Finding and Retaining Top Sales Talent
With Guest Jordana Matsos
Offering a challenging yet attainable commission plan is the key to attracting and retaining good salespeople
The How to Sell More Podcast
//
December 20, 2023
In this episode of “How to Sell More,” host Mark Drager examines commission structures and how they impact recruiting and retaining the best salespeople with Jordana Matsos, the founder of the sales-focused recruitment agency Hirequity. She walks us through some strategies for creating a challenging yet achievable commission plan that allows your sales team to feel like they're a part of the company’s success story.
- Use the information you already have: The integration of HR insights into sales strategies can lead to more effective hiring, better commission structures, and improved sales performance.
- Mix it up: Offering a variety of incentives can motivate salespeople to diversify their efforts and not just focus on one aspect of the sales process.
- Big-picture thinking: Transparency, fair compensation, and a supportive environment are crucial for retaining top sales performers who are often motivated by more than just financial incentives.
Jordana has 20 years of corporate sales experience as VP of Strategy and Sales at Pethealth, VP of Sales at the tech start-up Foodee, and Director of Sales at Shutterstock. Her HR background means she understands the incredible amount of data and insights an HR department has at its fingertips and encourages companies to use this information when recruiting, and keeping top sales talent.
If you can't offer as much salary and commission as your larger competitors, then dig in on the other benefits of working at your organization.
--Jordana Matsos
Links to This Episode
Key Takeaways
- Aligning HR Strategies with Sales Goals - our HR department has a goldmine of data on your employees and, If used properly, these insights can significantly influence the effectiveness of your sales teams. HR needs to communicate the insights and data that can guide sales strategies and team development for more effective sales recruitment and retention strategies for salespeople.
- Effective Compensation Structures in Sales -Compensation plans need to be strategically developed, taking into account market rates, company profitability, and the specifics of sales roles. Ensure commission plans are challenging yet attainable. Align them with both individual and company goals to encourage sales staff to focus on activities that contribute to overall business success.
- Recruitment and Retention of Sales Talent - Companies often struggle to retain top sales talent due to issues like changing commission plans unexpectedly, lack of growth opportunities, and dysfunctional leadership. Fostering a culture where sales personnel are given opportunities for skill development and career growth can significantly reduce turnover.
Top 3 Reasons to Listen
Why you need an employer-value proposition: New hires are not just looking for a fair wage and commission plan, but they also want to work toward something meaningful.
Understand the importance of on-target earnings: Do you know how much your salespeople should be earning at peak success?
The top three reasons why salespeople leave: Avoiding these three things could mean the difference between keeping your sales staff or watching them move to a competitor.
Follow Jordana Matsos on Social
LinkedIn: https://www.linkedin.com/in/jordanamatsos/
Website: https://hirequity.ca/
Instagram: https://www.instagram.com/jordana_matsos/?hl=en
More About Today's Guest, Jordana Matsos
#TheSalesRecruiter | Personalized Hiring by a 5X Sales Leader, Sales Advisor & Mentor, JobJord Podcast
Jordana Matsos was a disruptive thinker and 3rd generation business leader/ entrepreneur when she decided to pursue her career in Sales. She was determined not to have rules for the sake of having them, give respect for the sake of a structure, or to take direction for the sake of someone giving it.
When Jordana graduated from McMaster University in 2003, it was with the foresight to take her Human Resources education, her entrepreneurial upbringing, and her flair for selling with the intention of creating inspiring environments, solving problems that people care about, and making meaningful human connections.
Jordana has scaled sales divisions to increase revenue contributions by over 200%, executed merger strategies while leading at Autotrader, Pethealth, and Shutterstock, led multi-million-dollar partnerships with global retailers, developed sales and marketing divisions to improve their profitability, and enhanced the customer and cultural experience through her charismatic energy.
Through challenges and successes, Jordana’s grit, determination, and courage have been the core attributes to her diverse experiences
Jordana had a simple, adaptive, and repeatable philosophy: You Always Have a Choice.
“Sometimes that choice might not be an enviable choice to make, but it starts with you and what you decide you want for yourself and your career. I choose to be transparent in my approach and decisions and admit to my mistakes. I’ll take excellence over perfection.”
