Archive for the ‘Sales Compensation’ Category

Sales Compensation Planning for 2017

November 28th, 2016

Creating a Sales Compensation Plan for 2017

When it comes to how businesses pay their salespeople, there’s no one-size-fits-all approach. That’s especially true for many companies with diverse products and services that include: a 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.

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’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? What are sales goals? How long are your delivery cycles? What are your objectives: to secure new clients, incr. ave order size, add margin? Do you want to open a vertical market, new products? Each answer will help you design a compensation plan tailored to your company’s specific needs.

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.

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. A more sophisticated approach adds in marketing expenses, corporate overhead, direct expenses paid to the salesperson and expenses related to sales support costs. CoS will vary from industry to industry. 

 

Examining the Options Compensation plans vary widely, but all should include “accelerators,” that is, increased commission rates for employees who achieve target levels.

  • 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.

There are many variations and we recommend multiple combinations based upon the objectives of the organization.

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.

Take a sales compensation assessment to evaluate your current plan: www.AcumenManagement.com

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.

 

Ken Thoreson “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 19 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for organizations throughout the world.

He was recently ranked for the fourth year in a row by Top Sales World magazine as one of the Top 50 Sales & Marketing Influencers for 2015. His blog has been rated in the sales blogs in the world!

 

Ken has written 5 books, his latest book is: SLAMMED! for First Time Sales Managers, Ken provides Keynotes, consulting services and products designed to improve business performance.  Need more sales management resources? Check out his Sales Management Tool Kit or the Acumen Project and his new Ignite Your Sales Team online video training program for sales leaders.

 

Ken@AcumenMgmt.com  www.AcumenManagement.com

Blog:  www.YourSalesManagementGuru.com

Sales Contests: Building a Culture of High Performance

May 23rd, 2016

Building a Culture of High Performance: Sales Games

At this time of year sales management must be looking at pipeline levels and goals for the 4th quarter and determining if there is the necessary level of activity to ensure targets will be exceeded. Organizations need to focus certainly on the short term-30 days sales cycle and end of year, but they also need to have a longer term perspective.  As an executive you must also focus on creating an atmosphere of fun, high performance and teamwork.

In this blog I wanted to share a few ideas from my books on sales management: Leading High Performance Sales Teams and Creating Sales Compensation Plans for High Performance.  In both books I share ideas for sales contests/games as well as how to properly roll them out and manage them.  In many cases I have seen great sales contest ideas poorly executed, it is critical you  think through what your objectives are and what you want the results to be and then CLEARLY write down the objectives, rules and incentives. The first rule, remember cash is not what you want to use during sales games-that is what your commission plan is designed to achieve.  The second rule is that creating fun in your sales culture is the main outcome-surely you may wish to add “net new client’s” or sell certain products/services and increase sales-but it is sales leaderships objective to make the sales contest is a fun experience. “If it isn’t fun, it isn’t selling”.

You might enjoy this video on Building a High Performance Culture:

Different types of contests will help you achieve different goals. Some should be held annually to address sales objectives, company business strategies and potential seasonal fluctuations. Others can be scheduled as needed to help launch new products or services, promote new releases or upgrades or tie into your customers’ larger campaigns. Still others can consist of short-term incentive games designed to motivate sales personnel to accomplish specific objectives by a specific deadline.

A Contest Sampler

Following are a few typical goals, along with ideas for contests that may help achieve them:

  • Increasing sales volume. Consider adding a cash      bounty for each additional new seat, new customer, or revenue sold beyond      a certain target value. Set a quarter-to-date objective above your sales      goal; that way, everyone on the team can win.
  • Improving customer service. Periodically survey your      entire customer base. If satisfaction reaches a certain goal—for instance,      when 95 percent of your clients say they’re “highly      satisfied”—and if your company is profitable, everyone gets a cash bonus.      Keep a visible scorecard of your goals and results so that everyone      maintains a constant awareness of your objectives.
  • Acquiring new clients.      To boost the number of new clients you add each      quarter, consider creating a “bounty bonus” plan. For example,      salespeople could earn a bounty bonus—either in cash or in points that can      be redeemed for rewards—for each new client or each competitive      replacement of a specific vendor’s customer. In addition, you could offer      bounty bonuses for salespeople who exceed their quarterly or annual quotas      for new accounts or net new revenues. You might even create and post      “Most Wanted” posters with the bounties prominently displayed to      help keep salespeople focused on contest objectives.
  • Overcoming seasonal slumps. If your sales typically      slow down over the summer, try launching a prospecting activity contest in      March, April and May. For instance, award sales team members points for      each new face-to-face call or sales demonstrations that they make during      those months, with accumulated points eventually eligible for prizes. Such      an effort can go a long way toward increasing the number of opportunities      in the pipeline from June through August.

