How to Scale Your Sales Function

If you are responsible for establishing and growing your sales function, then I encourage you to buck convention. Do it differently and reap the rewards.

Conventional wisdom is to hire a salesperson, give them a laptop and a cell phone and have them go forth and sell. I recommend going against this conventional wisdom. When your sales function is in growth mode, simply adding salespeople won’t give you the revenue growth you desire. You need to fill each of your different player positions first before adding depth to your roster.

Start by hiring a business development professional. Have them take their first month and research the right CRM for you. If you’ve got one already, have them confirm or deny it’s the right one for you. There are many, many choices out there so have them do their homework. 

Next, give them four weeks to build out your lead outreach process so they can work systematically to fill both your marketing and sales funnel with viable leads and prospects. Only then should you hire on a sales professional to work through the sales process and close deals. 

Here’s why; the business development function is very different from the sales function. The person who gets joy from the business development function often does not get joy from the sales function and vice versa. In my role as a fractional VP of Sales, I often speak to business owners who have sales rep turnover issues. The root cause of this turnover is that sellers were brought on without a viable sales funnel. They had 90 days of business development work to do and then became frustrated and believed they had no path to sales success…so they left.

With your sales professional onboard, capture the process they will follow to turn prospective buyers into paying customers. Document this in your CRM in the form of your sales funnel.

With your business development and sales function now up and running as separate roles, take another eight weeks and refine both your business development and sales processes. The goal is to increase the deal size and the sales velocity. This is accomplished by looking for ways to be more effective and efficient in researching and activating leads and then running the resulting prospects through your sales process.

With this work done you can now determine where you should add depth to your roster. Is your sale/market/industry such that you need more business development resources and fewer sellers or is it the other way around? Is it that you need to add key account salespeople rather than local or regional salespeople?

There is of course a great deal of nuance to all the suggestions above [which is often why I play a fractional sales management role to support business leaders]. If you’d like to chat, I’d be happy to share my insights with you.

Top Reasons Why B2B Sales Prospecting Should be Outsourced

If increasing your close rate is not the path to revenue-generating success, then what is?

In my work as a sales consultant one of the least common problems I encounter is companies that have a hard time closing business. Generally, when an opportunity that is a good fit presents itself whoever is at the wheel of that sale manages to bring it home. The bigger challenge and root cause of not meeting revenue growth goals is when there is no “next deal” behind the one at hand. Regardless of whether or not a seller closes the deal in front of them the end result is the same – there is now a gap in their sales funnel.

Reaching of revenue growth goals is accomplished by managing the cycles of the sales funnel. As deals come in, they are worked and move through to their ultimate dispatch. Classically, salespeople love the act of closing business but are not so keen on the acts of lead development and business generation. Thus, your best closer may be left with nothing to work on after they close a deal. Maintaining a steady inbound flow to the top of your organization’s sales funnel will lead to both short and long-term revenue growth.

It used to be that salespeople would do their own prospecting and business development. That’s not best practice today.  There currently exists a wealth of service providers who make it illogical for you to put a highly paid sales resource toward top of funnel work. This work is typically noncomplex and can be readily done by an outsourced service. Further, it might in fact be better done by them. Your best closers might not be your best researchers. Your best relationship builders might not be your best data miners.

As recently as five years ago this tier of service providers did not exist. Today you can find lead research experts who will mine and create lead lists. You have firms that will take those lists, further refine, and vet them and begin email and social media outreach sequences.  Other firms will then take the results from those outreaches and set appointments for you. Some will even do all of the above. All of this for a monthly fee that is often 25% less than the cost of a full-time employee.

Using these services help you achieve revenue growth in many ways.  They…

  • Free up time in the day of your best salespeople to allow them to do what they do best, build relationships with customers and close business.
  • Eliminate peaks and valleys in your sales results. As your sellers sell, their funnel is constantly being backfilled for them, rather than the sales process halting as they do the filling themselves.
  • Increase sales velocity by having appointment set with the right decision makers upfront, rather than your salespeople having to go through trial and error to get there on their own.
  • Keep morale high within your sales team as each team member gets to focus on the thing they love doing more of the time and have more success doing it.