Jordana has been instrumental in the start-up, product development, profitability, turnaround, and commercial growth of retail, supply chain, healthcare, food services, insurance, tech, software, media, animal welfare, automotive and funeral services companies.
A Transcription of The Talk
Mark Drager: So, Jordana, we are bringing you in here today because you are the expert on all things recruiting. We were talking a little bit right before we hit record, and I was asking you how you got into recruiting. You mentioned that you have a degree in HR, which I didn't even know was a thing. I guess I should have known that it's a thing, like a degree in HR. Well, not that it matters to me, but for education enthusiasts, it would be a diploma in HR, and it is a thing. But back in the day, it really wasn't because you used to just be like an administrative professional, and that was HR. This is what makes you such an awesome expert at this. The audience, listen up because we're going to cover some real tactics in terms of how to build commission structures to recruit better salespeople and hold on to top sales talent. We're gonna get all into that in a second. But what I find interesting about you is that you have this background in HR, you didn't like it, it wasn't for you. So, what do you do? You go into sales, and now you've spent the last four or five years 100% focused on recruiting. So, I feel like you have seen all areas of the business. You get the sales team side, and the recruitment side, and you understand what HR might be dealing with. You've seen it all.
Jordana Matsos: You are bang on, and most people tell me that. They're like, "I have never seen someone who's done sales and HR before." Operations and HR, yes, but not sales and HR. And I get it because normally, those aren't two departments that agree on a lot other than when it's time to fire someone.
Mark Drager: Let me ask you this question. Having seen both sides of sales and HR, what does HR need to do better that they can learn from sales? And what does sales do that they can actually learn from HR?
Jordana Matsos: HR needs to be more vocal and proactive with their data. The data that HR has on employees is unbelievable. The information HR can give to the business to better direct how profitability happens within a sales department and how to retain people is unbelievable, and they don't. On the flip side, most sales leaders I've worked with have no idea about the legality around conversations they're having with employees, how to properly interview, and how to properly navigate through constructive criticism. So, I think if they talked a little bit more, they'd have a wonderful marriage.
Mark Drager: What data is this that HR is sitting on? Like, what are the types of data? What is the insight? And what should we be looking at?
Jordana Matsos: Well, if you think about it, on the very basis, the data they're sitting on is attraction data. Right? So, where are the people applying for these jobs coming from? What industries are they coming from? What are their backgrounds? What are their educational backgrounds? What does their previous compensation look like? They could be advising on compensation metrics, commission metrics, salary metrics, and geolocations of where people should be coming from. And then throughout the progression of the lifecycle that these people are in their jobs, normally, you think you can go to HR for something like, "Oh, I'm having trouble with my manager," or, "I need some assistance with my career progression." They have all of this data and then exit as well. Normally, companies will do exit interviews. And if you're saying, "I left because I'm not making commissions," "I left because the salary is too low," and HR isn't taking that data and bringing it back to the business to inform them, you're going to keep having this cycle of turnover. That's really frustrating. And on the sales end of things, I mean, the good sales leaders are hearing from their sales team all the time about challenges in the market, challenges with customers, prospecting challenges, issues happening around retention, operations, and marketing challenges. And no one really has the appetite to listen unless it's coming from a sales leader.
Mark Drager: Are there organizations or companies, or is there a way that they've structured this type of thing? Because the silos tend to kill us, right? We've talked a lot on the podcast about the alignment needed between marketing and sales. Marketing is generating the leads, but they're not close to customers. Sales are close to customers, but they're not generating leads. There's often a mismatch, and it really tends to tank conversions and campaigns. But this is the first time I have ever heard anyone speak about the insight between HR and sales managers or even business leaders. And I can definitely see the benefit of this. But who is doing this well? And how do they structure those conversations?
Jordana Matsos: Enterprise corporations are doing this a lot better than mid-level and SMBs.
Mark Drager: Fortune 500, Fortune 100. They have the systems, the people, the man-hours, and they're actually taking the time to dig into this data and leverage it.
