As outside elements such as the economy, competition, and technologies change, sales strategies must be re-evaluated and adjusted.
Arental business's sales strategy is like any good science experiment. You combine all the variables, mix them together, measure the data over a period of time and then analyze the results. The desired outcome is a highly satisfied customer base and consistent rental revenue growth. If the results don't measure up, then the rental business owner must take a close look at what part of the sales structure isn't working.
Are the salespeople motivated by the current pay program or is it time to shake things up a bit? Are customers satisfied with the level of service being provided by their sales representative or are adjustments needed in the way territories are laid out and serviced? Do the salespeople possess personality traits and characteristics suitable for the sales position they are in? Is the rental company equipping its sales force with the latest technologies to keep them competitive in the field?
RER talked to a number of rental companies to learn how they manage their sales force and why hiring the right people, equipping them with the tools to do their job and paying attention to the changing marketplace is so important. As outside elements such as the economy, competition, and technologies change, sales strategies must be re-evaluated and adjusted.
Sales are the foundation for everything in a rental business. The equipment, maintenance, customer service, delivery, training, accounting — all of those other functions hinge on the sale of rentals.
“We're a sales company,” says National Trench Safety president, Ron Chilton. “There are no more important people in the company than the sales force. Without them, nobody else is needed.”
For this reason, a well-constructed sales team backed by thoughtful management is critical to the success of a rental business. Oftentimes a happy sales team translates directly into happy, satisfied and well-serviced customers. Today more than ever, it's the quality and capability of salespeople and the relationships they build with their customers that differentiate one rental company from its competitors in the marketplace.
“I'm a firm believer that everybody's equipment is about the same today,” Chilton explains. “Everybody thinks the quality is there; it's a given. Everybody expects good service. So that's what you have to have to be in the game. The differentiator now is the actual salesperson — the man or woman who shows up on the job with the technical expertise, and the one who gets things done for the customer.
“I tell people all the time, ‘I don't think customers wake up excited to rent equipment. It's not necessarily something they're looking forward to do. So why not do it with somebody you know who is going to take care of you, do it right the first time, and somebody who's pleasant to deal with.’”
Rental companies are typically set up with both an inside and outside sales staff. The role of the inside salesperson is primarily to support the outside sales force and do whatever is needed to provide a high level of service to customers. An ongoing debate among rental business owners is whether a commission- or salary-based compensation structure is a better motivator and thus a more lucrative arrangement. Many times, however, the inside sales people are compensated differently than their outside sales counterparts because they serve in more of a supporting role than a sales-generating role. Unlike the outside sales team, inside salespeople are not set up with a sales territory to regularly call on, giving them little opportunity to generate new sales on their own. As a result, many inside sales reps receive a salary rather than a commission-based pay program, and are sometimes eligible for additional bonuses if companywide sales goals are met.
“Inside salespeople are on a good livable salary with the understanding that they will never receive a raise, but will receive a bonus for exceeding regular sales,” explains Phillip Frye, owner of Homestead, Fla.-based Frye's Tool Rental.
“As the inside roles are meant to supplement and support, we feel salary allows the person to broaden their focus, making sure each and every customer and deal is given the same amount of care and attention,” says Todd Foster, vice president of sales operations for Bloomington, Minn.-based Aspen Equipment Co. “When the desired result is to farm new business, the commission-based structure keeps the positions actively involved in the process of winning the order while continuing to find that next opportunity.”
At Theros Equipment Rental every person behind the rental counter is an inside sales representative and each of its four branches has an outside sales rep whose primary function is to find new business and service existing customers in the field.
“You want the outside sales representative always looking for business that isn't already walking in the door,” says Joel Theros, owner of the Gainesville, Va.-based company. “The inside sales representatives work in tandem with the outside sales representatives to service existing customers — both are responsible for making the customer happy, whatever it takes.”
The underlying theme among all the rental companies RER interviewed was that a teamwork approach between inside and outside sales staff is the key to ensuring that customers are taken care of on a rental contract from start to finish. In addition, the overall level of customer service provided by rental companies today is higher than at any other time in the industry's history; and the quality of service is the No. 1 differentiator among the rental providers in a given market.
