delegating Responsibilities: Trust team members with important tasks.
- Providing Support: Offer guidance and resources for development.
- Holding the Team Accountable: Establish clear expectations and follow through.
The best sales leaders aren’t necessarily the best salespeople. They are individuals who can develop talent, communicate effectively, and build high-performing teams.
Reference: “Building Resilient Teams: Leadership Strategies for Tough Times”
Strategies for Motivating and Retaining Top Sales Performers
The Balance of Autonomy and Accountability
Top performers thrive when given the freedom to operate autonomously within a framework of clear expectations:
- Set Clear Goals: Define what success looks like.
- Provide Flexibility: Allow them to choose how to achieve these goals.
- Regular Check-Ins: Offer support without micromanaging.
Recognition Beyond Money
While financial incentives are important, other forms of recognition can be equally impactful:
- Public Recognition: Celebrate achievements in team meetings or company communications.
- Professional Development: Invest in training and growth opportunities.
- Career Progression: Offer advancement paths that don’t necessarily lead to management roles.
Creating Purpose and Alignment
Connecting day-to-day tasks to the company’s mission enhances engagement:
- Align with Company Values: Show how their work contributes to the bigger picture.
- Customer Impact Stories: Share testimonials that highlight the difference their efforts make.
Career Development Without a Management Track
Provide growth opportunities that value their expertise:
- Specialist Career Paths: Create roles like Senior Sales Consultant, Key Account Manager, Product Specialist / Evangelist, Sales Trainer, or Strategic Business Developer.
- Mentorship Opportunities: Encourage them to mentor junior team members.
- Involvement in Strategy: Include them in planning sessions to leverage their insights.
The following articles provide additional insights into the important area of culture and motivation:
“Finding Your Why – “People don’t buy what you do, they buy why you do it.” – Simon Sinek”
“From Good to Great: How Employee Recognition Can Transform Company Culture”
“Building a Memorable Brand: The Secret to Long-Term Customer Loyalty and Business Growth”
“Building Your Dream ‘A-Team’ – Hiring A+ Talent”
Leading a Fearless Business: Boosting Growth and Profits
Building a Sales Leadership Pipeline for Long-Term Success
Identifying and Developing Future Sales Leaders
Proactively cultivate leadership potential within your team:
- Assessment Tools: Use performance metrics and behavioural assessments to identify high-potential individuals.
- Mentorship Programmes: Pair potential leaders with experienced mentors.
- Leadership Training: Provide courses and workshops focused on developing leadership skills.
You can find more on identifying and developing leadership talent here: “Securing Your Business Future: Succession Planning for Sustainable Growth and Success”
Encouraging Peer Coaching and Team Learning
Foster a collaborative environment:
- Knowledge Sharing Sessions: Regular meetings where team members share successful strategies.
- Team Projects: Encourage collaboration on accounts to build teamwork.
- Recognition of Collaboration: Reward not just individual success but also contributions to team growth.
This article on a Learning Culture talks further about knowledge sharing an collaboration: “Why a Learning Culture is Essential to Future-Proof Your Business and Thrive in a VUCA World”
The Role of Leadership in Team Stability and Growth
Effective leadership reduces turnover and boosts morale:
- Consistent Support: Be available to your team and responsive to their needs.
- Fair Policies: Implement transparent policies around performance and rewards.
- Career Progression: Clearly outline how team members can advance within the company.
The articles on leadership referenced earlier will provide more in-depth information on this aspect.
Aligning Sales Leadership with Company Vision and Strategy
Ensure that your sales leaders are in sync with organisational goals:
- Regular Strategic Meetings: Keep communication channels open between leadership and sales managers.
- Unified Messaging: Ensure that company vision is consistently communicated to the sales team.
- Cultural Alignment: Promote company values through actions and expectations.
Alignment of the leadership team is vital – see “Leadership Alignment: The Key to Turning Vision into Reality” for more on this.
The Sales Compensation Dilemma: Structuring Incentives for Performance and Profitability
The issue of commission structures can be something of a minefield if not handled properly. I’ve seen even large companies suffer severe cashflow issues when the commission structure was not properly thought through, and top salespeople leaving for similar reasons. This section outlines some of the areas to consider.
The Problem with Capping Commissions
Although not an uncommon approach, care needs to be taken when capping commissions as it can greatly demotivate your sales team:
- Limits Potential Earnings: Discourages going beyond targets.
- Encourages Complacency: Reduces the drive to exceed expectations.
- Impacts Cashflow: Encourages sandbagging which can impact inventory levels and cashflow.
Solution: Consider uncapped commissions to encourage continual performance, while monitoring for any negative impacts on profitability.
Why Paying Commissions Too Early Can Harm Cash Flow
Paying commissions before securing payment can strain finances:
- Cash Flow Issues: Outgoing payments before incoming revenue. This can also apply when commissions are paid up-front on total deal value for an implementation over an extended period.
- Risk of Non-Payment: If a deal falls through, you’re faced with trying to claw back any commissions already paid.
Solution: Tie commission payments to key milestones, such as when the client pays and/or when the product/service is successfully delivered and implemented. Consider how to handle delayed payments, cancellations, or refunds.
Balancing Base Salary vs. Commission Models
Finding the right compensation structure is crucial. Factors to consider are the type of business you’re in – whether it is one that has infrequent large deals, or a high-volume one. Also consider the gross and net margins on average deals.
- High Commission, Low Base Salary:
- Pros: Motivates salespeople to perform.
- Cons: Can lead to income instability and high staff turnover.
- Higher Base Salary, Moderate Commissions:
- Pros: Provides income stability.
- Cons: May reduce the urgency to close deals.
