In my previous post, Where Most Interviewers Go Wrong (Part 2) I brought up the topic of how many Sales Managers are fixated on hiring sales reps from the competition. I also shared my belief that this fixation is rooted in their lack of understanding of how to select sales reps from outside of their field. Given how hard it can be to consistently select top sales performers I can certainly understand their reluctance. In today’s post I’m going to share some of the dangers with hiring sales reps from the competition and some tips on how to effectively recruit sales reps from outside of your industry.
To be clear, teaching a new hire the dynamics, lexicon and critical points unique to your industry can be quite challenging. There are, however, several other factors to consider when hiring. Usually we are not faced with the prospect of selecting between two candidates with exactly the same drive, talent and ambition with one of them coming from a competitor and the other from outside the industry. It’s my experience that we can often attract more talented sales professionals from outside an industry given that your competitors’ top sales reps are usually either unaffordable or unavailable. It has been our experience that your competitor’s top sales rep isn’t likely to leave for a modestly or even substantially better salary unless there is something critically wrong with their situation. Changing companies means walking away from the deals, commissions, internal relationships/goodwill and momentum they have worked so hard to build. Given this, recruiting out of your competitirecon usually means that you’ll be looking at B or B+ players or what I lovingly call retreads. Given the potential positives and negatives of each type of hire, what trumps – talent or industry knowledge?
Before we answer that question we need to establish the time horizon for your team’s sales goals. If your company is looking to maximize revenue in the next 12 months before getting acquired we’ll clearly have a short time horizon where industry knowledge could potentially reduce the ramp up period. Conversely, a company with a long selling cycle and long-range growth goals would have a rather long time horizon. We also need to consider how difficult the learning curve is for your industry.
With these two criteria in mind, I’d like to share a few observations from my career. We have two long-term clients (approximately a decade each), each with 100-150 sales reps. Given their size and the length of our relationship with them we have a big enough sample size to draw some conclusions (50+ hires each). Both clients also hire from inside and outside their industry. Additionally, I would rate the ramp-up curve for each as moderately difficult (medical sales to hospitals and employee benefits insurance via brokers). Overall, the trends are similar for both companies. A higher % of what one client calls Life Experience Hires (no industry experience) end up as top performers (top 20%) and President’s Club winners compared to industry hires. More surprisingly, an out-sized number of “Rookie of the Year” hires were from outside the industry. Turnover rates were fairly comparable for both industry and non-industry background hires although there’s more to this story. Our clients enjoyed longer tenure with top sales performers that came into the company from outside their industry vs those top performers that had previous industry experience. There was, however, a higher initial turnover % with sales professionals that came from outside the industry probably attributable to the higher initial learning curve. So what are takeaways?
- In the case of both companies, we were are able to find sales professionals from outside their industry that considered moving into these new industries a step up. The ability to attract the best and brightest from another industry is a key driver in successfully recruiting from outside your industry. As mentioned above, the best and brightest within your industry are incredibly difficult to attract and ultimately hire.
- When our clients looked beyond their own industries they had a much, much bigger gene pool of sales professionals to interview. It is a maxim here at Sales Talent that all other things being equal, a larger gene pool equals a better gene pool.
- Our clients could offer top sales performers from outside their industry an entry into a better and more lucrative industry. It’s my opinion that this fostered loyalty and ultimately longer tenure with these home grown stars.
I do have a few words of caution if you are considering hiring sales reps from the competition. There’s a learning curve involved. We have another long-term client that only hires from outside their industry. After a few mis-steps we found several ingredients required to achieve consistent success. A few notable ones:
- Have a strong training program in place that can shorten the industry learning curve. Our client breaks their training program into two parts with the first part solely focused on learning their industry.
- Get crystal clear on the 2 or 3 most difficult aspects about your sale/role. Only hire sales reps that possess the strengths necessary to tackle those challenges.
- Develop a consistent hiring profile. Without a clear target it will be difficult to understand what went right and/or wrong with sales hires.
- Recruit out of industries and companies that are a step down from yours. Even better, recruit out of industries and companies that are harder to excel at and have lesser rewards. This one tip will significantly cut turnover.
- Pay particular attention to the upward trajectory of a sales candidate. I go into a lot more detail in our eBook – 7 Things You Should Know About Hiring Top Sales Performers. All other things considered, the steeper the trajectory, the better.
- Set clear expectations with potential sales hires. They should know going in what aspects will be hard and what aspects they can expect support with.
Like with most things, there is a learning curve and some pain ahead with leaving what you know and hiring sales reps from the competition. There is also the potential of building an elite sales force that can outsmart and outsell your competitors.