“Once our outside reps have earned a customer's business, it is essentially a tag-team effort between them and the inside sales force, ensuring the customer is given the best possible service,” Foster says. “This approach allows multiple avenues for the customer. The key is communication between the outside and inside sales forces to make sure each player understands their role and the customer's expectations.”
So what is the best pay structure to keep outside sales representatives motivated to maintain the highest level of customer service and hungry enough to continually go after new business opportunities as they develop? There are basically two philosophies among rental companies and both are supported with strong evidence to back them up. The first, and perhaps most common, is a commission structure.
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“The best way to motivate a sales force is through commissions on business that they are responsible for generating from the field,” says Theros. “Commissions are the best way to achieve the result you're looking for because it motivates a salesperson to go find business in the field that you are not already getting. The more leads he or she creates, the more sales that happen generally, and the salesperson should be motivated by creating new business, not getting paid on business that's already there and the same amount of money no matter how much business is done in a month. Money is always a good incentive, and a commission-based plan is a win-win for both the business and the salesperson. The biggest benefit that comes from having a commissioned sales staff for your business is more business!”
For NTS' Chilton, the commission-based structure also makes the most sense. To avoid using the fear of not making any money as motivator, however, NTS pays outside sales reps a low base salary and supplements that with a strong commission plan that is a sliding scale based on the amount of revenue the salesperson can generate. “We like to say, ‘our guys eat what they kill,’” Chilton says. “We want our people to be able to feed their family and have a good lifestyle. So what we do is make an investment in the support — the inside sales, equipment delivery, pickup, credit, accounting and collections. We want the [sales reps] out there in the field taking the company's product and message and story out to the customers. We believe that to do that right, a commissioned rep is going to get a bigger reward for his or her efforts. That's why we think it's the right way to motivate.”
Without the proper support from the inside sales team, backed up by high-quality technical support and a fleet mix of dependable, well-maintained equipment that is backed up in the field by a field service staff that can deliver and pick up the equipment on time, the commission structure won't be successful.
“To have a commissioned sales force you've got to have a very strong team, and all cylinders on the team have to be working,” adds Chilton. “You can't underfund one part of it and expect a commission plan to work. You've got to be able to support your salespeople with great inside support, technical support, equipment and, of course, the after-sales support and service.”
Aspen Equipment finds that the best motivator for its outside sales team is a straight commission plan with the supporting inside sales personnel compensated on salary. Florida's Frye's Tool Rental uses a salary against commission program for outside sales reps. For example, if an outside salesperson has a base salary of $3,000/month and a commission due of $4,500, the salary is subtracted from the commission to determine his or her actual paid commission of $1,500. With that pay program the salesperson takes home $4,500 on that paycheck, but even if they didn't earn any commission they don't have to be worried about how they will feed their family or pay the bills. According to Frye, who places a strong emphasis on meeting an attainable monthly quota, this structure keeps the outside sales force motivated and keeps the anxiety associated with not meeting sales goals away from the customers.
For material handling equipment rental specialist Lizzy Lift, in Franklin Park, Ill., outside sales are generally handled by president and co-owner Jennifer DuBose-Lombard, so for them it doesn't make sense to compensate on sales. Instead, the company employs an in-house rental team that is paid salary or hourly, plus bonus, if the company's sales goals are met. “I think our plan works well for our staff because it helps keep them motivated and pulling together as a team,” DuBose-Lombard explains.
On the other side of the compensation debate are companies like Phoenix-based Sunstate Equipment Co., led by industry sales veteran Larry Cox, Sunstate's director of sales, who has long been a proponent of a non-commission-based pay structure. Cox' philosophy is that eliminating commission also eliminates the internal competition among outside salespeople and the game of constantly auditing each invoice to chase every dollar that should be billed to a certain territory. While Cox doesn't deny that a commission structure can drive productivity, he instead prefers to drive that productivity through managing the sales force as a team.
