Training Without Coaching

A WSJ article once cited that, “With some studies suggesting that just 10% to 40% of training is ever used on the job, it is clear that a big chunk of the tens of billions of dollars organizations spend annually on staff development is going down the drain.”

Picture2Part of the problem – and, of course, the solution – lies in coaching.

When calculating the ROI of training, consider:

  • 25% of ROI comes from what you do before the event (the actual training).
  • 25% of ROI comes from the event itself.
  • 50% comes from activity after the event (coaching).

That’s half of the ROI, yet too few companies follow through with coaching. In a Sisyphean-like endeavor, sales organizations send folks through training, expect them to return transformed, and then watch as the organization inevitably returns to its old pre-training ways.

Not surprisingly, many companies (44%, according to a recent SalesGlobe survey) aren’t clear on the benefits of coaching and don’t measure the effectiveness of their sales coaching programs. Of those who do measure the effectiveness of coaching, the top benefits they see from their coaching programs are:

  • an increase in sales productivity per rep;
  • an increase in close rates;
  • an increase in their ability to cross sell or sell complex solutions or complex products;
  • an increase in revenue or profits.

In terms of ROI, about half of companies (48%) report that they get a return greater than their investment in coaching and development, or a return multiples greater than their investment. And an additional 32% of companies at least recover their costs from coaching.

So what’s your view on coaching? Necessary, unnecessary, or truly worthwhile?

Read an excerpt from our new book, “What Your CEO Needs to Know About Sales Compensation.” Or, to learn more, visit us at SalesGlobe.

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by Collette Parker on February 20, 2013  •  Permalink
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Posted by Collette Parker on February 20, 2013

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Four Big Needs for Effective Sales

Go ahead and get excited about this.

When we talk about the Revenue Roadmap, people get excited. There’s a physical change in the room. People lean in, sit on the edges of their chairs, and put down phones.

I’m not kidding.

Revenue RoadmapWhenever we discuss the Revenue Roadmap, sales leaders instantly recognize a plan – a map – a well organized set of ideas that are crucial to effective sales. The ideas below are in top-to-bottom order, too. You need to have Insight on your customers and your business before you can move on to your Sales Strategy, and so on. We find that when sales organizations try to tackle one of the lower levels – Enablement, for example, which includes training and sales compensation – without carefully reviewing the upper disciplines, the solution won’t be as effective. It sounds obvious – you can’t have a great sales comp plan unless you understand the sales strategy, and you can’t have a great sales strategy unless you understand your customers’ needs – but you’d be surprised how many sales organizations operate without going through each of these disciplines.

So here they are. Let us know what you think.

 

Insight

The first layer of the Revenue Roadmap, insight, pertains to understanding the market and competitors and how the business is performing. Insight is the highest level competency: understanding the voice of the customer, the macro market, competitor moves, and the performance of the business. That insight will drive certain decisions to the next downstream level, which is sales strategy.

Listening to the voice of the customer is a critical starting point. Sales leaders must understand the needs and expectations of their customers and their performance relative to those expectations. That insight allows leaders to see any gaps and determine where they can improve value proposition, sales coverage, and sales process.

Sales leaders also need to consider what’s going on in the macro market environment, especially as it relates to their industry. Certain shifts in the economic environment can – over the long term – drive decisions about the sales strategy and how they might plan for where the market is going, as opposed to where they are right now.

It’s essential to know how competitors are performing from a growth and financial perspective. Sales leaders also have to understand their competitors’ offers to the market and how they are positioning their products and services.

Finally, sales leaders should look at the company’s historic and projected revenue and profit performance. This evaluation should consider whether growth has come through the retention of current customer revenue, the penetration of customers through increased usage or additional products, or the acquisition of new customers. By understanding the business performance they can see where they’ve been strong and where they’ve been weak, and they can adjust their sales strategy accordingly.

Sales Strategy

The second layer, sales strategy, defines the sales organization’s action plan to achieve its goal. The sales strategy will drive decisions concerning product and service focus, concentration on certain markets, value propositions, and the resulting approach to market.

First and foremost to the strategy, it’s critical to define the core and strategic products and services the business provides. In many companies these are developed based on the needs of certain customer segments. Too often however, products or services are internally driven and may not align naturally with customer needs, requiring a significant change in the offer or value proposition.

The organization determines how it will organize and prioritize customers and prospects through its segmentation and targeting. The most effective segmentation and targeting considers characteristics such as customer industry, sales potential, profitability, common needs, and overall fit with the sales organization’s business.

It’s important that segmentation and targeting flow into a plan that’s actionable by the sales organization. Simply defining the segment at a high level is not going to answer the sales rep’s question “Who do I go see on Monday morning?”

The value proposition goes beyond what the sales organization communicates to customers and articulates the organization’s understanding of the customer’s business and issues, what the organization can accomplish for the customer, and how the organization differentiates itself from the competition. The highest level value proposition is usually communicated at a company level. To be effective for sales however, the organization must convert its value proposition to sales messages that can be communicated at the segment level, customer level, and deal level to adapt to changing situations and customer needs.

When developing the approach to market, sales leaders should incorporate decisions about product, service, target segments, value propositions, and potential sales resources into a plan that can be executed by the sales organization. The customer coverage layer converts that plan into action..

Customer Coverage

Customer coverage, the third layer, defines how the organization will use its channels, roles, processes, and resources to go to market.

