AsSeenIn

Why You Want to Ignore GPA When Hiring Sales People (Or Anyone At That Matter)

If GPA matters to you when hiring sales people, you are losing out on some of the best talent. GPA has no correlation to job success (Google) or success in general (How Children Succeed, Paul Tough).  GPA is a useless measure when it comes to hiring and using it as a hiring criteria is only hurting you, your team, and your organization.

“G.P.A.’s are worthless as a criteria for hiring, and test scores are worthless. … We found that they don’t predict anything.” — Laszlo Bock

The goal of hiring is to find people who can do the job. It’s that simple. Nothing else matters. If a person can do the job and do it well, hire them.  The rub happens in our attempt to determine if someone can do the job and too many of us screw it up. We use irrelevant, useless and mildly correlating criteria in an effort to “categorize” candidates as fits or not. It’s time to stop.

If you want to hire the best people, get real and be honest about what it takes to do the job. If it takes smarts, then look for a way to measure smarts, don’t use GPA. More importantly define “smart.”  What does “smart” mean. Does smart mean book smart, the ability to solve difficult problems, to be creative, to think ahead? What exactly do you mean by “smart?”

Hiring processes are filled with bad decision criteria at best and in too many cases with terrible criteria that doesn’t even correlate with success.

Do you require a college degree? How does that correlate to success? Do you require 10 years of industry knowledge? How does that correlate to success? Success early, maybe, but long term success?  A shitty sales person with industry knowledge may outperform a killer sales person with no industry knowledge for about 6 months, then what? Be real careful in how you identify success criteria. It’s not as black and white as you may want to believe.

A GPA is one of a number of terrible hiring criteria. Don’t get suckered into evaluating candidates on things that don’t matter. Evaluate them on things that do and as head of sales, or as the HR partner it’s your job to know what they are AND why they correlate.

Winning is about the people we can attract, hire and retain. So, let’s get it right!

 

 

We’ve All Been Duped

If you missed Venture Beat’s post the other day on these stats you’ll want to go check it out, cause it appears we’ve ALL been duped.

 

I’ve seen these numbers so many times I, like most people, have come to accept them as fact. Haven’t you? Although I don’t believe I’ve blogged about these numbers, I know I have verbally tossed them about with peers and customers.  Now that it appears they are fake, I’m a bit embarrassed.

I tried looking for similar stats to see if someone else or another company had done a similar study that was close to or similar and I couldn’t find anything. I also wanted to make sure  Stewart Rogers, over at Venture Beat, wasn’t putting one over on us. I couldn’t and he’s not. I couldn’t find these stats attached to a real company or similar stats by anyone else. Which bothers me, because I can recall seeing a bar graph a while back that had similar numbers but not exact and for the life of me I can’t find it.

Needless to say, this is a devastating blow to the sales training and consulting world. No, it’s not going to change much, but it does leave a big hole that many felt was filled. That hole is our understanding of what it takes to connect with a prospect to make a sale.

This information has been used to support cold calling scripts and cadences. It’s been used to promote content marketing. It’s been used to justify inside vs outside sales. It’s been used as a critical piece of data in a myriad of corporate sales organization’s decisions and now it appears the data is baseless.

Stewart does a good job of breaking down how long it appears this info has been out there, how ubiquitous it is and how unfortunate it is that few people actually checked its authenticity.  So, I’m not going to pile on. I will say, it should leave us all thinking hmmm? What now, is cold calling really dead? Are the numbers worse than we hear? Are they better? Should we be doing something else now? How many contacts does it take to make the sale?

Maybe the owl can help us?

How many contacts does it take to get to the sale? Now that we’ve been duped, the world may never know.

Looks like someone has a chance to do a study that will move like wildfire. Just sayin’!

Creativity Strikes Again (On24 Kills it!)

You know how much I love creative shit. I could talk for hours about creativity AND how creativity is the difference between winning and losing. Creativity is the shit and the cats over at On24 have lit up the creativity Christmas Tree with this funny and creative video. How to Webinar!

