Fractional sales management serves companies with small sales forces of two to fifteen salespeople. These small sales forces are difficult to cost-effectively manage due to the diseconomy of scale in the department.
Typically, this diseconomy of scale is handled one of five ways:
- The owner serves as the sales manager. This tactic makes sense of the surface but adds another responsibility to an already over-burdened business owner.
- No one manages sales or the team self-manages. This seems to make sense for a stable sales force; however, without any management, the team may grow complacent and fail to reach their full potential.
- Hire an inexpensive sales manager. This solves the cost diseconomy, but sales management is a skill position. Any sales manager who does not bring skill is nothing more than a sales babysitter. It’s better to have no sales manager than a bad one.
- Hire the sales management pro you need. This solves the skill problem, but if the cost of high-caliber sales pro is spread over only a few salespeople, it’s too costly.
- Promote the best salesperson to sales manager. Please do not do this. This plan fails 99% of the time and creates more headaches than it solves. It should be renamed “Promote your best salesperson to bad sales manager.” The most likely outcome is that sales go down, the employee is highly dissatisfied, and will quit once you realize the mistake and demote them.
Fractional sales management comes at the diseconomy of scale inherent in any small sales force from a different perspective. First, good sales management adds profit to organizations. Bad sales management or no sales management subtracts profit. Therefore, do not bother hiring a low-quality sales manager or ignoring the function. Second, rather than try to fill a part-time sales manager position internally with a half-salesperson half-sales manager or part-time owner/manager, use a part-time sales manager. No rule says the sales manager has to work forty hours a week to be effective. Third, acknowledge that the sales department has a diseconomy of scale that cannot be fixed with a perfect solution. Once you stop searching for the perfect fix, you will pick the “best bad option” vs. holding out for perfection.
Fractional sales managers only work a portion of a week, so they have to work on only the highest impact activities. It’s unfortunate that all needs cannot be addressed, but by completing the most profitable projects and tasks, the sales manager position can be staffed with a high-skill employee and remain cost-effective.
Where did the idea of a fractional sales management originate?
About thirty years ago, mid-sized business owners realized that they needed the talent of a CFO, but could not afford one on a full-time basis. By creating a service that bridged the gap between bookkeeper and CFO, the outsourced CFO business was born. Companies such as B2BCFO began to lead the way in this fractional CFO industry. Today, B2BCFOalone has over 600 outsourced CFOs.
Many of the mid-sized and small businesses that struggle with CFO issues have similar struggles in the sales management area. It is nearly impossible to cost-effectively manage a 2-10 person sales force with internal resources.
A fractional sales manager divides their time between 5-10 local businesses, spending a portion of their week with each. By sharing the cost of a talented sales manager, businesses get the intellectual property, best practices, and management skill they need, but at a cost, they can afford
What type businesses can use fractional sales management?
Fractional sales managers can be a good solution for business-to-business sales teams of less than ten. B2Cs can also benefit, but companies with longer the sales cycle and a less transactional sales process tend to benefit more significantly.
Here are just a few examples of the types of industries and companies that have benefited from fractional sales management:
- Staffing companies
- Engineering/Architectural Firms
- Software Developers
- Other IT companies
- Construction (roofing, home builders, paving, remodelers, etc.)
- Marketing firms
What to expect from a fractional sales management
Below are some of the direct and indirect benefits companies experience from a part-time sales manager.
Direct benefits can include:
- Create a Proven and Repeatable Sales Process (PRSP)
- Increase the lead flow by instituting hacks and best practices
- Lower lead cost by shifting resources
- Create a predictable sales pipeline which creates sales team accountability and predictability
- Implement best practices from other high-performing sales organizations
- Use technology, systems, tools, and hacks to lower sales costs and increase sales
- Improve sales team retention and individual salesperson performance via individual coaching sessions
Indirect benefits can include:
- Reduce turnover
- With a company-wide sales process, salespeople cannot “twist management’s arm” by threatening to quit and walk out with their sales process
- Create a sales culture of excellence
- Reduce time demands of the CEO. Redeploy their valuable time towards a higher and better use than sales management.
- Demonstrate to the entire company that the sales function is important (via the investment in sales management)
- Technological leverage used to reduce dependence upon weak salespeople.
Pros and cons of fractional sales management
Even though fractional sales management has many benefits, it’s not for every company. Sure, a part-time sales manager can provide most of the benefits of a superstar sales manager for a fraction the cost, but there are some points of note for the model.
The biggest adjustment is losing the “babysitting effect.” For many CEOs, it’s very comforting knowing that Old Stan is down the hall babysitting the sales function and salespeople. He may not be adding much value, but at least he’s at his desk all day. A fractional sales manager is only in the office half a day each week.
By definition, a fractionalsales manager cannot do all the tasks which a full-time person can. They are not working every day. However, a fractional sales manager has the talent to accomplish objectives that are well beyond the skill of Old Stan. That is the trade-off. A company that needs skillapplied to the sales function, and not just time, will benefit the most. This is most companies. Sales babysitters can only babysit. They can’t close marginal deals. They can’t motivate the team. They can’t manage well. They can only hold people accountable and make sure they work.
Another issue that can creep into a part-time sales management engagement is the speed of implementation. A company with no sales manager or a sales babysitter is not accomplishing any initiatives. The part-time sales manager has the skills needed to create and drive initiatives, but they are not doing it full time. Sometimes the business owner forgets that slow, steady progress is much better than none. Savvy fractional sales managers have learned to remind the business owner that they have gone years without these initiatives, so a few months more isn’t that long to wait for massive change.
Is this a trend?
Yes. Thirty years ago, no one had heard of a part-time CFO. Ten years from now, outsourced sales management will be commonplace. The economics of the fractional sales management are too powerful to ignore.
We predict that this trend will play out the same as the CFO trend did. Successful corporate sales experts will receive buyouts or retire. A portion of these will desire a position where their skills can be put to use but without the hassle of corporate employment. This rich talent pool can be re-purposed to the benefit of small businesses to create a pool of fractional sales managers.
salesQBis always looking for sales superstars to serve businesses in our local markets. If you fit the bill, please contact us.