“The competitive spirit, the sense of urgency, the high level of customer service we deliver — it's fun to watch,” says Cox. “It's like an orchestrator with the baton, he doesn't make any noise, but it's fun to listen to his productivity. It all comes together in a symphony. It's no different than any orchestrated effort, which is what we have. There's a synergy with ops and sales force working very close together in every market that we have. You get that, I think, from our model.”
divide, conquer and problem solve
The way in which a sales force is structured and divided into territories can either send it soaring toward success or set it up for failure. For NTS, territories are assigned primarily based on customers with geography only a secondary factor. For instance, if a customer crosses the line into another salesperson's geographic territory, the salesperson goes with them.
“We're not going to tell the customer, ‘We can't call on you here because you crossed our line,’” Chilton explains.
Theros Equipment has a similar strategy, assigning each salesperson a piece of geography close to their branch and giving them incentive to secure business in that piece of geography only. As a result, competition comes only from other rental businesses in the area, not from other members of the Theros sales staff.
“The result is a team-oriented philosophy in which the customer is handled locally by the geographically assigned salesperson no matter where the jobsite is,” says Theros.
Though its outside sales team has assigned territories, the sales force at Aspen Equipment Co. works together to pass on leads, referrals and other business opportunities to the appropriate sales representative. In addition, sales veterans work with newer team members to help them when unusual situations arise. But that's not to say that Aspen's sales staff doesn't possess that competitive spirit and drive that most rental businesses seek out in their outside sales representatives. Aspen's sales team creates a healthy competition around placing the best available equipment in customers' hands. Because machines go out on a first-come, first-serve basis, each salesperson works hard to service the customer by getting them the newest and best equipment available for their job.
Rental business owners and managers agree that the killer instinct of a salesperson is an inherent quality rather than a learned one. Sunstate's Cox believes that the best outside sales people are just driven to succeed by something inside them. They don't need a sales manager pushing them to make the next sales call because they were going to do it anyway. They possess a motivation that comes from within themselves rather than from an extra few dollars on their paycheck.
So what qualities and personality traits do rental companies look for when recruiting to fill sales positions?
For trench and traffic safety specialist NTS, finding a salesperson who wants to be a problem solver rather than someone who just wants to quote rates is important. “Our guys want to be problem solvers; they want to make recommendations and be part of the process of making the decision on what the customer really needs,” Chilton says. “Being part of the NTS sales team is not for the weak of heart, or those who are lazy, or those who think their job is something they do in between their skiing and hunting trips. We want people who have passion for the business and passion for the company's story and what we're trying to accomplish.”
Theros looks for people who are eager to learn and always curious about new products and finding better ways to get things done — essentially problem solvers. “They must be organized and excellent at follow-through,” he says. “Don't tell the customer you're going to call them right back or get their question answered and then forget to do it because you're disorganized — that's anti-marketing.”
While some rental companies prefer to look for these qualities in salespeople with previous rental sales experience, others share the philosophy that it's preferable to start out with a clean slate so they can mold them specifically to fit their rental business model.
Chilton prefers to recruit people with a construction background, such as an estimator, a superintendent or a machine operator, but no previous sales experience. “Our guys are not great salesmen. But they are great application guys, great problem solvers and they're relationship builders.”
Sunstate's Cox has had success hiring people with proven sales experience, but not necessarily in the rental or construction industries because those people have to be retrained to do things differently. Instead he looks to other high-service industries to find people who understand the urgency of the equipment rental business.
Aspen Equipment's Foster has a slightly different philosophy for his company, preferring to recruit candidates with some experience in rental sales.
“Finding someone with previous experience is almost always a plus,” says Foster. “However, the right attitude and attributes can often outweigh experience. If we find a person that has all of the qualities we're looking for, but not necessarily the specific experience, we will not discount them as an option.”