Competition Considerations

Following are some issues to consider and questions to answer as you plan sales contests:

  • Determine what you want the contest to accomplish
  • Set the ground rules. Are all sales executives on an equal basis for the contest?  Be sure to put the rules in writing, making provisions for those and other situations that could arise.
  • Make the contest length the same as the      sales cycle.
  • Set specific goals that can be measured weekly or monthly.
  • Incorporate an exciting theme.
  • Consider making rewards gifts, rather than cash.
  • Boost team members’ motivation by getting their families involved.
  • Never run contests to the last day of the month or sales period.

Ken Thoreson “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 19 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for organizations throughout the world.

He was recently ranked for the third year in a row by Top Sales World magazine as one of the Top 50 Sales & Marketing Influencers for 2015. His blog has been rated as one of the top sales blogs in the world!

Ken has written 5 books, his latest book is: SLAMMED! for First Time Sales Managers, Ken provides Keynotes, consulting services and products designed to improve business performance.  Need more sales management resources? Check out his Sales Management Tool Kit or the Acumen Project and his new Ignite Your Sales Team online video training program for sales leaders.

Ken@AcumenMgmt.com  www.AcumenManagement.com

Blog:  www.YourSalesManagementGuru.com

Sales Compensation Planning for 2016

November 16th, 2015

Sales Compensation Planning for 2016

It takes time to get it right. As sales leaders or executives everyone must be focused on exceeding the end of year sales quota’s and budgets-but alas- it is mid-November and December will be quickly on top of you.  Over the next few weeks I will be discussing the components that all companies must begin to work on during the 2016 budgetary and business/sales planning process.  Initially the first step in overall business planning is to have the management team determine what per cent ages of overall revenue will come from net new client’s vs existing clients by product/service or Practice area. Once that exercise is completed then all budgets, marketing plans and sales compensation planning can begin. This is because based upon where your planned revenue is coming from, every aspect of marketing and sales could be impacted.  HINT: Business Planning is not just spreadsheet budgets but departmental planning with objectives and tactics designed to exceed goals.

The sales management process in developing sales compensation can be complex, yet the goal must always to create a program that is simple to understand and administrate. The ultimate concept in sales force compensation is to ensure that the salesperson’s and sales management’s plans are in alignment with each other and most importantly, in alignment with the objectives or goals of the organization.

This key point is why I always state that compensation planning is strategic not tactical. This is a short YouTube video that will help better understand what we mean by setting your goals.

Once that step is taken, you can take a free sales compensation “assessment” on Acumen’s website. It will help you judge the effectiveness of your existing sales compensation plan. www.AcumenManagement.com  Now that you have taken that action the sales management process must begin:

    • Determining acceptable levels of Cost of Sales,
    • Determining a QTD objective?
    • Should you use an accelerated or ramp plan based upon sales or margin or both?
    • Will there be special bonuses for reaching certain objectives such as add X number of Net New Customers.
    • Perhaps you may consider creating team bonus plan based upon exceeding a revenue/margin quarterly goal?

 

  • Depending upon your needs as a sales leader, that blog link will also provide you access to a large number of other blogs on sales management. On our website, in our store we have a series of On-Line Video training courses specifically on sales compensation and other topics of interest to any sales manager or you might consider our book on “Building Sales Compensation Plans that Work!”

My recommendation is to start early, work through various scenarios and most importantly Look For the Holes.

Looking for the holes means, once you have narrowed down your plan, test it, present it to others and let fresh eyes try to find the weak spots in your plan.  In my book we discuss creating a compensation committee and how to roll out the plan to your team.  Then you must practice your presentation. Strategic sales management must focus on increasing the sales performance of your team, hiring will help, training is a must, but a well thought out sales compensation plan will add the right fuel to mixture. If you have questions on your sales compensation plan, send me an email:  Ken@AcumenMgmt.com

Ken Thoreson “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 17 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for organizations throughout the world.

He was recently ranked for the third year in a row by Top Sales World magazine as one of the Top 50 Sales & Marketing Influencers for 2015.