I have had direct working relationships with many such providers. Too many to mention here. If you would like to learn more about where to start looking, please let me know. Always happy to help.

 

The Most Under-Utilized Sales Leadership Tool

Appreciation is the most underutilized leadership tool. After working with literally 1000’s of employees as a fractional sales leader I’ve learned this first hand.  

I’ve not encountered an employee who felt they got too much appreciation – and many who felt they didn’t get enough. Have you ever offered appreciation to someone and had them respond “please, enough of the platitudes. I know, I am wonderful!” I know I haven’t. I recall reading Keith Richard’s biography in which he talks about the relief and relaxation he felt after coming off the road, but that he had gotten used to 65,000 people per night chanting his name and came to miss it quite quickly! 

Quite recently I was dealing with a pervasive and thorny Accounts Receivable issue at one of my clients. Sales was upset at some customers being put on credit hold and others not getting credit approval to open accounts.  When I started asking around, I found that not only were these departments silo’ d, the walls were made of bricks. In speaking with the finance group I came to learn the challenges they were facing and quickly understood how critical their work was to the health of the company. They felt sales didn’t understand their pains.  I expressed my sincere gratitude and appreciation for their hard work on a tough task, and the lift in spirits and tone of the conversation was immediate and palpable. I came to learn that no one had ever given them such appreciation. 

In working with the marketing department at another client they were feeling down. The challenges they faced were significant and the amount of work on the plates was huge. They were very much struggling to keep their heads above water. As a sales group we decided to be overt in expressing our appreciation for their efforts.   The VP marketing responded with “thanks so much for your overt appreciation.  It’s great that my team knows how you feel!”.  She felt the power of appreciation.  Opening the door of appreciation was the start of a great collaborative relationship.

Overt expressions of sincere appreciation are often a surprise to the recipients because it is not often they get them. It lays the foundation for a positive working relationship and increases the likelihood that colleagues will extend themselves to help each other out. In these days of remote work and The Great Resignation having employees know that they are appreciated is nothing short of vital. Positive conversations in the hall or by the “watercooler” just aren’t possible anymore.  Leaders need to be purposeful in expressing appreciation wherever and whenever they can.

If as leaders we don’t openly and regularly model appreciative behaviour we are missing an opportunity to anchor this into our company’s culture.  Sincere displays of appreciation and gratitude seem to stimulate more of the same. It is an authentic and easy way to strengthen the fabric of any team.  Knowing that your work matters and is appreciated is one of the top influencers in employee engagement and job satisfaction, and an easy one for leaders to satisfy.  

If you’d like to discuss the power of appreciation further just let me know.  Always happy to help. Rob

Why hire a fractional VP Sales? 

Why hire a Fractional VP Sales instead of a full time one?  If you need serious sales horsepower to solve your revenue generation challenges but a] don’t have the resources to pay for a full-time senior executive or, b] feel that your leadership group isn’t ready for one or, c] both, then fractional might be an excellent alternative.

The gig economy and great resignation have combined to create an amazing pool of highly qualified fractional sales leadership talent for hire. For the uninitiated, fractional means that rather than being a full-time employee they act in a consulting capacity on a part time basis to help you maximize your company’s revenue growth potential.  In this relationship you get everything you need from a sales leader without having to take on a full-time employee.

Because fractional leaders work with other clients as well as you, they bring current “been there-done that” experience.  Often from multiple industries, countries and company sizes.  This can be applied to your situation towards maximizing your growth potential.  Rather than “here’s how we solved this challenge 20 years ago at my previous company…” their advice and direction for you will sound more like “here’s what’s working out there in today’s market with today’s conditions.  Let’s consider these options… ”  

Part of being a successful fractional leader is being easy to work with, even in challenging times.  They are adept at fitting in quickly and getting results.  As you’re likely looking for senior sales leadership because you are in rapid growth mode [or the opposite], this skill set is invaluable. Having someone who can come and integrate themselves into your team readily shortens your path to results.

Fractional sales leaders are often overqualified. They are authors, speakers and well tenured consultants with a strong track record of success. They can bring road tested and proven intellectual property and solutions that deliver value to you in the immediate and short-term, as well as the long term.  Setting the foundation for long-term revenue generation success while achieving short-term wins is a recipe for success.