Sales channels outline the overall routes to market, whether they’re third party companies such as resellers, referral partners, retailers, or whether they’re part of the company sales force which could include a range of sales jobs. Sales leaders need to base the selection of their sales channel mix on factors like how the customer prefers to buy, how channel partners might improve the overall product offer, their ability to reach customers in different markets, and the financial efficiency of using lower cost channels to reach certain customers or conduct certain types of sales or service transactions.

Within sales roles and structure sales leaders must consider the types of sales and support jobs they’re going to use and how the organization is structured around those jobs. Sales jobs typically will align to customer segments and can range from global account management to field sales to inside sales. The structure may be developed around key segments – for example, the telecommunications industry or major accounts. It may also be defined around certain geographies, functional roles, or some combination.

Sales channels and sales roles integrate with the processes for working with customers. In fact, the best customer coverage models are built from the customer’s buying process with a sales process and roles that reflect how the customer prefers to work. Sales processes lay out the common approaches for how the sales team  identifies prospects, qualifies opportunities, develops solutions, manages the momentum, closes the sale, and implements the product or service for the customer. While sales processes vary widely even within a single sales organization it’s important to define the optimal or preferred sales process as a foundational point for the organization to manage and optimize performance.

Sales deployment maps the feet on the street and the level of sales resources needed for each of the sales roles by geographies, segments, or other forms of account assignment. Deployment is typically guided by a combination of sales capacity (available sales time and workload) to manage current accounts or sell to new accounts, sales role and customer alignments, and logistical factors like geography and travel patterns.

Enablement

Enablement, the final layer of the Revenue Roadmap, supports all of the upstream disciplines within Customer Coverage, Sales Strategy, and Insight. Enablement includes areas such as incentive compensation and quotas, which aligns sellers to the sales strategy. It includes recruiting and retention, which define the current inventory of talent and determine how the organization is going to attract and retain the right talent for the long term.  Training and development builds the capabilities of the organization for people currently in their jobs and in junior roles that will progress into key sales roles. Tools and technology provide leverage by enhancing the effectiveness of gaining insight and implementing the organization’s decisions around sales strategy, customer coverage, and enablement.

 

Please review our new book, What Your CEO Needs to Know About Sales Compensation, and let us know what you think! To learn more, visit us at SalesGlobe.

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by Collette Parker on February 14, 2013  •  Permalink
Posted in Sales Compensation, Sales Leadership, Sales Operations

Posted by Collette Parker on February 14, 2013

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Your Revenue Roadmap: Driving Your Sales Strategy with Compensation

On a chilly morning in Sacramento, I sat perched on a vinyl bench seat, warily eyeing my rolling workplace for the day: an 18-wheeler, windows fogged from the cold, vibrating slightly as its engine idled. My tour guide, Cliff, was a driver sales rep for a major brewing company. Cliff climbed into the cab, slid over to the driver’s seat, and we pulled away from the distributor’s warehouse towards a 10-hour day of sales calls to convenience stores, supermarkets, bars, and restaurants.

As we drove, we talked about how Cliff sold beer. He had been with the company for a number of years and was very successful, but he explained that his role had changed. “Two years ago, I was selling cases of beer to store owners. Now, I’m trying to make the beer they already have move faster. I check the signs, inspect the coolers, and try to get our beer in the best position.” In addition to being a driver sales rep, Cliff had become a bit of a marketer, too, since the company had changed his objectives a short time ago.

In the parking lot of a convenience store in a gritty urban neighborhood, Cliff dragged down a hand truck and I followed him to the back of the store and into a huge cooler which held cases upon cases of light beer, regular beer, and premium beer in 12-ounce, 16-ounce, and quart containers. Cliff looked through the stacks, pulled the expired boxes, and loaded them into the truck. He then lugged beer from the truck and packed it into the cooler. As he did this he talked to the convenience store owner about what was selling and what was not. Then he detailed the cooler display at the front of the store, making sure the facings of cans and bottles were aligned and that the packaging and tags for the week’s specials were clearly displayed.

The brewery Cliff worked for had changed its sales strategy recently. The old approach was to sell as many cases of beer as possible, as often as possible, to as many retailers and restaurants as possible. Cliff and the other driver sales reps were paid cents per case commission to load more cases into the cooler, rotate the stock, and pull out old beer.

Eventually, the brewing company realized that pushing more bottles and cans into the backroom of a retailer wasn’t necessarily selling more beer to the customer. With competition at the point of sale increasing over the years, sales out was less driven by stocking the cooler and more driven by effective marketing. Strategically, what was important to the brewing company was selling beer to the end consumer. The company learned that the consumption of beer was driven by TV, radio, and social media advertising. Point of sale advertising, they discovered, was another driving force.

For years the company had missed the opportunity to mobilize the driver reps and had motivated them toward the wrong goal. It had mistakenly promoted a transactional model of selling into the backroom. Finally they realized what actually sold beer – product placement, use of signs and displays, and matching price points with competitors. But the question remained: how did that translate to the sales organization? How could this strategy convert to incentives meaningful to the driver sales reps?

The quest for that answer found me undercover in a convenience store cooler, wearing a starched uniform with “Mark” neatly scripted above my left shirt pocket. We worked with the company to determine how to motivate the sales organization with performance indicators that could ultimately steer consumer preference. The company moved their sales compensation plan off of a purely volume-based plan and connected it to the metrics and activities that drove beer consumption. They developed performance measures that were focused on merchandising such as the number of facings, the position of the product closest to the cooler handle, the placement of signage in the retailer, the positioning of large displays, and competitive matching. If their competitor’s malt liquor was in 32-ounce bottles, they made sure their 32-ounce bottles of malt liquor were positioned right next to them, hopefully with a larger number of facings.