Ken has written 5 books, his latest book is: SLAMMED! for First Time Sales Managers, Ken provides Keynotes, consulting services and products designed to improve business performance.  Need more sales management resources? Check out his Sales Management Tool Kit or the Acumen Project and his new Ignite Your Sales Team online video training program for sales leaders.

Ken@AcumenMgmt.com  www.AcumenManagement.com

Blog:  www.YourSalesManagementGuru.com

 

What Sales Compensation Trends Are in Store for 2015?

February 12th, 2015

What Sales Compensation Trends Are in Store for 2015? 

By David J. Cichelli, Sr. Vice President, The Alexander Group, Inc.

This week while I am on vacation I am adding a Guest Blog, it should be of huge interest to the readers of this blog.

A look into the Alexander Group’s “2015 Sales Compensation Trends Survey” reveals that companies plan to offer moderate pay raises of 3 percent for sales personnel in 2015. This comes after a blowout year in 2014 with payouts increasing 7 percent over payments from the previous year, widely exceeding the 3% increase planned for 2014. Sales departments have a long history of overspending their compensation budgets. 2014 was a poster year for this practice.

Historically, projected wage inflation increases for sales personnel have remained modest since 2010. From 2011 through 2014, sales departments have projected their next year compensation payout costs to increase at a median 3 percent. Only in 2012 did the payouts match the projections. For 2011 and 2013, the payouts exceeded the estimate by 2 percent. For 2010, the payouts exceeded the estimate by 3 percent.

For 2015, we are again seeing sales departments estimate their compensation payouts to increase 3 percent. This is consistent with pay treatment for other corporate functions.

Much like the rest of the economy, most sales departments are expecting moderate sales revenue growth in 2015. Survey participants project a 7.5 percent median increase in sales for 2015.

The Survey results indicate that sales personnel hiring will be improving in 2015. Almost 65 percent of the reporting companies plan to increase headcount in 2015, the highest portion of reporting companies since 2010.

What else we can we expect to see in 2015? As the economy improves further, the demand for qualified sellers should expand. Hiring will become more difficult. If voluntary turnover increases as sellers seek improved compensation, we may begin to see an uptick in compensation inflation. The 2014 blowout might be a precursor signaling further and more generous wage increases for sales personnel in 2015.

Read more about the latest sales compensation trends, quotas, practices, costs and recognition events in the Executive Summary.

David J. Cichelli is the editor of the survey and a senior vice president with the Alexander Group. He is also the author of the best-selling book, “Compensating the Sales Force,” published by McGraw Hill, and the “2014 Sales Compensation Almanac,” published by AGI Press. He can be reached at dcichelli@alexandergroup.com.

2015 Sales Compensation Plans

October 7th, 2014

Creating a 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 many companies with diverse products and services that include: a 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? What are sales goals? How long are your delivery cycles? What are your objectives: to secure new clients, incr. ave order size, add margin? Do you want to open a vertical market, new products? Each answer will help you design a compensation plan tailored to your company’s specific needs.

Finally, take a hard look at your sales organization. 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?

Understanding Cost of SalesOf 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.

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. A more sophisticated approach adds in marketing expenses, corporate overhead, direct expenses paid to the salesperson and expenses related to sales support costs.

 

Examining the OptionsCompensation plans vary widely, but all should include “accelerators,” that is, increased commission rates for employees who achieve target levels.

  • 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.

There are many variations and we recommend multiple combinations based upon the objectives of the organization.

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.

 

Ken Thoreson “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 16 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for organizations throughout the world.

He was recently ranked for the third year in a row by Top Sales World magazine as one of the Top 50 Sales & Marketing Influencers for 2014.

Ken has written 5 books, his latest book is: SLAMMED! for First Time Sales Managers, Ken provides Keynotes, consulting services and products designed to improve business performance.

Ken@AcumenMgmt.com  www.AcumenManagement.com

Blog: www.YourSalesManagementGuru.com

Sales Leadership: Compensation and Summer Fun

May 30th, 2012

Sales Compensation and Having a Fun Summer

Sales Leadership Ideas

At this time of year sales management must be looking at pipeline levels and goals for July/August and determining if there is the necessary level of activity to ensure targets will be exceeded.