Because of the fractional nature of their working relationship with you, their only interest is improving your condition. They are not looking to settle in, get comfortable and hit cruise control. They have no ulterior motive other than your mutual success.  Also, they don’t get mired in non-core job role minutia that typically distracts the full-time VP sales.  They, and the rest of your team are very clear that they are there for one reason only which is to increase sales.  Further, they bring objectivity and a fresh pair of eyes to your challenges as they did not grow up within your company [or maybe even your industry].

Finally, a Fractional VP sales gives you a depth and breadth of experience you perhaps otherwise couldn’t afford.  Their total Target annual compensation is generally speaking less than what you would pay for a full-time employee with the same credentials. As self-employed contractors they also don’t bring any benefits costs burden to your payroll.

A Fractional sales leader is of course not for everyone or every situation. Sometimes your challenges call for someone who will live within your 4 walls day in and day out.  Despite being a fractional sales leader myself I have counselled business owners to hire a full-timer.  If you are curious to learn if a fractional sales leader is right for you just let me know. I’m always happy to chat.

 

Choosing Your Sales Tools

For business owners, hiring sales overachievers is only part of the revenue generation success equation.  The other part is the toolkit you provide those folks to excel and maximize revenue.

Building a sale is just like building a physical product. Done the right way it is an efficient and effective process with defined inputs and construction methods that result in a consistent outcome. If building a physical product you gave your workers inferior tools you know what will happen to both the process and the outcome. It’s the same with sales.

This is not about giving your team the “best tools that money can buy”. It’s about giving them the right tools at the right time. From lead generation data mining tools to CRM to marketing enablement software the sales tech stack space is so crowded it is difficult to know where to begin to start tooling up your team.

Starting at the top of the sales funnel your team needs a place to source leads, a way to find their contact information, a repeatable way to reach out to buyers, a defined process by which they move leads through the sales funnel, a value-based sales method to follow to conduct buyer facing interactions and finally a way[s] to measure all of these activities along the way.

Top of funnel management is the space where I’ve seen the greatest proliferation of options over the course of the last few years.  At the far end of easy are outsourced lead and appointment generation services. They have significantly evolved in that they now use structured outreach and contact protocols to warm up leads prior to contacting them to ask for meetings. This significantly increases the quality of the meetings that are generated.  

At the other end is the plethora of do-it-yourself tools that exist.  In fact, if you use an outsourced business development service these are the tools their folks will be using. At its most basic LinkedIn is the place to find your Ideal customer. A web scraping tool like zoom info [expensive] will give you all the information you need to know about that person and where to reach them.  Tools like hunter.io [relatively inexpensive] will get you bits and pieces of contact information, likely enough to conduct an initial outreach.

Moving down in the funnel your team needs a templated way to conduct an email outreach campaign to warm up contacts before calling them. At its simplest this is a series of emails sent to potential buyers explaining who you are, what you do and how you might be able to help them. Also included would be informational content of value for the recipients to click on to learn more about you and your offering. Creating effective emails is both an art and a science and is an iterative process. Hubspot has great content about how to construct such sequences and track their effectiveness at converting leads into meetings and ultimately paying customers.

Once an opportunity is secured your team needs a sales funnel process map they can follow to move leads through the sales funnel from the 1st diagnosis of needs meeting to Closed Won.  Basically this is an inventory of all seller activities and buyer commitments required along the way in order for a sales opportunity to be converted into a paying customer. Skipping steps or doing them in the wrong order will result in poor sales performance, unhappy customers or both. Working with your team to plot this path will ensure everyone can check the boxes along the way and ensure that when a sale is made it is sturdy enough to last.

Having a value-based sales methodology for your team helps ensure that they are selling the value your products and services bring to their buyers rather than simply the features and benefits. Customers buy value. If your team diagnosis buyer needs 1st, then talks about how your solutions will meet those needs and wrap up with the value [in business terms] your solutions will bring they will significantly increase their sales conversion rate.  There are many, many sales methods out there [I happen to have written a book explaining mine, “Sell More by Selling Less-Mastering the Conversational Sales Method” https://robmalec.com/the-book/].  Pick the best fit for you and your sale and you will be golden.

