Managing the sales force effectively is one of the greatest challenges a rental company faces. When rental companies compete with one another in a marketplace, chances are they both have comparable-quality equipment. One can argue the relative merits of different manufacturers and models, but for the most part, there are a number of good manufacturers of most categories of equipment. What tends to differentiate the effectiveness of rental companies versus their competitors is the quality of service they offer and their efficiencies, in terms of internal operations and the ability to deliver value-added service to the customers. Issues of price enter the discussion of course.
But often under-estimated is the ability of a rental company's sales force to communicate and deliver the company's message. Is the sales staff motivated? Are they dedicated? Do they only compete on price or do they effectively communicate the ways their rental company can save the customer money and enhance his ability to get his job done?
Sunstate Equipment, the subject of this month's cover story, has an interesting approach, one that most companies in the rental industry probably would not agree with. Sunstate's sales staff is compensated by salary only, unlike most rental companies that pay either strict commission, or commission on top of a base salary.
There are several reasons Sunstate finds this more effective. First, it promotes teamwork. Sometimes the superintendent on one job is in one territory, but his boss, who makes the decisions, is in another. The Sunstate staff can utilize a team approach, and have one salesperson calling on each. Or, as Sunstate's director of sales Larry Cox says, sometimes one particular salesperson just can't seem to break through and establish a rapport with a particular contact. Perhaps another salesperson can be called in on that particular jobsite to try to break the ice, or could even know the individual from a past association.
Another advantage is if a salesperson is coming back towards the office from sales calls, he or she could be asked to pick up a piece of equipment that's coming off rent, thus taking the burden off the drivers. While there, he or she might spend some time talking with whoever is on that jobsite, without having to worry about whether or not that's “his” or “her” client. And, as Sunstate chairman Mike Watts and Cox point out, the salesperson won't then come back to the office at the end of the day worrying about whether or not he or she gets credit for a rental. The rental helps the company; whether or not it helps salesperson No. 2's commission is irrelevant.
Cox pointed out also that by nature sales people are highly competitive and motivated and don't need a potential commission to motivate them if they are compensated well.
I suspect the lack of concern over a commission takes away some of the anxiety of sales. If a salesperson's paycheck is guaranteed, it takes the pressure off each particular contact, the feeling of “I need to make a sale here because if I don't, I won't have enough for my mortgage payment this month.” It doesn't mean the salesperson doesn't try hard to make the deal, but the salary takes away the desperation to make the deal because of personal finances rather than because it's in the long-term interest of the customer.
Whether or not a salesperson is effective in communicating with customers and earning their trust may not, in many cases, be determined by the form of compensation, but just by the nature of that salesperson as a human being. Does he or she inspire trust in a customer? Does he or she in fact earn that trust because he or she naturally has integrity? Having that quality may have nothing to do with the form of compensation but more because the salesperson has those qualities. But Sunstate's approach may help nurture that integrity.
This concept for the most part flies in the face of conventional wisdom in the rental industry and, in fact, in many industries, and may not work for everybody. But like most things at Sunstate — its comprehensive training programs, its branch management system, its fleet management philosophies, its metrics and measurements, and its constant efforts to improve its processes — they are ideas that are carefully thought out.
There are a lot of business buzzwords and concepts that come in and out of vogue. Planning ahead carefully and strategically, thinking things through analytically, laying the foundation for long-term achievements: these ideas may not inspire seminars and get the heart pumping. But they have a lot to do with creating one of the most successful rental companies in the industry.