Not only is it creative, but it’s not boring. Most companies are boring. There is nothing fun or exciting about GoTo Meeting or any other conferencing platform for that matter and On24 is capitalizing on the fact the industry is boring.

Here’s the message, don’t be boring and be creative. This video already has 177k views. How long does it take you get that many views? I’m sure more than a few days.

Why Missing Quota In Q3 Is What You Need

When it comes to making quota there are a number of critical success factors, but the most critical and often undervalued is time. Time is without a doubt one of the most critical and important elements to making quota. The more time we have, the higher the probability we make quota. The less time, the lower the chances we have. Time is our best friend.

Don’t believe me?

Then ask yourself this question, how do you feel the last day of the quarter when you still haven’t made quota vs how you feel the first day of the quarter when you have 90 days to make your number– Exactly! The more time you have to work your pipeline, address challenges, get over objections and most importantly prospect for new business, the higher the chances of making your number and this is why it just might be in your best interest to miss Q3 quota and focus on Q4.

Yup, I know blasphemous, but you’ll get over it.

Here’s how it works. If you’re struggling to make Q3, the odds are you probably have a weak Q4 pipeline as well. Which means, if you put all your effort, blood sweat and tears into Q3, even if you make it, you will wakeup day one of Q4 with a tiny pipeline and a very low probability of making your number for the year and worse yet the quarter. I see this happen far too often. Companies, managers and sales people trade the present quarter for subsequent quarters or even worse the year. They get overly wrapped up in making the quarterly number they make a grave mistake. They stop using time to their advantage and start using it against themselves, unwittingly. They don’t use the time they have in Q3 to set themselves up for Q4 and when Q4 arrives, they are working against the clock.

Here’s how it breaks down. Say you have a 1.5x pipeline* for Q3 and a .7X pipeline for Q4. In order to make quota in Q3 you have to close 66% of your pipeline. That then leaves the .5 to carry over to Q4. You then go into Q4 with 1.2X quota, making it almost impossible to make Q4 and possibly the year, not the ideal scenario.

Now, consider flipping the script. Rather than doing everything you can do to scrape quota out of a 1.5x pipeline, consider scraping 75% of quota out of your 1.5X pipeline for Q3 and spending more time on growing your Q4 pipeline through prospecting. If you can grow your Q4 pipeline by 50% through more prospecting in Q3, AND you push the remaining 1/2 of your pipeline into Q4, your new pipeline would be 1.8 times quota, needing only 125%. In this scenario you have more time AND pipeline to make your Q4 and yearly numbers.

When more time and pipeline are at your disposal, probability of making quota increases. I’m a huge fan of drive, grit and winning at all costs. But sometimes, blind grit and drive only hurt you. Sometimes picking up your head and looking at the big picture is the smart choice. Too often we viciously drive sales teams to make their number for the quarter. There can be a cost of this myopic thinking. That cost is future quarters and even yearly quotas.

Take the time to step back and evaluate where you are. Is you’re pipeline big enough to make Q3 AND Q4? Do you need to sacrifice a bit of Q3 to make sure you can make Q4 too? Are you using time to your benefit, or are you squandering it in futile effort to make the current quarter. Time is critical to making the number. When it’s squandered or mismanaged quota is in jeopardy. Don’t jeopardize your future because you’re too focused on the now. You’re paid to make your yearly number and if that means you have to sacrifice part of Q3 to do it, then so be it.

Getting to quota is more than just working hard, driving your team and being maniacal, sometimes it’s about being smart, smart enough to see what’s really happening, not what you want to happen.

Let go of Q3, it just might be what you need to make Q4 AND  your year!

 

* 1.5x pipeline represents a pipeline that is 150% of quota. Ex: If you’re quota is 100,000 for Q3, a 1.5x pipeline would represent 150,000 in deals. Depending on your closing percentage, a 1.5x pipeline could be big or small. Traditionally however, 1.5 is too small to make your number. Not many sales organizations have a closing percentage of 66%.