By understanding what influenced the purchase of beer and connecting it to something that was important to the driver sales rep, the company was able to change the behaviors of the reps and get them to sell more beer. Now, Cliff talked to the store owner not only about how many cases of beer he wanted and yesterday’s baseball scores, but also how the beer was selling and ideas he had about improving the marketing of certain products. He talked about the positioning of the product and displays, and he had statistics on how much that could increase the volume. The store owner listened because he knew Cliff’s advice was in his best interest.

Because Cliff’s compensation changed, his conversations changed. Because his conversations changed, the results changed. This retailer had struggled with the sale of premium beer brands in this particular market, but had seen a dramatic improvement in those sales over the past 24 months because of Cliff’s marketing.

The company and Cliff had learned an important lesson about translating the new sales strategy to the front line. The customer learned an important lesson about how to improve the results for his business, and together the company and the customer saw significant improvement in results, demonstrating the power of sales compensation and its connection to the sales strategy.

Aligning to the Strategy

One of the first things our firm does when we look at sales compensation is understand the sales strategy. We ask: How should the priorities of the business be represented in the sales compensation plan?

One of the ironies of sales compensation is that while it’s a tactical program, it can churn up issues that are actually bigger sales effectiveness misalignments. For example, Cliff’s sales compensation plan paid him for generating pure sales volume, an activity that was out of alignment with the company’s strategy of positioning product competitively and playing an advisor role to help the retailer grow its business.  A transactional plan like this would ultimately cause a breakdown in the company’s ability to achieve its goals. Sales executives have to be able to distinguish between issues that are sales compensation related and those that are indicators of bigger strategic challenges. They have to know when they have a sales process issue that needs to be fixed.

Mike Kelly, former CEO and president of The Weather Channel Companies, began his career years ago at Fortune magazine. There, Kelly worked directly with the business customer – sometimes the CEO of the company – who would have a personal preference for a business magazine, whether it was Fortune or Forbes or Business Week. Because the decision maker was at a senior level in the organization, it was important to understand the corporate strategy. When Kelly took over the sales organization of a new magazine, Entertainment Weekly, he took that customer orientation with him.

Traditionally, a magazine would research target companies and try to prove to clients and agencies that their audience was the right audience, as opposed to trying to connect their customers and advertisers to the subject matter. But Kelly implemented a customized, consultative approach, connecting advertisers to entertainment marketing. Unfortunately, Kelly explains, “We over-customized it, and the organization had a hard time making money.”

Entertainment Weekly was scheduled to be profitable after two years, but by year five it was still losing money and Kelly was feeling some pressure. “We would always point to our growth. Our circulation growth was great, our revenue growth was great, and everybody assumed, ‘Okay, at some point or another we’re going to get to profitability.’”

Kelly enrolled himself in an executive education class at Columbia University where he met Professor Selden, who talked about an idea called customer segmentation. He told his class the best companies understand not only who their customer is but also what their customer’s needs are. They group their customers based on needs as opposed to what they want to sell them. By segmenting his customers Kelly could understand the profitability of each customer and each customer segment. Then he could align his resources against those customer segments that were most profitable.

“It was revolutionary for me,” says Kelly. “No one – and certainly no one in the magazine industry – thought that way. All revenue was good revenue. And we typically thought our biggest customers, our highest volume customers, were the most profitable customers.”

So Kelly took this idea back to Entertainment Weekly, and his team analyzed the profitability of all of the advertisers and all of their segments. They figured out that cable advertising was starting to explode. Networks wouldn’t let cable channels advertise on television because they thought they would steal viewers. Cable had to buy print advertising; it was the biggest, broadest reach they could get. Entertainment Weekly had a smattering of cable channel advertisers, but it hadn’t been a big focus. Kelly and his team had concentrated on what everybody else was concentrating on – automotive companies and health and beauty companies. They were big advertisers that had a lot of appeal but were price sensitive. Kelly, however, realized that the cable television advertisers were actually their most profitable advertisers because they paid full price; they were time sensitive – they had to be in certain issues in the magazine because the show was on a certain night – all the factors that compelled them to pay a premium.

Kelly completely changed how his organization thought about who their customer was, who their most profitable customers were, and how they should go after their customers. He realigned the sales force, putting more people on the most profitable categories with strong growth expectations and sales incentives and fewer resources against the customers for whom it was really just a price buy.

“We were supposed to lose money that year,” Kelly says. “We made money. And then we went on to have 30 percent CAGR [compound annual growth rate] for the next five years.

“I learned that sales is sales. But there are principles of finance that if you apply them to sales, including incentive plans, you can accelerate what you do. I’ve brought that to every other job I’ve had. We really try to understand who the customer is and what our value proposition is to that customer. Then we segment those customers so we understand who the most profitable ones are and who they aren’t. We put our resources behind that profit.

“If your compensation plan doesn’t align with the strategy and the segments you want to target, then you’re going to be working at cross purposes. It’s hard work to get an organization, any organization, to start to think differently. And in most companies, sales is product-focused or platform-focused. They’re going to go sell their product wherever they can. When a company becomes more customer focused, all of a sudden it starts to define the product mix based on what the customer needs are.”  The sales compensation program can either support that customer focus, run counter to that focus, or create confusion. In Kelly’s case, the priorities of the sales strategy were well-represented in the sales compensation plan, and it drove the desired behavior.