CRM is the place where you measure all of your sales inputs and outcomes. Doing so allows you to course correct your sales process towards maximizing revenue generation success. CRM is another extremely crowded space. It’s been my experience that company size/scale and how much of your marketing function you want to integrate into it are the primary drivers for selecting your CRM. Do your homework here. For smaller companies buying into an expensive CRM with many functions that they never end up using is a common mistake [Zoho is great for small enterprise].  For midsize companies the trap seems to be buying into a CRM that is not an exact fit for the needs and ultimately having to pay expensive configuration consultant fees. I’ve seen that large organizations will buy and build out a CRM platform that is so robust it becomes non-user-friendly. 

Choosing the toolkit for your sales team is no small task. I’m happy to chat if you would like some help.

Not Reaching Your Sales Goals?

Wondering why your business isn’t reaching its Rev Gen goals? Here’s the things you should be looking at to diagnose what’s at the heart of the problem…

 In the realm of sales KPIs there are leading and lagging indicators. Lagging sales indicators such as revenue sold versus sales plan are the ones most all business owners keep their eye on.  However, leading indicators are where the real money is. Measuring the incidence of those things that cause a sale to happen will provide rapid and accurate insight into where your revenue will be in 30-60-90 days.  Further, it will give you time to course correct to hit your goals.

The leading indicators you should track for each of your sellers are sales velocity, opportunity size, sales leads researched, sales leads reached out to, planned buyer facing sales meetings and proposals issued.

Sales velocity is a measure of how quickly an opportunity converts from when it is identified as viable to when it is closed won.  This number varies significantly depending on your average deal size, the product you’re selling and the market you’re selling it into. Smaller dollar value and less complex sales should close faster. Higher dollar value and more complex sales with multiple decision-makers will close slower. Do a backward analysis on how many days your opportunities remained in the sales funnel to establish your benchmark, and then strategize as to how you can make that number smaller.

Opportunity size refers to the dollar value of your average sale.  When calculating your average, take out deals that are unusually small or large as they will skew the numbers. The higher your average deal size [relative to the price point of your products and services] the better. The Land and Expand sales approach is a good one but if your initial Landing sale is very small it means you are having to sell to the same account multiple times in order to Expand and generate the revenue you could have secured in the 1st sale.

Sales leads researched and sales leads reached out to track your sales team’s top of funnel sales activities. This work is the heavy lifting of selling and most sellers don’t enjoy doing it. Once they get viable opportunities they will neglect filling the top of the funnel. This of course is a major strategic and tactical error. Having a lead funnel that is robust greatly increases your Sleep at Night Factor because if an opportunity doesn’t close then no worries, there are other viable ones right behind it.

Planned buyer facing sales meetings is of course a big indicator of sales success. A quick look into the calendars of your sellers will give you instant insight into the potential for their sales productivity. The best sellers will have ample meetings scheduled in their calendar. Poor performing salespeople will often have empty calendars for the upcoming week.

Proposals issued represent the number of sales opportunities your team is bringing to the point of closure. Be aware that a higher number is not always better. A seller who is providing quotes too early is likely skipping several important steps within the sales process and in doing so will decrease their close ratio.  This is where knowing your close ratio [number of proposals issued to closed won deals] comes in handy.

CRM of course allows for simple tracking of all these leading indicators. It’s been my experience that within the first 1 or 2 weeks of tracking your leading indicators you will get big insights into the sales effectiveness and efficiency of your team. There’s lots of nuance to setting up these measurement structures and rolling out. If you need any help around how to do that I would be happy to chat with you.

Hiring Sales Overachievers

Hiring Sales Overachievers

Q:  What is the [not so] secret to your company over achieving its sales goals?  

A:  Hire amazing salespeople [of course].  Here’s how…

Ever thought you’ve hired a great sales person only to see them underperform and exit the organization in 9 months? Aside from being frustrating, this is an expensive experience. Paying 9 months of salary [plus any commission guarantees, benefits etc.] for no net new revenue is painful.