The Lie, The Time Waster and the Bullshit (A Lesson for SaaS Sales Teams)

A Sales Guy Recruiting is in the market for a new ATS (applicant tracking system). We’ve reached out to several of the leaders in the space and I have to tell you, if their sales organizations and approaches are any indication of the type of company they are, I’m in a lose lose. One company in particularly, and ironically it’s the front runner, has been the most egregious in their incompetence.

I reached out to the company for a demo and to learn more. I didn’t hear from them for two weeks. Frustrated, I tweeted my dissatisfaction and low and behold I get a call back. They say they’ve been having problems with their inbound lead system. OK, I’m a flexible guy, shit happens. I’m told someone will follow up with me. They do, but that takes another week or so. From inquiry to demo took over a month.

Once we connect, we set up “TWO” appointments. One discovery call and one demo. The argument to this approach, spend 15 minutes before the demo to learn my business and what’s driving my need to look at an ATS. This way they can customize the demo to my companies needs. Makes sense to me, good approach.

During the discovery call, I specifically say the main and most critical driver to changing ATS’s is that I currently have no reporting. I can not see my business. I have no visibility. We go over the 15 minutes scheduled as I explicitly outline why I want visibility into the business. What happens when I don’t. What type of KPI’s I measure that I currently can’t see and more. I couldn’t have been any more clear. Reporting and visibility are the most important driver behind our decision to change.

Fast forward to the demo. I’m excited to see what they can do from a reporting perspective and how I’ll be able to track the business more effectively. I ask my team to participate as well, as they will be using it from a day to day perspective.

The demo begins and after an hour, the scheduled duration of the demo, ask me if I’ve seen one report or one reporting feature?

You got it, not one. I had a hard stop at 2:00 and had to go and never saw anything that I needed to see to make the decision. I call out the sales person, telling him I’m not too happy. They took 20 minutes of my time the day before and an hour during the demo and I hadn’t got what I asked for. He said the reporting was next (last) and that he was prepared to show it. My thought, why did you make it last. We had already established it was the most important element of my decision process. I was pissed.

A few weeks later, I get a call from the sales person asking if I wanted to get back on the phone and see more of the demo, particularly the reporting. I say I’m not sure and that I’m still a bit pissed that so much of my time was wasted and he argued with me and said they were going to show me at the end. He was full of excuses. It only made my more angry!

These guys screwed this up from the beginning to the end and took almost no accountability.

Here’s how I break it down:

The Lie - Don’t tell me we’re doing a discovery call in order to customize the demo and then NOT customize the demo. That’s just strait-up bullshit. If a customer tells you reporting is the number one feature to their decision, show them your reporting capabilities. Don’t put it LAST! If you’re gonna steal 15 extra minutes of your prospects time with a discovery call, you’d better make up for it by providing a targeted, informative, effectively delivered demo. Don’t tell me you want 15 minutes extra minutes of my time to create a customize demo, then give me the same shitty demo you give everyone else.

The Time Waster - I wasted one hour and twenty minutes on the phone not getting what I needed. I wasted my time explaining my business and what I needed to run it. I wasted an hour being walked through a demo that didn’t give me the information I needed to make a decision. I wasted valuable time because this company couldn’t get their shit together and do what they say they were going to do.

The Bull Shit - Don’t bullshit me when I call you out on your glaring and blatant screw up. Don’t come up with excuses. Don’t tell me you were saving it for the end, AFTER you went over the allotted hour time slot. Don’t tell me that you were showing me the other features because my team was on the demo and they were the ones going to be using it. I told you I was the decision maker. I told you what the key decision factor was going to be. I told you exactly what I needed to see and you didn’t show it to me. Don’t bull shit me, just own up to it, take your lumps, be accountable and move on. Arguing with me and coming up with bull shit excuses only makes it worse.

Trust in sales is nothing new. We’ve know this for years. Yet, when companies don’t deliver as promised, trust is eroded. When trust is eroded, it makes it very difficult to sell to them. No on feels good about buying without trust.