The Four Layers of the Revenue Roadmap: Connecting Your Sales Strategy and Compensation

When thinking about sales strategy and sales compensation, it’s critical to have a framework. “The comp plan is the caboose, not the engine,” says Doug Holland, director of human resources and compensation for Manpower Group North America, a global workforce solutions company. “Compensation should never be driving the strategy. The strategy drives the compensation. It’s incredible, especially in times of stress, how that message can kind of get lost.  Comp issues are often symptoms of bigger problems, and it’s the easiest, most tangible thing to look at. The challenge is, do we have the right job designs? Do we have the right people? Those are harder conversations. That’s often the struggle with comp plans.”

We developed the Revenue Roadmap from our decades of work with hundreds of high performing sales organizations. The Revenue Roadmap identifies four major layers, or competency areas, and 16 related disciplines that must connect for the organization to grow profitably.

To learn more about What Your CEO Needs to Know About Sales Compensation, visit the book’s website, or purchase a copy on Amazon or Barnes and Noble. To learn more about SalesGlobe, please visit us at www.SalesGlobe.com.

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by Collette Parker on January 10, 2013  •  Permalink
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Posted by Collette Parker on January 10, 2013

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What Your CEO Needs to Know About Sales Comp

Our new book is out! Read an excerpt below and let us know what you think!

Book Cover 3The office lights flicker on at 7:00 Monday morning. The early risers arrive and the staff trickles in. The CEO, vice president of sales, CMO, and vice president of human resources sip their first cups of coffee, bleary-eyed from Sunday evening’s conference calls. The office chatter starts. In an hour the phones will begin to ring. A few miles away, manufacturing has been busy at the line for a couple of hours by now.

Despite the bustling activity, it will all come to a halt if the next sale isn’t made. “Sales” is the top line on nearly every income statement. Without it, the funding runs out, the stock doesn’t trade, the lights no longer burn, and the office chatter falls silent.

At the root of sales is a team of tenacious souls squeezed in middle seats without upgrades, walking the hallways of major corporations, making outbound calls to semi-qualified prospects, pacing customer reception areas waiting for a chance to have that critical conversation about the customer’s needs, and generally wearing out the soles of their Cole Haans. Each year on average, they experience eight to ten times more rejection than acceptance from their prospective customers. Yet they persevere – most with continued optimism – in pursuit of the close, the add-on sale, the contract renewal. Most of them are driven by a quest for three things: personal accomplishment, recognition, and compensation … sales compensation … commission … bonus … the deal that makes their year and the company’s year.

The sales compensation plan is one of the most significant drivers of performance in the sales organization and represents one of the single largest expenses a company will incur, commonly tens or hundreds of millions of dollars. It’s a thin but vital long distance line that keeps the daily connection between corporate growth and the rep on the street. It guides and motivates the actions of the sales organization more than any other single factor. It trumps leadership messages, sales strategies, sales management, and sales training. If there is a hard wire between the customer’s office and the corner office, sales compensation is it.

But if the plan’s message isn’t clear or to their liking, sales reps will interpret the plan in their own financial interest. As a corporate leader, you’ll get what you measure and what you pay for – and it may not always be what you expect.

While its impact can be direct, it’s a fine blend of art and science that has long been a point of conflict within companies. Everyone has an opinion about sales compensation and everyone is an expert, yet few agree on the best approach to drive performance toward the company’s objectives. Sales, sales operations, human resources, and finance regularly engage in battles over questions like:

  • Does the plan represent our business objectives?
  • Are our highest paid sales people actually our top performers?
  • Is the plan too expensive?
  • Can we better motivate our organization to pursue the sales strategy?
  • How can we promote more of a performance-oriented sales culture?
  • Can we make the plan simpler to understand?
  • Can we make the plan easier to administer?
  • Are sales quotas penalizing our best performers?
  • How can we set quotas that better represent the sales potential in our markets?

Too often these battles lead to sales compensation programs that are compromises between parties, ultimately leading to underperformance in the business. Above the fray, senior executives look on, often asking only the most general questions. Many of these senior executives, concerned about the next quarter and the remainder of the year, miss opportunities to use sales compensation as tool to drive growth.

What Your CEO Needs to Know About Sales Compensation is not a technical guide for designing a sales compensation plan. This is a book that tells the stories of how senior leaders in a company can understand the connection between their goals and sales performance to leverage sales compensation as a driver of real growth in their organizations. We’ll focus on the top challenges in companies today and offer logical leadership approaches for dealing with each of these issues.

What Your CEO Needs to Know About Sales Compensation, written by Mark Donnolo, managing partner of SalesGlobe, is available now on Amazon.com.

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by Collette Parker on January 7, 2013  •  Permalink
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Posted by Collette Parker on January 7, 2013

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What’s Your ROI on Coaching?

We can all probably agree that coaching and development are important, but we can also probably agree that good coaching programs can be expensive.  So, in terms of a financial return, what can you expect for your investment?

In a recent SalesGlobe survey, about half of companies (48%) reported that they get a return greater than their investment in coaching and development, or a return multiples greater than their investment. And an additional 32% of companies at least recover their costs from coaching.

graphOn the “return” side of the ROI calculation, the outcome from coaching is not always clear or near-term. While productivity levels and close rates may appear to be clear metrics for coaching success, those metrics may be driven by other organization and market factors in addition to the coaching program. Improvements in sales capability can develop over time as well. For instance, learning more effective methods for developing the business case and value proposition for strategic accounts may yield results months later when those opportunities naturally present themselves over a long sales process. While the effect of coaching is there, its impact may be latent for some period of time.