At its best, hiring has its inherent risk that the party you’ve hired is not “the right person being put in the right seat on the bus”. To make a hiring decision even harder, any salesperson worth their salt will sell you on them, and next thing you know they are on the payroll. There are some specific things you can do to increase the likelihood you can hire a sales winner.

This might sound weird, but hiring based solely on sales track record is a mistake. What was sufficient to make a salesperson successful at another company, even if it’s in the same industry, may in fact be different than what’s required to be successful at your company [I’ve seen this numerous times]. Sales track record is of course important but by no means is the only criteria on which you should base your hiring decision.

Hiring for a salesperson’s Rolodex [contact list] is also something I’ve rarely seen work. I’ve watched companies overpay for seemingly well-connected salespeople only to find that after they come on board the new customers from old contacts don’t materialize.

Great salespeople, regardless of industry, typically share the personality traits of resilience, initiative, competition, achievement orientation, courage and high accountability.

A resilient salesperson will be able to handle rejection inherent in the job. One who has great initiative will make things happen when others cannot. One who is competitive and achievement oriented will be internally dialled up to beat sales goals. Those who possess courage will be willing to try new things and adapt towards being successful. Those with high accountability will not blame market conditions and the like for lack of sales success. My guess is you can easily see that the salesperson who does not possess these traits and characteristics has a lower probability of success.

How to determine if your candidate has sufficient levels of the traits and characteristics required for sales success? Google “behavioural interviewing” and you will find all you need to know. Asking questions that begin with “tell me about a time when…” is magic. Proceed to ask about when your candidate had to draw upon the success traits and characteristics.  If they in fact possess them, they will readily come up with examples of when they’ve leveraged them. If they don’t possess them, their examples and stories will be weak.

Behavioural interviewing is just one part of the hiring equation. I generally recommend a 4 step hiring process comprised of an initial interview to screen for overall fit, a 2nd interview to assess personality traits and characteristics, a 3rd interview for some type of “sell back” interaction so you can experience what your buyers will experience and finally an interview in which the candidate presents their 30-60-90 day plan to tackle their territory.

The 1st interview is pretty standard and the 2nd is described above. The 3rd interview involves asking the candidate to sell you something. The purpose of this interaction is to determine if they understand how to conduct a sales call, ask great questions focused on uncovering buyer needs and close the interaction. The 4th and final interview allows you to understand your candidate’s business literacy and their ability to make a presentation with something at stake.

Of course this hiring process is modified and adjusted based upon the sales role being hired for. The approach would be different if hiring for an entry-level position versus hiring for a Senior Accounts role.

There is a meaningful amount of nuance to conducting this hiring process. If you would like further detail, please let me know. I’m always happy to help.

Getting to Reliable and Predictable Revenue Growth

Here’s a silly question… Would you like your company to hit its sales and revenue generation targets reliably and predictably? I’m going to go out on a limb and say the answer is yes ????.  There is a very simple recipe to make this happen.  Implement it and you will be golden. It’s called The 4 R’s. Here it is…

If your sales team does The Right Things, The Right Way, To the Right Degree, at the Right Time your company will hit its revenue generation goals reliably and predictably.

Here’s how it works…

The Right Things: Having a detailed process flow that inventories all of the “right things” your sellers should be doing over the course of every sale will ensure that each sales opportunity is given its’ chance to convert into a happy paying customer. Sales process steps being skipped is the death-knell for a deal.  If you’ve ever done a post-mortem on a lost opportunity and said “if we’d only done this one extra thing we would’ve closed it” you’ll know what I mean.

The Right Way: If your sales team is doing all the Right Things but in the wrong way then of course results will be variable. For each of your “Right Things” have a corresponding “Right Way to Do It”.  The right way usually comes from a] studying the sales that you have won and distilling out best practices for each of the sales process steps and b] studying the ones you lost, finding the tripping points and taking them off your Right Way list.

The Right Degree: Once your team is clear on what to do and how to do it this 3rd factor relates to how much of each thing they are doing. If your team applies all their energy to closing deals and none to filling the top of the funnel you know what happens. Sales is very much a balancing act of doing the right amount of each thing so that you achieve optimal sales velocity and deal size.