Jordana Matsos: Exactly. And if you look at just salary and commissions as it pertains to sales and HR that is the basis of most conversations that are happening and where alignment needs to happen. Think about it: when a sales manager wants to hire someone, and HR has created a list of competencies and benchmark data on salaries, which usually comes from two different resources and is outdated the second it hits the market. But if you just look at those two baseline areas where sales and HR need to align, the biggest challenge becomes sales leaders who say, "I want to hire this account executive, but they tell me they need 95-100k." And HR says, "Oh, sorry. But our grid says they should only be between 75 and 85k." Say goodbye to them, right? That's the frustrating part of enterprise organizations. But at least they have done the work on that data to know what the on-target earnings should be, how the commission plan should be structured, and what the salary grid should be. In contrast, I find that medium and small businesses are all over the place. So, you'll bring one person on at 60k, and then three months later, you'll bring another person on at 85k. And don't think for a second those two people aren't going to talk.
Mark Drager: 100%. Now, I was at a conference in Tampa back in September. Someone gave a presentation specifically on the fact that enterprise-level organizations tend to be very good at building out the team, and the org chart, and holding positions that are, in fact, empty. Let's call them ghost positions. But when you're dealing with a small or medium-sized business, you tend to operate much more on trust. They were breaking down this idea that if you brought on a junior-level person, say in an advertising agency, a junior-level media person, and they happen to report to the head strategist. When you ask them about their career progression, they might say, "Well, I want to be the head strategist," because it's the only job they can see. But between being a junior advertising person and a head strategist, there are probably five or six different steps, sitting empty, in different salary bands with different levels of responsibility. They were actually speaking about the fact, exactly as you're saying, that enterprises are very good at setting up these structures and levels, and being able to move people up through seniority and give them more responsibility, even if it doesn't mean suddenly you're a people manager. Is this something that those of us in the small, medium, sub 100 million-dollar-a-year space should be really learning from and putting time and resources into?
Jordana Matsos: I think so. And I'll give you a perfect example. I was at a company once that had 50 people and was about five years old, with about $20 million in top-line revenue. When I joined as VP of Sales, there was no HR manager. I went to my CFO and said, "Where's our HR division? Here are all the things I need to do, and I need to speak with someone about that." One of them was to create a commission plan, which, believe it or not, did not exist. The answer I got was, "Well, we're only 50 people; we haven't hit that number yet where we need to have an HR department." Well, what the hell is that number? I've never heard of what that number is. The problem I have in small organizations, and I've rarely seen it done well, is that in your example, Mark, you have that junior ad rep reporting to the head strategist. They're actually getting all the learning, development, and coaching from that head strategist. And you might argue that's a good thing because it's going to accelerate their learning. I would argue it's not a good thing. If you ever want to leave that small infrastructure and go into a more corporate enterprise infrastructure, you're going to struggle because there are so many fundamentals you haven't learned yet, because you didn't get that opportunity. You're building the plane as it's flying.
Mark Drager: Listeners may have heard the little air quotes that I just gave. But yeah, there are pros and cons to each business model. So, let's talk about compensation models. I always see things a bit differently. Whenever I go to market for a new role, I feel like we're dating. I want to sell the position, the opportunity. I want people to want to come and work for me. But in smaller businesses, especially in the medium-sized space, we tend to be a little over-generous. We want that person for 85k while we're busy offering someone else 60k. So how do we approach compensation to bring in the best talent? Value for dollars should be more important than top-line dollars, right?
Jordana Matsos: Yeah, Mark, you started that statement with one of the most important things.
Mark Drager: Is that good or bad?
Jordana Matsos: No, good, good. Okay, good. Yeah, you understand that you need to sell your business when you're bringing in sales or marketing people. You might not have a recognizable brand name, but you can still have an employer value proposition. Nowadays, especially those who are 27, 28, and under, are looking for a fair wage and commission plan, but also something meaningful to work for. So, if you can't offer as much salary and commission as larger competitors, then you really need to dig in on other benefits. But I will tell you, 100% of the companies that reach out to me, especially those with a million dollars in revenue or less, are asking about what's happening in the market for salaries and commissions. They never know the answer to what the on-target earnings should be. As a business, you have to sit down and figure out your profitability and revenue metrics. There's an old philosophy that you need to cover your costs. If I'm offered a $ 100,000-a-year job, and my costs include salary, car plan, benefits, and onboarding, then that company might say they've covered costs when I've sold at least $150,000 worth of products or services. But many never sit down to figure out how...