But measuring ROI is not an exact science. Companies report several challenges in tracking this information. For example, on the “investment” side of the ROI calculation, coaching in many organizations is conducted informally at the manager level and is not practiced consistently in the field. This makes it difficult to measure the actual resources, both hard and soft dollars, invested in coaching. Also, coaching is often blended with other management roles and not clearly tracked by the organization.

What sort of financial returns should you expect on your coaching investment?

 

To learn more, visit us at SalesGlobe.

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by Collette Parker on December 17, 2012  •  Permalink
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Posted by Collette Parker on December 17, 2012

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Coaching Is Important … But When Do I Do That, Again?

So we can all probably agree that coaching and development for the sales organization are important – even vitally important. But there tends to be so much confusion around it.

Last week I wrote that optimally a sales manager should spend 30% to 40% of his or her time coaching her reps. But we all know that rarely happens. In fact, when we mention that optimal amount of time – 30% to 40% for coaching – we get a range of reactions, from puzzled to shocked, as managers think about all of their other responsibilities.

The reality is most sales managers spend less than 20% of their time coaching. That statistic illustrates a gap of about 60% between how much time managers should spend coaching their organizations and how much time they’re actually spending.

So what’s to blame? Many things, probably. For one, the mandate for coaching may not be getting through from executives to managers.

what preventsAnother issue – and one of the biggest challenges we see in both sales management jobs and sales jobs – is the time available to focus on their core responsibilities, whether they are still selling or purely managing.

A full 70% of companies say that sales managers are held back from coaching because they are too busy with aspects of their job that aren’t always related to sales or sales management. Oops. A deeper look reveals that many of these responsibilities are administrative or operational in nature – responsibilities that do not have a direct impact on either revenue growth or the development of the team that produces revenue.

Time constraints can take another form. Forty percent of companies said that sales managers just don’t make the time to effectively coach, meaning they are finding other things to do with their time. Perhaps they are even deliberately avoiding that ominous task.

We know from our research and our work at SalesGlobe that a big part of coaching comes down to the priorities of the organization. About one in seven companies (14%) do not require their sales managers to do any kind of coaching or development. If coaching is not a requirement of the organization, other responsibilities – whether they are selling or administration – will always take the front seat.

Beyond time, the other top barriers are around knowledge and importance. Forty-four percent of companies said managers do not know how to coach effectively. Therefore, even if they are given the time they do not know what to do with that time. Another 19% said they do not have a methodology for managers to use when they have time to coach.

With all the time constraints precluding managers from coaching it’s important to have a program in place. There is a right way and a wrong way to coach reps. (Hint: selling for them is a wrong way.)It’s important to build a coaching program and methodology that fits your organization. Using a standard coaching program – one off the shelf or one being used by another company – is certain to fail. A program that is a good fit for one organization may be a poor fit for your organization. Determine the priorities for your coaching program. Understand from a customer perspective where your weak points are and engage your leadership team in developing the right program for your business.

To learn more visit us at SalesGlobe.

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by Collette Parker on December 3, 2012  •  Permalink
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Posted by Collette Parker on December 3, 2012

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Time for Coaching Sales

Coaching is a critical role for sales managers. But consider your own organization: how many managers spend time each week coaching and developing their teams?

For the rest of us, it’s a struggle. Sales managers just don’t put the necessary time into coaching. Sometimes – often – it’s because they don’t have the time available or they really don’t understand how to coach.

If you’re thinking, “Each of our sales managers spends about 30% to 40% of their time coaching,” then congratulations. You are in a small but decidedly elite group.

But it’s not that sales managers don’t want to. In a recent survey conducted by SalesGlobe, 84% of companies perceive coaching as either “very important” or “one of the most important factors of sales success” for their organizations. And the reps are actually really interested in doing the work. Surprisingly, although sales people often take a cynical view of training, most are open-minded when it comes to coaching and development that contributes to their success. In fact, 75% of sales leaders see their organizations as receptive to coaching.

Balancing out the role between sales and sales management is crucial to allow bandwidth for coaching time, and setting priorities for sales managers is the first step.

Leadership must make the mandate for coaching clear. If coaching is not a priority in the organization, it will only be conducted by those who are interested. Many of the top performing sales organizations around the world require that their managers spend target amounts of time weekly on coaching. To ingrain the process in the organization some companies will go as far as requiring managers to post their coaching time on a public calendar, making it visible to the organization. Like most business priorities, coaching has to be viewed as essential by leadership in order for managers to make it a priority in their own jobs.

 

To learn how to make coaching a priority for your sales team in 2013, email Mark at MDonnolo@SalesGlobe.com, or visit us at SalesGlobe.

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by Collette Parker on November 26, 2012  •  Permalink
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Posted by Collette Parker on November 26, 2012

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2013: Questions for a Lucky Year

Whether 2012 was a banner year for your sales organization or one preferably forgotten, it’s winding down. It’s time to start looking forward to 2013, that oh-so lucky sounding year.

But fear not. Even the most superstitious among us can make 2013 absolutely providential with a little planning. High performing sales organizations operate around four key areas: Sales Insight, Sales Strategy, Sales Coverage, and Sales Enablement. Together, this knowledge helps to create a clear strategy that will make sense on the front line, and drive productivity all year.

Sales Insight comes first, because it’s essential to really understand what’s happening in your market.  Without insight into your industry and competitors, it’s next to impossible to plan an effective strategy.