When recruiting new salespeople to Theros Equipment Rentals, Joel Theros also believes previous rental experience is a big help. “It's great to have someone who has some killer instinct, good organization and good follow-through, and it's even better if they've spent some time at a rental counter or in the shop at a rental store,” he says. “The personality traits are the most important, and if they can couple that with equipment knowledge, they'll perform very well in the field.”
more than sales
Selling rental is much more than just writing up a contract and calling it done. Equipment rental sales require ongoing support and service. NTS' Chilton calls rental a “just in time industry” rather than the “just in case” industry it was in years past. If a customer needs a piece of equipment today, they want to rent it today and when they're through with it, they want to send it back. Gone are the days of a contractor renting two or three machines to place on standby at the jobsite just in case they need them. Today's rental industry “takes a lot more service and a lot more critical interface,” Chilton says. “And the salespeople are working with more customers and have to have high levels of contact. They have to be able to text, email, make phone calls — all of it.”
Customers expect their rental sales rep to be able to communicate with them instantly by phone, email or text — whatever their preferred method — making the service side of the business even more competitive. The work that an outside sales rep used to do in a 4-, 5-, or 6-hour day, is now a 10-hour a day job. “You've got to work from sun-up to sun-down almost to stay on top of the game,” Chilton adds. “Because if you can't do it somebody else will, and they'll do it today.”
The industry's overall focus on customer service has intensified to the point that rental companies understand the importance of not taking for granted their most loyal repeat customers. As a result, sales reps never back off on the high-level service those customers expect and are careful to treat them with the same attention required when trying to win and build new business.
“We think all existing customers are new customers every time they start a new project,” says Chilton. “We have thousands of customers on our books, but every time they start a new project or start a new phase of a project, it's their decision again whether they use us or not, so you have to be in contact with your customers every day. The best prospect you have is the guy you're doing business with. On the other side of the coin, your competitor's best prospect is your best customer.”
The high quality of service most rental businesses now provide, paired with the high quantity of competition in the rental market, makes service beyond the sale a critical factor in maintaining that existing customer's business and is a big responsibility for the outside sales team.
“We approach existing customers and new customers the same way,” explains Theros. “The rental business is always exciting in that way. We like to get the deal, but we also want to consummate the relationship and take care of the customer through the duration of the rental.”
In addition, calling on existing customers regularly not only allows the rental salesperson to learn about new projects entering the pipeline, but also gives the sales rep an opportunity to tell them about new products and services the company has recently added.
The onslaught of just-in-time technology such as Smartphones and tablets, combined with the recent recession and resulting uptick in competition among rental companies to supply equipment to fewer construction jobs, has brought about some permanent changes for sales representatives. The level of customer service required to win a contractor's job has increased more than ever before, and rental sales reps now have to do a lot of things different than they did in the past in order to better meet the immediate needs of their customers.
All Aspen Equipment sales representatives and rental staff are equipped with iPhones, and outside salespeople rely on either laptops or iPads to make presentations to customers in the field. The technology allows them to share and review literature with customers one-on-one, show videos of equipment in use, and stay in touch with customers wherever they are.
The sales staff at Theros Equipment also uses Smartphones, laptops and GPS units to stay in constant contact with customers. As a result, they are able to provide better service to customers and the company benefits by saving tremendous time and money.
NTS salespeople use Smartphones and iPads to ensure their ability to be self-sufficient in the field, and having instant access to company information allows them to provide quotes to customers instantly, eliminating any wait time from the customer.
“We're spending more time on the lead generation process and on the projects before they actually get out,” says NTS' Chilton. “We're working more upstream than on the downstream on projects, and spending more time training our customers and offering more unique products for them such as the electronic data interchange and electronic invoice and online billing system — a lot more technology than we used to have so our guys are having to get up to speed.”
“The inside sales representatives work in tandem with the outside sales representatives to service existing customers — both are responsible for making the customer happy, whatever it takes.”
— Joel Theros, owner, Theros Equipment Rental
“We think all existing customers are new customers every time they start a new project. We have thousands of customers on our books, but every time they start a new project or start a new phase of a project, it's their decision again whether they use us or not …”
— Ron Chilton, National Trench Safety, president