Do what you say you’re gonna do. Do it well and if by chance you mess up. Just fuckin’ own it. Your bull shit just makes it worse.

Don’t be these guys. They’ve just about sold themselves OUT of a sale.

 

Getting Better, It Never Stops

I spent the end of this July at adult ski camp. Yes, I said “adult” ski camp, frickin’ cool uh? It’s my second year doing it. It’s a  blast! We spend 6 days skiing moguls (or park and free style if you prefer that instead) learning from the best coaches in the world. This years coaches included Phillippe Marquis, 9th place finisher in moguls at the Sochi Olympics and James “Woodsy” Woods who finished 5th in slope style in Sochi. The coaches at this camp are absolutely sick.

ASG representing on the glacier!

ASG representing on the glacier!

Each day we take three lifts and a bus to get to the snow, which is a glacier a top Blackcomb Mountain. On the first day we are paired with skiers of the same skill and level, usually 4 – 6 to a group. The smaller groups make for killer individual attention. Each day looks very similar, starting with stretches, then some easy runs and drills on the flats and then runs down the moguls. Each and every run our coach for the day (the coaches rotate every day, so we get a different one each day of the week) provides feedback on our skiing. They watch us and evaluate what we’re doing right and what we’re doing wrong. The feedback is unreal.

At the end of each day there is a video session. We sit with the coach as he goes through our skiing on video in slow motion pointing out the most obvious and the most subtle issues with our skiing. It’s amazing.

Here’s the deal. Every time I go, this is my second year, I learn something new about my skiing. This year, it was my absorption, timing (same as last year) and my angulation. I don’t angulate enough, therefore my hips come across the mountain too much. This doesn’t set me up for the next mogul and causes me to extend my feet and get them away from my body. This then causes me to hit the mogul too hard and not be in a position to absorb correctly. My timing is too early. I absorb too early and don’t hold it long enough, therefore initiating my turn too early. This causes me to be in the wrong position as well and puts me in the back seat. Once I’m in the back seat I lose control of my skis and begin to accelerate too fast. If you ski moguls, there is nothing scarier then losing control in the moguls and going too fast.

Me and my boy Kenny. I'm sportin' the smile faces and ASG swag!

Me and my boy Kenny. I’m sportin’ the smiley faces and ASG swag!

I ski moguls well. I can ski any mogul run on any mountain. I ski what’s called a zipper line. I ski them better than 98% of all skiers. But, no matter how well I ski them, every year I go back to Momentum Ski Camp, I learn how much I don’t know and can’t do. And this is the lesson of this post.

No matter how good a sales person you are, you can always learn more if you’re willing to. What do you know about your selling? Where are you weak? What deficiencies do you have? How does your selling affect your ability to close the deal, get to the next yes, to craft a solution or create a solid deal strategy? Are you aware of your selling strengths and weaknesses?

Getting good at something takes practice. It’s a life long journey. No matter how good you get, you can always get better.

 

I’m Back

OK, I’ve been gone too long, my bad. But, I’m back.

After a long vacation, where I skied my ass off, but also partially collapsed a lung and bruised my ribs, I’ve returned. (There is no video of my brutal crash, ’cause I’d share it if there was. It was a YouTube worth wipeout. It was nasty. :) )

Sorry for the dry spell all. No excuse. My brilliant and impressive sales peers did a great job of filling in for me while I was out beating my body into oblivion.  So,  a mad shout and props to them.

If you missed any of their straight-up wisdom, go check out the last 5 posts, they are worth the read.

As always, thanks for being the best sales community on the planet.

You’re all badasses in my book.

Now back to our regularly scheduled program.

 

The Subtle Art of Follow-up

Guest Post by Kelly Riggs

Everything that happens after your customer says “yes” is what separates sales leaders from the rest of the pack.

In many cases a salesperson will work for weeks or even months to secure a piece of business; a process that likely includes several meetings, a number of presentations, and a host of additional sales calls before he/she finally reaches the finish line and wins the sale.

Then, of course, the real work begins: delivering on your promises.