Take the time to consider these key Sales Insight questions before diving into sales strategy or coverage planning for 2013:

  1. First and foremost, what’s happening in our macro market? What’s happening in our economy overall?
  2. What about your market? Was 2012 really a banner year for your industry or a dismal one? Why?
  3. How did your competitors perform this year? Do you know what led to their successes or failures?
  4. What do your customers say about your sales organization? Did you meet, exceed, or fall short of their expectations this year? Do you truly understand the needs of your customers?
  5. Where did the revenue for your company come from this year? Did you retain current customers? Did you sell new products or services to those current customers? What percentage of revenue came from new customers?
  6. What were the major strengths and weaknesses of your sales organization in 2012?

What other ways can you gain insight that will help your planning, and make 2013 the “luckiest” year ever?

To learn more, visit us at SalesGlobe.

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by Collette Parker on November 13, 2012  •  Permalink
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Posted by Collette Parker on November 13, 2012

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To Cap or Not To Cap?

Now that the election is over and all those spirited Republican vs. Democrat office debates will start to cool down (maybe), here’s a fun idea: why not kick up some dust with a new fight? Should the sales compensation plan have a cap, or not?

This is a surefire way for some lively conversation.

A cap is an upper limit on incentive earnings. The benefits of caps include mitigating risk for the company. We’ve heard stories, and you probably have too, of a sales team or single rep hitting a mega-deal and raking in a seven-figure commission check. These stories scare the heck out of finance.

These stories also motivate the hell out of the sales organization, which brings us to the downside of caps: they can be very demoralizing. Even if the cap is way out in the stratosphere of potential earnings, its existence is felt. The sales organization knows there is a limit to their earnings, and they don’t like it. For the highest performing reps, they might ultimately look for a role in another company, one that doesn’t cap incentives.

While we don’t recommend caps, there are some legitimate reasons a company may employ them. For example, caps protect you against unexpected payouts resulting from mega-deals or bluebirds beyond the rep’s control, poorly set quotas, unreliable financial modeling, or production-constrained environments where demand may outpace supply or the company’s ability to maintain quality levels.

On the other hand, uncapping the plan requires good historic data and financial modeling. An uncapped plan must also be consistent with the sales culture of the organization, especially if reps may earn more than their managers or senior sales leaders, in some cases.

Caps are less about the math and more about the people and behaviors.

What’s your position in this spirited debate?

To learn more, please visit us at SalesGlobe.

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by Collette Parker on November 8, 2012  •  Permalink
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Posted by Collette Parker on November 8, 2012

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Bus Accidents & Sales Comp: Thresholds

What do bus accidents and thresholds have in common? Well, a (pretend) bus accident is an important way to think about thresholds (we don’t actually want or advocate anyone getting hurt).

Within sales compensation, a threshold is the performance level at which the plan begins to pay incentive. For example, if a rep’s quota is to sell $1,000,000 in revenue annually, she might have a threshold of $400,000, or 40 percent of quota. If she sells less than that, she’ll only earn her base salary, without any incentive compensation. Once she sells that $400,000 – the threshold point – then her incentives kick in. She can earn these incentives up to her target incentive, which she would earn once she’d sold the full $1,000,000 of her quota. And of course, if she sells beyond $1,000,000, then she’s eligible for upside (the really good stuff).

But, are thresholds fair? To say a rep cannot earn incentive pay until she sells a certain amount could sound like she’s selling for nothing. But don’t forget, the company already pays a base salary for the core job responsibilities and minimal performance. So some companies believe paying incentive on top of that would be double-paying.  Thresholds also set a clear minimum performance expectation: performing below a certain percent of quota (or a certain dollar level) is unacceptable, and may ultimately find the rep looking for a new job. Withholding incentive is the first painful step but send a clear message that that level of performance is unacceptable in this company.

So for what types of jobs are thresholds appropriate? That decision is largely based on the job’s sales strategy and type of sale. This is where the (pretend) bus accident comes into play. Ask the question: “If at the beginning of the year the rep was hit by a bus, what percent of his annual quota would come in without him there?” If the answer is, “All or most of it,” because a large portion of his revenue is recurring, then you might want to consider a threshold for that role.

If your answer to the (pretend) bus accident question is, “None of it,” because the rep is focused on new customer selling or working with current customers that have little recurring revenue, then each new sale may simply not exist without the rep. If that rep has a high degree of influence for each sale, then plan should have little or no threshold.

The (pretend) bus accident question is a great tool to cut through the arguments about thresholds with some straight logic and cross-industry practices. The actual level of the threshold, in terms of percent of quota, is usually set either mathematically or through management expertise. Using the mathematical approach, the organization should look at quota attainment historically at the 10th percentile, and use that as an estimate of a reasonable threshold. The management expertise approach answers the question, “Below what point would it simply not be acceptable to pay incentives?” Most executives will have an immediate answer to this question.

Once the threshold point is set, beware of changing it from year to year just because the performance distributions change. Expect variability and keep a steady hand over time unless the market, nature of the sale, or job role change significantly.

How do you determine whether or not to set thresholds? Do you think they’re fair?

To learn more, visit us at SalesGlobe.

 

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by Collette Parker on October 30, 2012  •  Permalink
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Posted by Collette Parker on October 30, 2012

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Making More than the Boss: Sales Incentive Pay

How much cash should a top sales person potentially earn in a given year? More than her manager? More than the head of sales? More than the CEO? The answer to this question is indicative of an organization’s pay philosophy and its ability to attract and retain the best talent in the industry. We recently surveyed C-level executives in top companies around the country, and nearly all agreed that a top sales person could earn more cash in a year than the head of sales. While that high earning rep may be a different person each year, and that earnings level may not be attained every year, the event would not be unheard of in the organization. In fact, many C-level executives said that these events would be motivational to the organization.