The Right Time: Prime Selling Time refers to sellers reaching out to buyers and conducting meetings when those buyers are available. If you are doing the right thing [for instance sales lead research] at the wrong time [in the middle of the business day when you should be having buyer facing meetings] sales results will suffer. Honouring Prime Selling Time helps to focus your team on executing sales activities at the time of the day, week or month that will give them the highest likelihood of revenue generation productivity and success.

The 4 R’s recipe is by no means complicated. The thing about it is that you need to build out the recipe based upon your sales situation. If your company sells airplanes your 4 R recipe will look much different than a company who sells office supplies. If your company sells to senior decision makers at Fortune 500s your 4 R recipe will likely look much different than someone who sells to local SMEs.

As I know you have already guessed, the secret to making the 4 R’s work for you and your company lies in clearly defining what the Right Things, Right Way, Right Degree and Right Time are [to the granular level] for your company in your industry and geography.  Accomplishing this requires a focused and purposeful effort. It doesn’t happen in a one hour meeting. It might take several meetings over the course of a month to capture all of the elements and refine them into your 4 R’s recipe.  Distill the map down to its elements, embed it into your CRM, let your sales team bring it to life and watch meeting your sales goals become a thing of reliable and predictable beauty. 

If you have any questions about this process and how to undertake it please let me know. I’m always happy to help.

Doubling Your Sales Revenue

Is this you… “We’ve got a great product/service. We work hard to service our clients. Our offering is so good it should sell itself! Our sales team seems to have a hard time selling it though. How can we 2x this thing?”

 

Some think the path to revenue growth is all about sales technique and methodology, CRM adoption, closing cycles and sales metrics.  It’s not. The real path to revenue growth comes down to your people strategy with your sellers.

 

Here’s the equation you need to know in order to 2x the results each of your salespeople generate:

Competence + Motivation = Sales Productivity

To explain…

Competence: this is how effective and efficient your salesperson[s] is at each of the many tasks they must execute in order to generate a sale.

Competence has its own equation which is:

Knowledge + Skill + Diligence = Competence

Knowledge is the depth of understanding your salesperson has around how to sell [sales methodology], how to move deals forward in the sales funnel [sales process] and how to create strategies that close leads and turn them into paying customers [sales strategy creation methodology].  Inside of each of these 3 components are many subcomponents. Your seller’s knowledge base around each one will be a predictor of selling success. If it is low, they will struggle. If it is high, they have a good chance to succeed.

Skill is your salesperson’s ability to leverage their knowledge, synthesize it towards creating sales solutions and then putting action to the solutions in a way that generates results. If a person is book-smart but has trouble applying their knowledge, their sales success will likely be lacking. If they are book-smart and can apply those smarts, chances are they will do well.

Diligence is your salesperson’s “stick to it-ness”.  A seller with lesser knowledge and lesser skill can still have decent success if they are diligent and continue to try and try again. The optimal of course is to have a skilful salesperson with a strong knowledge base who comes ready to play every day.

 

Motivation: this refers to how “into it” your salesperson is. 

Motivation has its own equation which is:

Role Fit + Satisfied Motivators = Motivation

Role fit means the right person is in the right seat on the bus. An individual who feels miscast will not be optimally productive. Further, they will likely not last in their role.  For instance if a Farmer is hired for a Hunting role they will perform okay but in their heart of hearts will not enjoy the role, will be unhappy and performance will suffer.

Satisfied motivators refers to the degree to which your sales people are being fed the things that motivate them. An individual who thrives on recognition but does not get any will feel frustration. One who derives great satisfaction from developing deep relationships will wither if in a hunting role. A coin-operated pure hunter who earns more than they would like will be happy as a clam.

Sales Productivity: Revenue generated by a salesperson is only one measure of productivity. Others are leads researched and contacted [if they are to generate their own leads], 1st Needs Diagnosis meetings booked, Deep Dive Needs Diagnosis meetings conducted, proposals presented etc. In other words, productivity around conducting events that cause sales to happen is equally as important as how many deals close.