You have likely made many commitments along the way, and your future credibility hinges upon your ability to deliver as agreed. Unfortunately, this is where many salespeople drop the ball, losing additional opportunities and referrals as a result.

Getting customers is one thing; keeping them, and leveraging those relationships to create additional business, is quite another. Since it is clearly much easier to sell customers who have already bought from you, it is always in your best interest to master the critical elements of the subtle art of follow-up.

Five Critical Elements of Follow-Up

  1. Be a finisher; take steps to ensure that the installation of your solution is completed successfully, down to the last detail. For some reason, average salespeople tend to slack off once the order is received, while great salespeople actually redouble their efforts. It is critical to ensure that your customers get exactly what they agreed to, and that you   deliver on everything you promised. Make sure things happen exactly how and when you said they would! The pay-off is enormous when customers observe that you are someone who takes care of business, which, frankly, many salespeople don’t do.
  2. Don’t run and hide; make sure you are accessible during delivery and implementation. Future sales are often sacrificed because the delivery of a product/service is rife with minor issues (including poor communication) that erode the trust you have worked so hard to develop. This can largely be avoided by overseeing the process and being proactive in communicating with the customer. After a sale is made, poor salespeople take longer to return calls, answer questions, and deal with issues, which – from the customers’ perspective – is tantamount to saying, “All I really care about is my commission.” Never fail to be visible and to communicate proactively.
  3. Stand up and be counted; take ownership of any problems that arise. Once a sale is made, salespeople can easily be intimidated by customer complaints. No one likes confrontation or conflict, but when issues surface, great salespeople see an opportunity to validate the customer’s decision to buy from them rather than a competitor. Poor salespeople, however, pass the blame to others – the shipping department or accounting, for example – and fail to take responsibility for solving the problem. The result is a significant loss of credibility in the eyes of the customer. Remember, to the customer, YOU are the company. If you fail to take responsibility, handle the problem, and ensure the customer is satisfied, you substantially jeopardize future opportunities.
  4. Be grateful; never, EVER forget the two most important words you know: “Thank you.”  Gratitude is an extremely powerful emotion – for both the giver and the receiver. Tell  customers you appreciate them. Thank them for the opportunity to contribute to their successes. There is absolutely no downside, and there is considerable upside. They feel good. You feel good. The relationship is strengthened. Since it requires very little effort, and costs absolutely nothing, it is simply inexcusable to fail to thank a customer for doing business with you.
  5. Become invaluable; begin the personal marketing process. Great salespeople sell much more than a product or service; they sell themselves. To do that, they look for ways to benefit the customer beyond the products or services they provide. They create connections and deliver resources that provide additional value to the customer. This process is called “personal marketing” – the practice of reinforcing your personal brand and elevating your value to the customer. Connect your customers to other key contacts in your network. Seek out information that customers find useful and then deliver it. As opportunities arise introduce new ideas, and new product or service applications, into your customer’s business. Having done well in the first four elements of follow-up, becoming a resource to your customer is the icing on the cake.

To continue to build trust with customers – an essential part of winning future opportunities – a salesperson must take great care in the follow-up process.

You can be awesome in a sales presentation, and you can be a great closer, but it is considerably more difficult to get repeat business and referrals if you don’t excel in the subtle art of follow-up after the sale.

———————————-

By Kelly Riggs

Sales Executive. Two-time National Salesperson of the Year. Successful entrepreneur. Business performance coach since 2006.

A highly acclaimed platform speaker, Kelly is recognized as a dynamic thought leader in the fields of leadership, sales development, and strategic planning. He is a business performance coach for executives and companies throughout the United States, working with organizations that range in size from $3 million to $1.2 billion in annual revenues.

A national award-winning sales representative and sales manager, Kelly has spent the last seventeen years teaching and training organizational leaders in sales and executive management. His first book, “1-on-1 Management™: What Every Great Manager Knows That You Don’t,” was released in 2008. His second book, “Quit Whining and Start SELLING! A Step-by-Step Guide to a Hall of Fame Career in Sales” was released in May 2013.