 

As for earning more than the CEO, many C-level executives philosophically agreed that this wouldn’t be an issue given the right level of sales production, but it’s not usually realistic. Nevertheless, “sky’s the limit” potential is inspiring to reps who see no limits to their capabilities.

 

Organizations that know how to use the Reverse Robin Hood Principle typically set the pace with the leaders in their industries. One director of compensation told us, their top performer made $4.5 million in one year. “We had another person who made $2 million, another who made $2.5 million and then we had about 10 to 15 people that made over $1 million,” he said. “That’s probably eight to 10 times their target. So, there’s no question; we have a very aggressive comp plan that pays well. The incentive plan is a motivator. That’s the bottom line.”

 

How much can top performers earn at your company? More than the head of sales? More than the CEO?

 

To learn more, visit us at SalesGlobe.

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by Collette Parker on October 22, 2012  •  Permalink
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Posted by Collette Parker on October 22, 2012

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Sales Comp & Merry Men in Tights

Let’s just pick up where we left off last week: the case for upside potential. You want to reward those top performers, not just pay them. You want to incent them to repeat their performance next year. And you want to engender loyalty to your company by ensuring they feel like the critical contributors that they are, through recognition and financial compensation.

 

But finance will ask, “Where does all this money for upside come from?”

 

Our old friend Robin Hood has inspired the answer. While that merry fellow worked (robbed) to promote less division between the high end and the low end of the village, we suggest that when it comes to sales compensation, the reverse should be true.

The Reverse Robin Hood Principle states that an organization doesn’t overpay the low performers but instead significantly rewards the high performers. Instead of paying low performers below threshold, the organization uses those funds to reward the top. Perhaps surprisingly, this can be a big challenge. Some companies simply are uncomfortable with a huge disparity among members of the sales organization. The Reverse Robin Hood could upset the company culture, or the way it’s always been done in the past.

But, if the outcome is rewarding, celebrating, and retaining the top performers, perhaps at the expense of the bottom 10 percent, perhaps a meritocracy isn’t so bad, after all.

What are the potential risks and rewards you see with the Reverse Robin Hood?

To learn more, visit us at www.SalesGlobe.com.

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by Collette Parker on October 17, 2012  •  Permalink
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Posted by Collette Parker on October 17, 2012

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Sales Comp & Big Money

Let’s look at one of the most exciting components of the sales compensation plan. (No – your eyes have not failed you. I said “exciting” and “sales compensation” in the same sentence.) It’s the part that can sustain or destroy the sales culture, and it lets top performers know whether (or not) they can earn big money. Upside potential is the incentive pay, above target incentive, that a sales person can earn if she exceeds quota and reaches the higher levels of performance in the sales organization.

 

Let’s say, for example, a rep had a total target compensation set for $100,000, and had a 50/50 pay mix (so he would earn $50,000 in base salary, and assuming he met his quota, he would earn an additional $50,000 in incentive pay). But then, this rep just kept going. He kept selling. He went above his quota. His company knew he was capable of this extra effort and had a plan in place to reward him. It’s called upside. (As a side note: a top performer is usually a person at the 90th percentile of performance or above in the company, and the upside potential earnings is usually set as a multiple of pay at risk.)

 
For example, a plan may have the potential to pay 200 percent of target incentive to a 90th percentile performer. So, in our example, the rep’s target incentive is $50,000, so the plan would have upside potential of an additional $50,000 (paying 200% of target incentive to the 90th percentile performer). So now, our rep earns his $50,000 base salary for showing up at work and playing nicely; he earns another $50,000 for selling to his quota; and now he earns an additional $50,000 for being a top performer. Some plans pay 300% of target incentive – it’s up to the company to decide, but the amount of upside potential is usually determined by the competitiveness of the market to attract and retain top performers and the margins of the business to sustain a certain level of pay for top performance.

 
To me, this is what makes upside potential so interesting: Without the upside potential, the incentive compensation plan favors the company, because it only pays up to quota. The risk is all assumed by the rep; if she doesn’t make her quota, she won’t earn her total target compensation. But if she knocks her quota out of the park, she’s not rewarded much more. Upside potential balances out the risk and reward equation for the rep, making it worthwhile for the rep to put that pay at risk rather than just take a flat salary.

 

Believe it or not, some companies have very little to offer reps above quota. There’s minimal incentive to reach beyond their goals. In the case of our earlier example, the employee seeks a job with a company willing to pay her upside.

 
Let me know if you’ve seen examples of upside well used — or a company that doesn’t believe in it.

 

 

To learn more, please visit SalesGlobe.

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by Collette Parker on October 11, 2012  •  Permalink
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Posted by Collette Parker on October 11, 2012

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What’s So Great About Pay Mix?

According to the founder and CEO of a large, public communication company, incentives are everything. “The vast majority of people in companies work for two things: ego and money,” he has said. “What are we incented to do? How are we incented to behave? Incentives drive trained behavior. Period. We don’t spend enough time on getting it right in our company, and I guarantee not enough companies do. As a CEO, I have to hear my CFO and the finance department say, ‘Well you can’t do that because we can’t afford it. We can’t have that much incentive pay.’ That’s absolutely ludicrous. It’s not a question of affordability; it’s a question of sustainability.”

