By Alison Rice. Ask Manny Schatz about sales managers and builders, and you'll get an earful. "Most sales managers are set up for failure," believes Schatz, a builder-turned-consultant with Professional Builder Services in Danville, Calif. "They're hired improperly, they're not given clear expectations, and they're not given free rein to do their job."
It quickly becomes a fast track to burnout for the sales manager and an expensive way to do business for the builder.
"You lose at least $100,000 when a salesperson turns over, and more when it's a sales manager," says Tom Richey of Richey Resources Co. in Houston. "There's a break in continuity because a new sales manager usually wants to bring in new people, so there's downtime, a drop-off in referral sales, and all of that."
And it's happening all the time. Sales managers typically make it to one of two benchmarks: six months or about two-and-half years, says Nancy Gainer of the Gainer Consulting Group in Ladysmith, Va.
It doesn't have to be that way. "It's not a complicated story," says S. Robert August, president of S. Robert August and Co. in Greenwood Village, Colo. "There's just a lack of communication and a lack of understanding of what a sales manager really does."
Understand the job
Too often, builders don't know what their sales managers should do--and it shows.
"I've seen other companies where it's a fly-by-the-seat-of-your-pants position based on whatever the chairman, CEO, or president wants it to be at any given time. They have a knee-jerk reaction to the market," says Mimi O'Hara, a sales manager who's now happily situated at Centex Homes in Indianapolis, where she oversees the company's Fox and Jacobs communities. "Instead of hiring and training people, suddenly the emphasis is on marketing. For six months, it's a marketing focus, and no effort goes into training and hiring people." To focus a scattershot approach, develop a job description. While smaller builders may include marketing duties, the job's primary emphasis should be on hiring, training, and coaching salespeople.
"To me, the sales force needs that support, because they are out there getting beaten up every day," says Peter Simons, senior division president of Sanford Homes, a Denver builder bought by Beazer Homes USA last year. "If they don't have the support and resource [of a sales manager], they're not going to maximize their effort in the field, and they're not going to make sales. If they're not making sales, we're not making money."
Ideally, sales managers should oversee no more than 10 salespeople in five different communities, according to Richey.
Bypass the usual suspects
Jon Graham, a recruiter with Management Recruiters International in Indianapolis, suggests tapping the building products industry. "They're familiar with the components," he says. "They just haven't been selling to the public."
Richey prefers candidates with relevant retail and management experience, such as furniture store managers; they're used to retail hours and working with customers.
Don't automatically promote top salespeople to sales managers. "They're elevated as a reward," says Schatz, but sales stars often get frustrated with the paycheck, paperwork, and meetings. "The company loses in two ways. They lose a great salesperson, and they gain a bad sales manager."
Instead, look for individuals with a mix of sales smarts, people skills, and other competencies. "You need to have broad experience, so you can advise salespeople and recommend reasonable alternatives," says Simons. "Plus, you're very much in the therapy business. You're counseling, advising, and bucking up [your salespeople]. Sales is a tough job. Even if you get a 5 percent capture rate, which is great, that still means 95 percent is blowing you off."
While sales managers don't need to be sales superstars, they can't embarrass themselves on the sales floor, either. "I don't believe they can get the respect of the sales staff ... if [they] haven't done as much or more [selling] than them," says Cindy Beattie, vice president of sales and marketing for Ponderosa Homes in Pleasanton, Calif.
Finally, sales managers should know the industry and the basics of building--or be willing to learn. "Like any other manager, they have to understand what makes a building company run," Beattie says. "If we don't understand why we can't add a central vac five months into the home building process and convey that to a buyer, we're doing our builder a disservice."
Staff development is critical, especially for sales managers who've been hired for their stellar selling history, not their management experience. Every new manager (sales included) at Centex gets management training. "It helps tremendously," says O'Hara. "You get started on the right foot, and you know what the expectations are."
Similar things happen at Beazer, where sales managers take sales 101, management 101, leadership 101, and, if necessary, construction boot camp.
Such programs create a company that's growing versus one that's standing still. At Warrenville, Ill.-based Neumann Homes, which spends between $5,000 and $6,000 on each new team member, sales managers (Neumann's salespeople) and directors of sales and marketing (who supervise the company's sales managers) must complete a 30- to 60-day certification program and a four-week training program, respectively, before beginning their jobs. What difference has it made? The company has gone from two divisions to seven in one year, according to Jean Neumann, chief marketing officer.
Get out of the way
That means no interfering, as tempting as it may be for builders accustomed to managing sales themselves. The other great temptation? Pulling sales managers into meeting after meeting. "They're not able to do what they were hired to do, which is manage people," Gainer says.
Allow sales managers to meet weekly with their staff, one-on-one in the field. It sounds time-consuming, but it's an investment that will pay dividends if the market turns.
"We're still in such an extremely good market that builders don't realize that a world-class sales staff is the key to their survival," Richey says. "It's the Achilles heel of the housing industry."
Pay for performance
Compensation can be a sticking point. "The money is in sales, not sales management," Gainer says. "Any sales manager who knows what they're doing knows that."
Still, it's a well-paying job. Depending on the builder, base salaries often range from the mid $40s to the upper $70s, according to Graham, with incentives that boost into the six figures. (See chart below.)
Criteria for the extra cash vary. Some builders pay a percentage of sales; others leave that marker for salespeople and reward sales managers based on profit, margin, or overhead achievements. Still others offer incentives for individual and company goals, paying only when both are made.
Whatever the plan, it must be realistic, Richey says. "You need a good incentive program that's doable, not pie in the sky."
Show your appreciation
Accept it: People involved in sales are "creative, emotional" types who need positive feedback. Awards, "leader" boards, trips, a special parking spot, use of a company car, even just a mention in a company newsletter--all can provide the recognition that sales managers seek. "I've heard it so many times," says recruiter Graham, "'I just want to work for a company that appreciates what I do.'"
When it comes to sales manager salaries, home builders find themselves at an advantage, compared to other industries. "As an industry, we pay darn well," says Tom Richey of Richey Resources Co. "We don't have to apologize." According to the just-released NAHB production builders compensation study, directors of sales make an average of $125,827, compared to $75,698 for sales and marketing managers and $65,120 for field sales managers.
Below, you'll find the average total compensation (salary plus bonus and incentives) of sales executives by industry, according to Sales and Marketing Management magazine and Equation Research.