Kelly hosts a live, online, business radio show called “The Business LockerRoom” that airs weekly at 3:00 p.m. CST. Designed for managers, leaders, executives, salespeople, and entrepreneurs, the show features compelling conversations and useful content that listeners can use to immediately improve their own business performance.

For more information, visit www.bizlockerroom.com

KellyRiggs_June2013

 

When We Stop Calling It “Social Selling”, We’re Finally Doing It Right

Guest Post by Matt Heinz

Frankly, I’m getting a little tired of hearing people talk about social selling.  Somewhat ironic, I know, given how much I talk about and use social sales efforts today.

But in all honesty, once we can stop calling it “social selling” and just refer to it as “selling”, we’ve probably figured out how to do it right and make it an integrated part of our sales strategy.

You can’t execute social selling in a vacuum. It’s not something you can do separate from your core selling activities and process.

If you’re doing it right, everything is integrated. Social selling isn’t a distraction or addition to your sales strategy and process, it’s part of it.

Sure, the channels are different. And some of the tactics are new. But the relationship selling foundation is the same.

My dad sold Caterpillar tractors and other heavy equipment for 30+ years. He was an active social seller throughout.

Of course, he did it the old fashioned way. With a telephone. And in person. And at trade shows. But if you compare what he was doing to what we’re actually trying to do on LinkedIn and Twitter and other channels, it’s exactly the same.

It’s not social selling. It’s just good selling. When we can stop focusing on the new channels and get back to simply improving our sales skills, strategies and execution, we’ll know we’re finally in the right place.

——————————-

By Matt Heinz

Matt Heinz, President Matt Heinz brings more than 15 years of marketing, business development and sales experience from a variety of organizations, vertical industries and company sizes. His career has focused on delivering measurable results for his employers and clients in the way of greater sales, revenue growth, product success and customer loyalty. Matt has held various positions at companies such as Microsoft, Weber Shandwick, Boeing, The Seattle Mariners, Market Leader and Verdiem. In 2007, Matt began Heinz Marketing to help clients focus their business on market and customer opportunities, then execute a plan to scale revenue and customer growth. Matt lives in Kirkland, Washington with his wife, Beth, three children and a menagerie of animals (a dog, cat, and six chickens). You  can read more from Matt on his blog, Matt on Marketingfollow him on Twitter, or check out his books (listed below) on Amazon.com.

Modern Marketing Field Guide

Successful Social Selling

Successful Selling

Are You Selling Pants, Or Selling A Dream?

Move The Mouse & Make Millions!

Matt Heinz

Align Sales Compensation With Your Goals: 
A Compensation Plan That Works

Guest Post by Ken Thorenson

Note: This blog post is an excerpt from my new book: “Creating High Performance Sales Compensation Plans”

When it comes to how businesses pay their salespeople, there’s no one-size-fits-all approach. That’s especially true for any company that is diverse. Each has its own business, margins and mix of products and services. Some pay commission based on sales, while others only pay on margin; still others blend both with incentives and special bonus plans.

No matter which approach you use, success depends on awareness. Your sales management team must understand your company’s overall goals and structure compensation to align with them. In short, sales compensation should be not just a tactical focus for your organization, but a strategic one as well.

Sizing It Up
Compensation plans shouldn’t be developed in a vacuum. You and your sales leaders need a solid grasp of your overall industry and your organization’s place in it. You’ll need to factor in variables such as new product launches and major promotions, as well as consider your personnel structure.

You should also address these questions: Is your company a start-up or an established business? Are your sales goals orders- or bookings-based? How long are your delivery cycles? What are your objectives: to secure new clients, increase average order size, reduce selling expenses? Do you want to open new vertical markets, focus on the profitable aspects of your business or increase certain activities, such as cold calling? Each answer will help them design a compensation plan tailored to your company’s specific needs.

Finally, take a hard look at your sales organization. Take the time to set goals and analyze gaps. For instance, do you need to attract new representatives to make C-level sales calls? Do you want to retain employees to build a long-term, client-based sales team, or is rapid turnover acceptable because it provides new blood? Such considerations also play into compensation planning.

