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