In this blog I wanted to share a few basic ideas from my books on sales management: Leading High Performance Sales Teams and Creating Sales Compensation Plans for High Performance.  In both books I share ideas for sales contests/games as well as how to properly.  In many cases I have seen great ideas poorly executed, it is critical you  think through what your objectives are and what you want the results to be and then CLEARLY write down the objectives, rules and incentives. The first rule, remember cash is not what you want to use during sales games-that is what your commission plan is designed to achieve.  The second rule is that creating fun in your sales culture is the main outcome-surely you may wish to add “net new client’s” or sell certain products/services and increase sales-but it is sales leaderships objective to make the sales contest is a fun experience.

Different types of contests will help you achieve different goals. Some should be held annually to address sales objectives, company business strategies and potential seasonal fluctuations. Others can be scheduled as needed to help launch new products or services, promote new releases or upgrades or tie into your customers’ larger campaigns. Still others can consist of short-term incentive games designed to motivate sales personnel to accomplish specific objectives by a specific deadline.

A Contest Sampler

Following are a few typical goals, along with ideas for contests that may help achieve them:

  • Increasing sales volume. Consider adding a bounty for each additional new seat, new customer, or revenue sold beyond a certain target value. Set a quarter-to-date objective above your sales goal; that way, everyone on the team can win.
  • Improving customer service. Periodically survey your entire customer base. If satisfaction reaches a certain goal—for instance, when 95 percent of your clients say they’re “highly satisfied”—and if your company is profitable, everyone gets a bonus. Keep a visible scorecard of your goals and results so that everyone maintains a constant awareness of your objectives.
  • Acquiring new clients. To boost the number of new clients you add each quarter, consider creating a “bounty bonus” plan. For example, salespeople could earn a bounty bonus— in points that can be redeemed for rewards—for each new client or each competitive replacement of a specific vendor’s customer. In addition, you could offer bounty bonuses for salespeople who exceed their quarterly or annual quotas for new accounts or net new revenues. You might even create and post “Most Wanted” posters with the bounties prominently displayed to help keep salespeople focused on contest objectives.
  • Overcoming seasonal slumps. If your sales typically slow down over the summer, try launching a prospecting activity contest in March, April and May. For instance, award sales team members points for each new face-to-face call or sales demonstrations that they make during those months, with accumulated points eventually eligible for prizes. Such an effort can go a long way toward increasing the number of opportunities in the pipeline from June through August.

Competition Considerations

Following are some issues to consider and questions to answer as you plan sales contests:

  • Determine what you want the contest to accomplish
  • Set the ground rules. Are all sales executives on an equal basis for the contest?  Be sure to put the rules in writing, making provisions for those and other situations that could arise.
  • Make the contest length the same as the sales cycle.
  • Set specific goals that can be measured weekly or monthly.
  • Incorporate an exciting theme.
  • Consider making rewards gifts, rather than cash.
  • Boost team members’ motivation by getting their families involved.
  • Never run contests to the last day of the month or sales period.

I would like to hear from the readers, comment below as to what contests have worked for you and why? Or what contests did not work and why?  What contests are you running this summer?

Make it productive summer!

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’s latest book is: “Leading High Performance Sales Teams”.

 

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

Blog:  www.YourSalesManagementGuru.com

Align Sales Compensation with Your Goals

October 3rd, 2011

Align Sales Compensation with Your Goals
A compensation plan that works

 Note: This weeks blog is a excerpt from my new book: “Creating High Performance Sales Teams”

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.

Ken Thoreson is managing director of the Acumen Management Group Ltd., a North American consulting organization focused on improving sales management functions within growing and transitional organizations. You can reach him at ken@acumenmgmt.com

www.Acumenmanagement.com  Blog: www.YourSalesManagementGuru.com 3f4qb8v9ge

 

The Importance of Sales Management in a Recovering Economy

January 24th, 2011

The Importance of Sales Management in a Recovering Economy

During the past two weeks I have been in Miami, Phoenix and this weekend I have been speaking in San Antonio.  We have met with Sales Leaders from around the world, lead workshops, presented keynotes and developed new long term relationships with our client base. It’s been a great few weeks.  I have also noticed an uptick in my own prospects and business opportunities.  Have you?   Based upon my conversations almost every sales leader is optimistic and pipelines are filling. Are you ready to participate in the recovery?

