Knowing when to take the leap: considerations for salespeople thinking of changing companies
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Knowing when to take the leap: considerations for salespeople thinking of changing companies
How to determine if the grass is greener at another distributor or importer
When you’re a sales rep trying to assess the prospects at a new company, there are simply too many unknown variables to be able to test the veracity of a statement like, “We’ve got you covered; we’re going to give you a territory worth $X.” The implication is that since $X, the gross of new territory, is bigger than $Y, your gross sales run at your current company, you’ll be sitting pretty.
The fact is comparing territories is difficult because more isn't always more. It’s not merely an exercise in weighing the dollar amounts of all the accounts in two runs. That basic thinking can lead you astray even if your goal is simply to bring home more money. Here are two examples:
A $1 million territory is worth less than a $900k territory if the former offers 5% commission and the latter offers 6%. The million-dollar run will see you make an annual paycheck of $50k, while you’ll take home $54k with the $900k territory.
A $1 million territory is worth less than a $900k territory if the former requires you to service 100 accounts and the latter only has you covering 75 accounts. The accounts in the million-dollar territory are worth $10k per year, while the accounts in the $900k run are worth $12k. A rep with the smaller run is better off opening just nine more similarly sized accounts to sell a million.
More than ever, I hear from reps who reach out looking for advice on whether changing companies would be a good idea.
My usual answer: Maybe. It depends.
Every case is different.
Here what I do know and suggest you consider:
Variety is the spice of sales
If dollars are what you’re after, it’s usually more difficult to go from a larger company (in terms of SKU count) to a smaller one. With a smaller company, you’ll have fewer items to draw from to meet potential demands. If you are serious about going from a larger company to a smaller one, make sure to look at individual account performances.
Dollars aren’t everything
Are you going to sling product you’re more enthused about? What’s the company culture like? If you desire professional advancement, does the new company have a track record of promoting salespeople into management positions?
Also, be sure not to discount the amount of work you’ll be putting in to increase your earnings potential. Will you have obligatory sales meetings? Will you have a ton of paperwork? When you’re already making $75k, what’s an extra $10k in take-home pay if it means you must work 25 percent more.
Timing is everything
If a company is trying to hire you for a start date that begins between September 1st and December 31st, they are trying to fix a mistake. Someone left them in the lurch before the busy season and they’re not setting up their potential new hire(s) for success. It takes time to learn portfolios, systems, and protocols. You don’t want to be doing this during the busiest season.
Search for trouble discreetly
Why did the last person who held your position leave? How about the last brand? Find out. For more on assessing the overall quality of importers and distributors, check out this previous post.
Build yourself a margin of safety
Count on whatever territory you’re being promised to be at least 10 percent smaller than it is in terms of gross dollars. Some accounts promised won’t work out. Some relationships won’t blossom or translate. If they’re promising you a million-dollar territory, read it as one with a value of $900k. If it’s $1.5 million-dollar, think of it as only being worth $1.35 million. If you’re correct in your assumptions, you’ll be glad. And if you’re wrong, you can laugh at me on the way to the bank.
If you’re the spreadsheet type…
Here are some of the quantitative attributes I’d seek to compare if assessing a sales position and territory at a new company:
total number of accounts
number of accounts being offered
the average number of accounts per rep
number of SKUs available for sale
average commission
what percentage of SKUs are new (added in the last 12 months) to the book
the average tenure of a sales rep, the total number of salespeople
the total number of sales managers
Your new potential employer should be able to supply you with these pieces of information. These numbers should reflect a reality they are proud to share. If they’re holding these cards close to their chest, it’s not a great sign. No matter what they say their policy is about sharing such proprietary information, the company didn’t achieve success by keeping any of these details secret.