Understanding Cost of Sales
Of course, you can reduce selling costs and enhance profits by capping sales compensation, but in the long run you get what you pay for. If you hire good salespeople and compensate them poorly, expect high turnover, which comes with costs of its own. A sales plan that compensates strong performance will allow you to attract the best salespeople — and retain them as well.

You can reduce selling costs and enhance profits by capping sales compensation, but in the long run you get what you pay for.

Calculating the cost of sales (CoS) is an important part of planning a compensation package. For a quick CoS ratio, simply take an individual’s salary plus commissions earned at 100 percent of quota and potential bonus opportunities, then divide by that person’s revenues to obtain the percentage. For example, if a salesperson earns $150,000 in total compensation and sells $1.5 million of products and services, his CoS is 10 percent. A more sophisticated approach adds in marketing expenses, corporate overhead, direct expenses paid to the salesperson and expenses related to sales support costs.

Once you have determined an acceptable CoS range, you can fine-tune the commission plan. If you sell Microsoft offerings, services and other more product-focused solutions, it’s critical to find a blended CoS, which takes into consideration the margins of service and lower margins of product sales. That can allow you to achieve the desired CoS within your compensation framework.

Examining the Options
Compensation plans vary widely, but all should include “accelerators,” that is, increased commission rates for employees who achieve target sales levels. Following are a few common examples of different plan structures:

  • Profit-Based: Commission rates change as margin levels increase. These plans are generally based on invoice, product or monthly averages of margin generation.
  • Revenue/Quota: Compensation is based on sheer volume achieved over the previous sales period or on a percentage of a quota achievement.
  • Balanced: Compensation is based on margin, revenue and a third component, such as quota attainment.
  • Team: Bonuses go to all team members when quarter-to-date (QTD) sales goals are achieved.

Let’s examine which types of plans work best in which scenarios. If your company has high revenue-growth objectives in a boom market with little competition, use a plan with aggressive accelerators. Another option involves offering higher base salaries and lower commissions. An advantage to this approach: You may not need reps with top-notch sales skills because, in this case, they’re primarily order-takers.

The situation changes in a slower-growing market with many competitors. Here, you might adopt a “protect-and-grow” revenue objective to play defense against rivals, while using a margin-based plan to upgrade accounts. The idea is to gear compensation to account for growth while providing bonuses for new accounts.

If your company’s goal is to grow revenue and focus on new account conversion programs, choose a plan focused on the percentage of sales growth quarter over quarter or annually over named accounts. Certainly, using a quota-based compensation plan can achieve this objective, too. This scenario requires strong sales compensation with quarterly bonus emphasis on revenue gains from new business.

Tailoring Tips
Here are a few final considerations to keep in mind as you customize your compensation plan:

  • In new organizations focused on expanding within existing markets, the compensation plan will differ dramatically from that of an established company in the same industry. A mature, market-dominant company that receives a large percentage of its revenues from a small, loyal customer base can offer lower commissions and, perhaps, lower overall salaries. But a newcomer to an existing market probably needs to offer higher compensation to attract top-performing salespeople who can build a strong customer base.
  • New organizations in new markets need compensation plans reflecting the volatile environment, usually with higher-than- average base pay.
  • Companies in transition or undergoing a turnaround typically experience a higher CoS ratio; they may be best served by flexible plans incorporating morale- and team-building components.
  • Organizations positioned for high growth should develop plans covering brief, six-month periods. This will let management test theories and change direction while allowing the sales team to adjust accordingly.

No question about it: Creating an effective sales compensation plan is hard work, but the effort typically pays off in both improved sales performance and achievement of your corporate goals.

———————————————

By Ken Thorenson.

Ken Thoreson “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 13 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for partners throughout North America.

Ken provides Keynotes, consulting services and products designed to improve business performance.           Ken@AcumenMgmt.com   www.AcumenManagement.com

Blog:  www.YourSalesManagementGuru.com

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