During the past 13 years I have been consulting, writing and speaking on the fact that sales management is the lynch-pin that drives successful organizations; sales leadership sets the tone, the culture and drives the organization to greater levels of revenues and profitability.  And now, during the past six months the topic of participating in the economic recovery and the impact of great sales management on the organization has been a critical and hot topic. The topics of surviving or working in a challenging economic time are over.   “Economic recovery?”.. Yes, just reading the USA Today, on Monday January 24th, the quotes are all over the paper:

  • Are you more or less optimistic than you were 3 months ago about the economic outlook this year?  91% of 46 Economists answered YES.
  • Over the next 12 months, which will have the greatest positive impact on the economy?  48% said BUSINESS, 45% the consumer
  • The US economy is expected to grow at an annual rate between 3.2% to 3.4%, that is up from October forecast of 2.5% to 3.3%
  • They expect employers to add 200,000 jobs a month-more than double last year’s rate.
  • The DOW is over 11,961 at the time of this blog

What is the role or action points for sales manager’s in a recovering economy? I listed a few steps to focus on:

1)      Build your Hiring Plan; Sales Managers should know today when they expect to add new salespeople for the next 18 months. Based upon your revenue goals for the next 24 months you should have a plan set defining what months you will need hire new sales talent to achieve those new higher sales targets. If your next hire date is March, then your recruiting plan must in effect now, is it June? October? Make sure you also plan on members your current team could leave or be fired also.

2)      Get aggressive on increasing your individual salesperson strategy sessions, winning now is critical to build momentum.  Schedule special sales team sessions or hold a small group of salesperson discussions weekly to strategize each sales opportunity.

3)      Increase the culture building and building belief in your offerings and your organization. If you want an article I published on that topic send me an email.  Ken@AcumenMgmt.com  Your sales team needs to believe and feel the change in economic conditions, you want to create their desire to participate in the recovery. “Take advantage of the opportunity of a lifetime, during the life time of the opportunity”.

4)      Retool your sales compensation to ensure it is in alignment with your corporate objectives or if you have already rolled out 2011 compensation plans, create an aggressive sales contest or special incentives to win Net-New clients or upgrade existing clients or hit higher levels of revenues/margin. Drive the sense of urgency to win.

5)      Sales management must now focus, as always, but more importantly now on “Brilliant Execution”. If you and your team are 2 steps ahead of your competition during the next 4 months your summer and fall business opportunities will accelerate. Focus on increased levels of sales management planning i.e. sales training, one on one coaching and  managing the number of calls per month per salesperson and even schedule weekly telephone blitz days to find those businesses that need your solutions to participate in their own recovery.

Sales leaders are the key to success, you can make the difference and NOW is the time to take advantage of opportunity and participate in the economic recovery.

What else do you think you should focus on to grow your business during the next 18 months? Let me know your thoughts….

Ken’s books: http://www.yoursalesmanagementguru.salesgravy.com

Acumen Management Group Ltd. “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 12 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for partners throughout North America. Move up and move ahead!

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

Blog:  www.YourSalesManagementGuru.com

Sales Puny? Need a Workout?

July 6th, 2010

Is your organization and your sales team suffering from:

Puny Revenues?  Weak Results? It Maybe Time for a Sales Leadership Workout!

 A  one &  1/2 Day Regimen for Getting  Your Sales Organization in Shape  

Build a proactive approach to Sales Management 2.0 that creates predictive revenue and a self-managed sales team.  Learn how other top performing sales leaders have muscled up their teams to pump up predictable revenues. Here’s what they have to say about the event:

 “Great Content, Energetic Deliver, High Value.”     “Outstanding, just what I needed.” “Informative, educational, spot-on!”    “Inspiring” Information and tools you can use immediately” “Intense!” 

 The Skinny on Sales Leadership Workout:

 Schedule: Day One, 1:00 PM – 5:30 PM; Day Two, 8:00 AM – 4:00 PM

 Next Location: Waltham, MA August 4th & 5th,  Hasbrouch Heights, NJ August 19th/20th

Regimen:

  • 10 proven ways to boost sales in 90 days
  • The 9 Things Great Sales Organizations Do & How To Do Them
  • What you need to build predictable revenue
  • Building sales compensation plans that work
  • Creating a self managed sales team
  • Understanding how the “Cloud” will impact your organization
  • Building a salesperson’s business plan focused on results
  • Motivating your team to higher levels
  • Creating a self managed sales team
  • Strategies to help you hire, train and retain a top producing sales team
  • How to coach, mentor and hold more effective sales meetings

Your Workout Bag Includes $870 of Free Extras:

  • Your Personal Sales Leadership Assessment ($375.00 value)
  • The Sales Manager’s Tool Kit                    ($495.00 value)
  • Sales Management Guidebook                    (Priceless!)