What to do with all this…

In order to increase the sales productivity for each of your salespeople, set your people strategy for them.  First, ensure they are cast into the right selling role. Then train them deeply on the what-why-how of your sales-CRM process particulars.  Coach them on a regular basis to move them along the continuing to sales best practice implementation. Finally, ensure that your compensation and reward systems feed their motivators.  

Simple, right?  If you have any questions about how to go about this drop me a line at [email protected].

 

Setting Your Sales Force Compensation

Many business owners struggle with salesforce compensation. If this is you, you are not alone.  It comes up all the time in my Revenue Generation consulting practice.  Some feel they are not paying enough and worry their best sellers will leave. Others feel they are overpaying and are giving away margin dollars.  Maybe salesforce compensation is a burr in your saddle? If yes, here’s some thoughts that might get your sales comp plan right sized in short order…

To begin, determine exactly what selling behaviours you would like to incentivize and which you would like to discourage.  If the sales role is primarily hunting and bringing on new business, you want to provide a strong financial incentive for all hunting activities and results. If the requirements are mostly around farming and account management, the plan should reward farming activities and results.

Before setting your comp plan determine if you have the right people in the right sales roles. I’ve often seen farmers in hunting roles, which never ends well. Interestingly, it’s rare that a hunter ends up in a farming role. I think they self-select out of those jobs. If you have a miscast player your comp plan will not do what is designed to do regardless of how well it is constructed.  This means you may need to get the right people into the right seats on the bus before you change your comp plan.

With your hunters and farmers appropriately placed, it is time to look at how your plan is constructed. The best hunters are coin-operated, so ensure your plan rewards bringing on new customers, and is uncapped. I have seen capped plans, you can guess what happens, hunters hit the max compensation and stop selling. You don’t want that.

For your farmers, have your plan reward them not only for account retention, but year-over-year growth. Retaining a customer with significantly declining revenues does not help your business.

The steps to creating a plan for either role are…

  • Begin with the Total Target Compensation [TTC] for the job role.  This number is typically arrived at by looking at comparables within your market.
  • Decide the split of base salary to commission earnings that will make up the TTC.  For hunters you would want a 40% base salary component. For farmers, 60%-65%.
  • A note on hunting roles with a high base salary… I consistently see that hunters with a high base salary produce less revenue than those with a lower base salary. They simply are not hungry enough and have been made too comfortable with the higher base salary.
  • Determine if you would like to base commission earnings on the attainment of achieving a gross revenue or Gross margin sales goal. [Which you pick is based on a number of factors – too much for this posting. Happy to chat about this if you would like].
  • Your commission percentage number will be determined by the sales goal number and the commission earnings needed for your seller to hit their TTC when achieving 100% of their sales target.

As an example…

  • Sales Role: Hunter.
  • Total Target Compensation: $100,000 per year.
  • Base salary/commission split: 40%-60%
  • Base Salary: $40,000 per year
  • Commission Earnings at 100% of Sales Plan: $60,000
  • Sales Goal Type: gross revenue sold.
  • Sales Goal Detail: if a salesperson is required to sell $300,000 gross revenue per year, then the commission percentage must be 20%.

To make this compensation plan uncapped but not break the bank, a few thoughts…

  • After the sales person achieves 100% of their sales goal the commission percentage drops to a lower number for additional dollars sold.  The additional dollars sold could be tiered so that the 1st block of $20,000 sold above sales plan has a lower commission percentage than 20%. The next chunk of $50,000 could have a lower percentage still. You need to play with the numbers to ensure that you maintain your margins, but you get the gist.
  • For your comp plan to work you need to have your sales goal setting correct. If you make the goals too high your sellers won’t earn enough and may go elsewhere. If the goals are too low, you will then be overpaying for your sales results and erode your margins.
  • In terms of the frequency of commissions payout it’s been my experience that monthly is best. This maintains a short time frame between your seller selling and then getting the positive feedback reward for doing that selling. Also, if the base salary is a relatively smaller part of their compensation, regular commissions will help their cash flow.

So, there is a lot to think through when it comes to setting your sales force compensation. If you have any questions, I am absolutely happy to chat [no strings attached!]. Please feel free to reach out [email protected]