Mark Drager: That would be gross revenue, not even tying in gross profit margins. For a $140k or $150k investment, if you're sitting at, let's just say, 30% or 50% gross profit, then you need $300,000 in revenue before you're even making any money.
Jordana Matsos: That's exactly it. And about the gross revenue gross profit model, I see founders or CEOs who arbitrarily set a model without answering basic questions. Can you actually measure it at the territory level? Does the sales rep have any influence over the cost of products or services? I think enterprise organizations have done a better job because they have more data and analytics to inform their commission plans. Smaller businesses are just plucking numbers out of thin air.
Mark Drager: So, would you recommend, especially for businesses with a million dollars or less in revenue, to understand the target salary level and reverse-engineer the commission structure? Should we also be looking at the lifetime value of a customer, so it's not just about the initial sale but the long tail? For example, insurance organizations pay out commissions for two or three years because they hold onto the business for an average of eight or ten years. What KPIs should we be using to create these commission structures?
Jordana Matsos: Oh God, cost per acquisition, lifetime value, MQL to SQL (your marketing-qualified leads to sales-qualified leads). You need to consider whether you want new business or growth in existing business, which is more important to you, and your retention rates. All these metrics, whether you know them or not, need to come into play before setting up a commission plan. You can't just say, "I'm going to bring someone in on a base plus... " Base plus what? What's important to you? New business? Growth in existing business? You should consider about five to six different metrics, involving your finance team, HR team, marketing team, and sales team.
Mark Drager: And when working with salespeople specifically, they're there to make money. Yes, they help people and the organization, but their primary goal is to make money. Should you always look at the goal and outcome you want and simply stack one activity? Like, "I want you to do this activity for new business, so I'm gonna create the commission structure on that one thing." And I'm not going to hope for anything else because I imagine that whatever you set up the commission to is what they're going to optimize for, and they'll ignore every other aspect of the business, right?
Jordana Matsos: Your salespeople are smart, and you're exactly right. They go where the money is. So no, I don't think that it needs to be an all-or-nothing plan. The best plans I have seen actually have a percentage based on a few different metrics. One could be a percentage based on growth, another on new business, rather than just telling that person, "We want you to get all net new," or "We want you to focus on RFPs." When you have a company like Oracle or SAP, selling licenses and add-ons, you need to incentivize people to sell various solutions, or they'll just keep hammering that one thing.
Mark Drager: So, when we're looking for talent, like in SaaS versus enterprise-level software, is it more important to find people with a specific background in your vertical selling your type of product or service to your audience? Or are these skills transferable, and you're really looking more for hustle and attitude?
Jordana Matsos: This is a tricky question, Mark. Everyone wants industry experience, subject matter expertise, a book of business, and transferable skills. But it's probably less than 10% of clients who say, "We don't mind, we'll teach someone. We've got great training and onboarding." No one has time anymore. Especially in a SaaS-based company, the metrics are different than in a supply chain or healthcare company. If you've never dealt with MRR or ARR, annual recurring revenue, monthly recurring revenue, or subscription-based models, it takes time to get your mind around that. Sure, research, lead gen, business development activities, tech tools, prospecting activities, and presentation skills are transferable. But if you don't have contacts within that industry, it's a challenge. Telling someone with 10 years in industrial sales to jump into software is tough. They can do it, but it takes time.
Mark Drager: So, for those looking to make the most of every opportunity, should we develop patience and give people time to learn and gain expertise? Or should we just do what everyone else is doing?
Jordana Matsos: If you have the infrastructure to support that, it's worth it. Building it once opens up a whole new talent pool for a very long time. If you bring this into your culture, it gives you an edge, but it will come at the cost of a year or two of figuring it out.
Mark Drager: One other question about sales teams. I struggle with managing my expectations of how much I should give and how easy I should make the role. Often, leaders expect a rep to do every step of everything. At the same time, I've had team members where I'm generating leads, developing templates, making the job so easy, and yet they still feel overwhelmed. What's the right balance, and how do we analyze that?
Jordana Matsos: Where's the balance? Gone are the days where you throw a phone book at someone and expect them to figure it out on their own...
Mark Drager: Do you remember those plastic Rolodexes? You would go to like 'H' and hit a button, and it would pop open. Do you remember those?
Jordana Matsos: Or do you have your business card folder? And you'd look...
Mark Drager: That's the top drawer of my desk, the business card in the drawer.