Solution: Strike a balance that motivates while providing security, and takes account of your trading environment, too, considering sales cycle length, industry norms, and company growth stage.
Incentivising Sales for New vs. Existing Customers
The old adage about it costing 5x more to find a new customer than to sell to an existing one often holds largely true. Ideally you want to strike a good balance between existing and new customers to keep the business growing. Consider differing incentives:
- New Customer Acquisition:
- Tailored commissions to encourage expanding the customer base.
- New Markets Pros: Business growth.
- New Markets Cons: May require more resources.
- Existing Customer Sales:
- Incentives for upselling or cross-selling to current clients.
- Existing Customer Pros: Easier sales, often higher margins.
- Existing Customer Cons: Risk of neglecting new business development.
Solution: Consider weighted commission structures where new customer acquisitions receive higher payouts, while repeat business gets steady incentives to maintain account retention.
Big Deals vs. Smaller Recurring Sales
While everyone likes to see those ‘rainmaker’ deals that seem to come almost out of the blue, it’s important to avoid overemphasis on large deals:
- Resource Strain: Big deals can monopolise time and resources, while having a higher element of risk in areas such as reputation and payment.
- Inconsistent Revenue: May lead to peaks and troughs in income.
Solution: Encourage a balanced approach that values both big wins and consistent smaller sales.
Customer Satisfaction and Lifetime Value Metrics in Commissions
It’s important to integrate customer-centric metrics – happy customers are good for your business:
- Customer Satisfaction Scores:
- Measure and reward salespeople for high customer satisfaction scores.
- Lifetime Value (LTV):
- Incentivise long-term client relationships with regular transactions.
Benefit: Promotes quality over quantity, leading to sustainable growth.
The Role of Team and Company Goals in Individual Commission Schemes
While sales performances are often seen as the result of individual salesperson effort, the reality is that there is generally a strong team in the background that makes the sales successful. Commission schemes should recognise this and the importance of teamwork and collaboration:
- Team-Based Incentives: Encourage a culture of teamwork and shared success, with targets for both individual and team performance in the mix.
- Company Performance Bonuses: Align individual efforts with overall business success.
Example: If the company meets quarterly targets, everyone benefits.
Best Practices from Industry Leaders
- Salesforce: Known for comprehensive training and uncapped commissions.
- Microsoft: Integrates customer satisfaction into performance metrics.
- SAP: Offers dual career paths with equal prestige for specialists and managers.
Conclusion: The Future of Sales Leadership – Are You Building the Right Team?
In our competitive business world, building and leading a first-class sales team requires more than just promoting top performers. It involves recognising the distinct skillsets needed for effective leadership, investing in your team’s development, and crafting incentive schemes that drive both performance and profitability.
Reflect on your current sales leadership practices:
- Are you promoting the right people into management roles?
- Do your leaders possess the necessary skills to inspire and develop their teams?
- Are your incentive structures aligned with long-term business goals?
By addressing these critical questions and implementing the strategies discussed, you’ll be well on your way to achieving sales leadership excellence.
A question for you: What strategies have you found most effective in motivating and retaining your top sales performers? Share your experiences below – your insights could help others.
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This month we’re focussing on Sales Effectiveness, with this being the third article in the series. The first two, should you wish to review them, were:
“Crafting Winning Sales Strategies that Drive Sustainable Growth”,
“Transform Your Sales Strategy: The Art of Storytelling”.
Stay tuned for further insights in our series of business tips or, better still, subscribe to my blog and receive the latest articles automatically, simply by clicking here.
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Related Posts
If you’d like to learn more about sales effectiveness, leadership and the areas we’ve covered here, the following articles and posts might also be of interest:
- Growing Pains – When Is it Time to Fire Your Top Salesperson?
- Embracing Emotional Intelligence: The Heart of Leadership Success
- Leading with Confidence: Mastering Communication to Inspire and Unleash Peak Performance
- Mastering Difficult Conversations – the Power of Compassionate Communication
- The Power of Accountable Leadership
- Crafting Your Vision – “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” – Jack Welch
- Building Resilient Teams: Leadership Strategies for Tough Times
- Finding Your Why – “People don’t buy what you do, they buy why you do it.” – Simon Sinek
- “Company culture matters. How management chooses to treat its people impacts everything for better or for worse.” – Simon Sinek
- “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.” – Steve Jobs
- From Good to Great: How Employee Recognition Can Transform Company Culture
- Leading a Fearless Business: Boosting Growth and Profits
- Building a Memorable Brand: The Secret to Long-Term Customer Loyalty and Business Growth
- Building Your Dream ‘A-Team’ – Hiring A+ Talent
- Securing Your Business Future: Succession Planning for Sustainable Growth and Success
- Why a Learning Culture is Essential to Future-Proof Your Business and Thrive in a VUCA World
- Leadership Alignment: The Key to Turning Vision into Reality
- Life Happens – The Importance of Cash Flow in Keeping Your Business Running through Troubled Times
Backgrounders
HBR – The 7 Attributes of the Most Effective Sales Leaders
Fast Company – Have you been thinking about sales leadership all wrong?
Fortune – The Future Of Sales Leadership
Entrepreneur – 9 Keys to Leading Great Sales Team Meetings
The CEO Magazine – How leaders can build a high-performance sales team
Peak Sales Recruiting – Six Reasons Not to Promote your Top Reps to Sales Management
Came across a couple of great quotes that underscore the importance of building an A-Team – both by Steve Jobs:
“A small team of A+ players can run circles around a giant team of B and C players.” – emphasises the power of a well-selected team of high performers.
“A players attract A players. B players attract C players.” – underscores the importance of hiring the best talent and being a desirable employer.