 REGISTER to Earn Early Bird Discount : 

 www.resource-technologies.com/workout.php

Ken@AcumenMgmt.com

Building a Sales Management Program

May 17th, 2010

During many of our sales management consulting engagements we initially are confronted by the existing sales manager and or members of the sales team-if no sales manager is in place.  As you would expect, the first reaction to an “outside consultant” is resistant.  During my first sales leadership role, an outside business consultant looked at our entire partner organization and my first reaction was quite skeptical also, but when the first or second recommendations began to take hold and worked and were ideas that I had not thought about-I soon began to listen.

Many sales managers learn from what they maybe been previously exposed to or from information from magazine columns-hopefully blogsJ, or simply from experience.  The experience factor however seldom has the timeframe that most presidents or Vice Presidents of Sales can put up with-because of their pressures.

Over the next series of blogs I will describe the various aspects of sales leadership and additional thoughts on improving your sales performance. First, you need to determine where your current sales management program is and where it may need assistance. Please take the short quiz, determine your score and follow the blog for additional ideas. If you have a specific questions simply comment below or send me a note; Ken@AcumenMgmt.com

PLEASE SCORE Circle a Rating:  1-5, with 5 being HIGH

 

Rate how well you know the true or real total value of your pipeline:

  • 1, 2, 3, 4, 5

Rate how comfortable you are that you know what percentage of the pipeline in the current category is required to ensure that  you exceed the current sales budget:

  • 1, 2, 3, 4, 5

Rate how comfortable you are that you have enough pipeline potential in the 30-, 60- and 90-day categories to exceed future monthly quotas:

  • 1, 2, 3, 4, 5

Rate how comfortable you are about the projected revenue you need in each sales-stage category to ensure that you have enough opportunities to exceed the future quota:

  • 1, 2, 3, 4, 5

Can you visually see all your top-10 potential forecasted accounts, from your desk or notebook? Rate how well you strategize on the top 10:

  • 1, 2, 3, 4, 5

How well are all key accounts targeted?  Rate your plan to attack them. Do you have a plan to review planned targeted account activity vs. actual account activity?

  • 1, 2, 3, 4, 5

 

How would your rate your ongoing recruiting plan that ensures that you always have qualified candidates available?

  • 1, 2, 3, 4, 5

Rate the quality of your interviewing process in terms of whether it ensures that you select the best candidate, not just the best available candidate.  

  • 1, 2, 3, 4, 5

How complete is your salesperson personal business plan implemented and do you review it each month?

  • 1, 2, 3, 4, 5

 

q Rate the quality of your three-month sales-training program. Is it defined and implemented? Do you have a salesperson development plan implemented to improve your team’s professionalism?

1, 2, 3, 4, 5

Rate the quality of your CRM/SFA system. Is it being used effectively?  Is it up to date?  Is it backed up?

  • 1, 2, 3, 4, 5

Rate the quality of your salesperson six-month named account reforecast/strategic/tactical plan process:

  • 1, 2, 3, 4, 5

Rate the quality of your six-month sales/marketing/management plan. Is it defined for each month?

  • 1, 2, 3, 4, 5

Rate how well your compensation plan works. Are your company’s goals aligned with the compensation/quota programs?          

  • 1, 2, 3, 4, 5

How well are your sales leading indicators defined? Are they measured, posted, graphed, and analyzed?

  • 1, 2, 3, 4, 5

Do you have regular scheduled and unscheduled coaching sessions with each salesperson?

  • 1, 2, 3, 4, 5

How would you rate the effectiveness of your sales contests and business games? Are they planned to promote revenue and build teamwork?

  • 1, 2, 3, 4, 5

  Total Score                                       _________

 

Rate Your Performance

 

60-85                     Minor tuning may be required

47-59                    Several Improvement projects are required

34-46                  Need multiple actions taken quickly

0-33                     Major assistance required now

 

Confidential Property of Acumen Management Group, Ltd All Rights Reserved. No Reproduction without

Acumen Management Group Ltd. “operationalizes” sales management systems and processes that pull revenue out of the doldrums into the fresh zone. During the past 12 years, our consulting, advisory, and platform services have illuminated, motivated, and rejuvenated the sales efforts for partners throughout North America. Move up and move ahead!

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

Blog:  www.YourSalesManagementGuru.com