Jordana Matsos: Exactly. So, gone are those days. We have the technology and tools now to make someone's life not just easier, but also work smarter. If you have the affordability to give that to your team, I highly suggest using it. One of the top questions I get from sales reps is about the tech stack they're walking into. They want to hear about the different kinds of tools, automation tools, lead gen tools, CRM, and outreach tools. But on the flip side, as a business owner or founder, when you start to grow to 30, 40, 50, or 100 people, and you were doing the sales at the beginning, it's hard to step back. You wonder if you can pass over relationships to the sales rep. I tend to err on the side of if you're hiring SDRs and you want them to do lead gen and book meetings, teach them how to do it, and let them go. You're going to have to step away and allow them to make mistakes. But if you have the tools, use them. I don't think you should have open territories. Someone's going to leave you if that's the case.
Mark Drager: So these are things that make your organization more marketable and attractive: the tech stack, the management structure, knowing they're going to have opportunities for leads. The more professional it is, the more confidence it may have in you.
Jordana Matsos: It's that basic, it is.
Mark Drager: Okay. Two more questions. We've spoken about mistakes people make with great sales teams. Why is it so hard to keep really great talent?
Jordana Matsos: The top three reasons someone will call me looking to move are: one, you've changed their commission plan mid-flight in a negative manner with no notice. Two, there's no clear path for growth, not just in position but in developing skills and learning on the job. And three, dysfunctional leadership, where a manager is too busy or too involved in what they're doing.
Mark Drager: When I started my agency in 2006, I remember hiring a coach, Frank Milner. He told me about leaving a previous job because they capped his commission when he was making exponentially more money than anticipated. As leaders, what do we do in this situation? Do we just accept that they're making money and let it be?
Jordana Matsos: You do, because it goes back to planning. You may not have anticipated a sales rep bringing in a huge account. If it's an astronomical number, some companies negotiate with the sales rep, but what they're not open to is, "We didn't expect this, so you're not getting it." That's a recipe for them walking out the door.
Mark Drager: So, we can't get upset when they outpace what we expected.
Jordana Matsos: Exactly. It's about planning. I've seen companies negotiate when the numbers are astronomical. Sales reps are usually open to that kind of negotiation, but not to a sudden, unexpected cap on their commission.
Mark Drager: This has been a great conversation. So, Jordana Matsos, you're the founder of Higher Equity. For those wanting to reach out, the best place is LinkedIn. But here's the final question: What is your number one tip or strategy to help us sell more?
Jordana Matsos: My number one tip is about commission plans. Most leaders want them to be challenging, yet achievable. If you want to attract people to your organization, keep them, and help them grow, continue to make those plans challenging yet attainable. If your team isn't able to hit their commission plans, you'll start to see attrition. Sales reps want to feel like they're part of the business's success, so show them the path.
Resources & Go Deeper
Customer lifetime value: The customer compass" by McKinsey
Aligning HR Strategies with Sales Goals: Modern HR departments are increasingly data-driven, focusing on aligning their goals with strategic business objectives. They utilize employee and talent analytics to make informed decisions that impact sales and overall business performance. For instance, HR can analyze data from sales, marketing, and accounting to break down departmental silos, leading to more efficient onboarding, improved employee satisfaction, and reduced retention
Aligning Human Resources and Business Strategy | Lucidchart Blog
Recruitment and Retention of Sales Talent: The recruitment process should be closely aligned with the sales strategy, with HR understanding the specific needs of sales roles and goals. Collaborative hiring between sales managers and HR is essential to find candidates who are the best fit for these roles. Also, investing in tools such as e-learning platforms for the sales team can enhance training processes and efficiency. Research has also shown that small organizations can significantly improve sales growth and profits by implementing key HR management strategies, such as hiring based on organizational fit, fostering a family-like environment, and empowering employees
Research: Key HR strategies boost profit, sales (shrm.org)
Effective Compensation Structures in Sales: Creating attractive compensation packages is vital for both attracting new talent and retaining existing staff. A well-structured package would typically include a base salary, variable salary, commission, and company perks. Aligning this compensation strategy with business goals, considering the overall job market, and understanding what employees seek are crucial steps. This approach not only motivates sales teams but also aligns their efforts with the company's broader objectives
