Salespeople are the lifeblood, the first line of offense for a business in the marketplace.
Sales teams put forward the hard work needed to identify new opportunity, qualify prospects, sell and close deals that pay the bills within an organization. Why is it, then, that businesses seem too ignore the basics in how to motivate and incite their salespeople to the greatest potential?
Ignore the following at your peril.
1. The Offer Letter ≠ A Compensation Plan. Formalize sales compensation plans instead of “making up one” at decision time. Attach the plan to any offer letter you may send to a candidate. An offer letter leads to, or references, the compensation plan. The offer letter can’t contain every component of a comprehensive sales compensation plan so use the offer letter to welcome and to ask the recipient to consider the compensation plan, attaching the plan and its details to the letter. And, ensure your compensation plan that is clear and easy to understand.
2. Pay Regularly. Let’s be really candid—salespeople are “coin operated” resources. Salespeople are reward driven. They view rewards as in indicator of their performance and your confidence in them. Quickly paying salespeople what is owed them motivates the salesperson and increases their effort on your behalf. Pay commissions regularly and on-time. Make sure that the sales team knows that they are valued by how you take care of your end of things.
3. Provide Supporting Information. Readily available information can often answer a question before it gets asked. Information provides background for shared understanding. Make detailed information on compensation due, revenue, quota attainment, commission schedules and the like easy to access and understand. Doing so will reduce anxiety and grow confidence in the organization.
4. Don’t be a Reluctant Payer. Business owners sometimes avoid paying out generous sums to salespeople. They rationalize it by saying things like, “Nobody should be earning more than me in this company.” Salespeople are often the hardest working people in the organization. If a salesperson has “hit it out of the park” gladly pay what is owed and encourage them to do it again!
5. Don’t Cap Compensation. A similar issue to #4, above, is capping compensation. Creating a cap on compensation is like putting a cap on your business growth. Salespeople are motivated by money and will continue to build the business, harder and faster, when they know compensation is there to justify such dedication. Have a well thought out compensation plan that rewards at every step of the way for the right behavior and right results.
6. Align Compensation with Business Objectives. Business plans and objectives change from year to year. Yet many businesses stick with the “tried and true” sales process and compensation behaviors, leading to disconnects over time. For example, a business may seek high growth, but heir compensation plan drives more toward customer relationship depth. Both are good goals, but they are out of sync with each other. Line up sales compensation with business objectives each year or as there is a change in the business.
7. Don’t Isolate the Sales Team. It seems businesses strive for collaboration across the entire company—from manufacturing to product development, to engineering, to accounting and even our supply and demand chain partners—forgetting the sales team in the process. Not asking the salespeople what they think of the current sales objectives and compensation plans puts your business at a disadvantage. Salespeople know what motivates them to greater action and results. Bring them into the process and challenge them to help you put together the very best sales and compensation plan where everyone wins.
8. Be Careful When Changing Sales and Compensation Plans. Salespeople work best in a world of clear goals where they know the level of effort needed to succeed. Salespeople want to understand what is expected so they can get to work. If changes to the targets/goals and compensation plan happen too often or for no apparent reason, it creates an environment of “shifting sand” that makes it difficult for the salesperson to get a foothold and turn energy into action and achievement. Get it right the first time. Don’t continually experiment trying to find the “right” plan which doesn’t exist.
9. Simplify Goals/Targets/Plans. Make it as easy as possible for your salespeople to understand what they need to do and how they are to be paid. Shoot for no ambiguity and no surprises.
10. Treat New and Existing Business Differently. Starting and gaining new business is harder to do than the management of existing customers. New business provides the fuel for long term business growth, existing business is key to greater profitability. Have compensation plans that reward commensurate with level of effort and business payoff. Rainmakers that can continuously bring in new and profitable business must have a generous compensation plan. Those that maintain and incrementally grow existing customer business should be paid well, but differently than the rainmaker.
The Afterburner Group has been building sales teams and bringing better sales performance for companies in the technology, energy, services, manufacturing and non-profit industries for over 25 years.
If you think that your sales effort is suffering or could benefit from an assessment, process improvement or reinvigoration, fill out the contact form below and we’ll let you know what that might look like and how you’d benefit.
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