It’s a great point. The sales organization drives the bottom line, whether finance likes it or not (with respect to finance organizations everywhere). And sales people are motivated by their potential earnings. Would a great sales rep work just as hard and bring in as many deals if he were paid a flat salary? Yes, many of them would, but he or she would probably be looking for a new job at the same time.

So how can you responsibly incent, and pay, for the best sales teams out there? Through the correct pay mix and upside (We’ll talk about upside next week).

Pay mix, which refers to the portion of base salary and target incentive an individual in a job earns at quota, is usually the single most influential driver of behavior for a salesperson and the largest financial decision for the company. It establishes the company’s commitment to fixed (base salary) and variable (incentive pay) costs while setting the stage for upside payouts for high performers. A job may have a sizeable portion of pay or a modest portion of pay in target incentive, which reflects the desired role and, if designed correctly, will motivate the right types of behaviors.

Your company may have three job roles – for example, new customer acquisition, current account penetration, and current account management – which may earn the same amount of target total compensation for at-quota performance (let’s say $100,000), but they may earn that pay in different proportions. Those proportions of salary and incentive are affected by factors that include the sales role and sales process. But each type of job should have a pay mix that motivates the right type of behaviors for that job.

A new account acquisition role will usually have a relatively aggressive pay mix, say 50 percent salary and 50 percent target incentive. While their DNA will naturally drive the rep, significant pay at risk supports the types of hunting behaviors we want to encourage with this role. A more complex sales process will sometimes lower the percentage of pay at risk to enable the rep to work through the intricacies and duration of the process as well as multiple buying points in the case of global accounts or government accounts. As new customer acquisition is usually the most expensive type of sale, an aggressive pay mix also puts a large portion of pay in variable cost rather than fixed cost which lessens risk for the organization. However, with risk comes potential reward for the rep. Pay mix carries with it a corresponding amount of upside potential for top performers, usually in proportion to the pay at risk. Total incentive earnings for a top performer may be 200 percent, 300 percent, or more as a percentage of target incentive. If a person in this role earned $100,000 in a year, he would earn $50,000 in base salary and $50,000 in incentive pay. (We’ll discuss upside potential and differentiating top performers later.)

A current account penetration role is busy building relationships and may have a moderate pay mix with 70 percent of pay in salary and 30 percent in target incentive. We want to motivate performance but not typically with the level of risk and corresponding aggressiveness as the new account acquisition role. To maintain a balanced customer solution orientation and achievement orientation, most organizations will offer a pay mix somewhere between 70/30 and 80/20. If a person in this role earned $100,000 in a year, she would earn $70,000 in base salary and $30,000 in incentive pay. This role also receives upside potential relative to the pay she puts at risk.  

A sales role concentrating on customer service and revenue retention will usually have a relatively shallow pay mix, for example 90 percent salary and 10 percent target incentive. This minimal risk allows him to have the patience to work through customer challenges and strengthen relationships without the stress of trying to close the next sale. A role of this type with a more complex sales process will usually have a shallower mix than someone with a more transactional sales process, as the complexity will add to the time and patience required to work through creating the right customer experience. If we use a pay mix with too much incentive relative to base, we run the risk of creating a very anxious rep concerned more about attaining a sales result quickly than serving the customer correctly. If a person in this role earned $100,000 in a year, he would earn $90,000 in base salary and $10,000 in incentive pay.

More about incentive pay and upside next week.

To learn more, visit SalesGlobe.

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by Collette Parker on October 3, 2012  •  Permalink
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Posted by Collette Parker on October 3, 2012

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Doing Away With Quotas

Ah, quotas. Can’t make people like them, can’t achieve goals without them. Or can you?

We recently spoke to a sales executive who told this story:

“Several years ago our sales force for one of our business lines was cut from 25 reps to 15, but the quota went up. The sales leader was bold, and he had some bold leadership traits. He walked in to the meeting and said, ‘I’m doing away with quotas. I don’t know what the right number is. I know you guys are the best of the best and it’s a big market. Now, my number, is $100 million, and there are 15 of you. So you can all go figure it out if you want. But there are no quotas and I’m not measuring to a quota. I want to see what we’re capable of as a team.’

‘And then he said, ‘Give me a list of what’s getting in the way of your success.’ The reps came back and said, ‘Titles,’ so he changed all their titles. And guess what happened that year?  They sold about $127 million, best number ever, highest per person, and we never set a quota for anybody. The organization had a target and there were a certain number of people, but there were no incentives at the target. It was paid off of what you drove home for the business. To some extent he set the people free. It was a powerful enablement, to say to your people, ‘You’re the best of the best, and I just don’t know how good you can be.’ He’s a motivator and a very good team builder, and kind of an impassioned leader. I don’t think everybody can get away with that.”

Could your sales organization get away with it?

 

To learn more, visit SalesGlobe.

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by Collette Parker on September 28, 2012  •  Permalink
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Posted by Collette Parker on September 28, 2012

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Unless the CEO is Designing the Compensation Plan Himself

The sales compensation plan has to align with the overall business strategy, and the overall business strategy generally comes from the top. So unless the CEO is designing the comp plans himself, there needs to be some translation of that strategy to the people working on the comp plan. 

To help direct those conversations, think about the goals of the business in five different dimensions: the customer dimension, the product dimension, the market coverage dimension, the financial dimension, and the talent dimension. Articulating the goals in each of these five areas from the C-level to the organization helps to simplify the overall strategy. 

Continue reading this on our new blog.

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by Collette Parker on August 20, 2012  •  Permalink
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Posted by Collette Parker on August 20, 2012

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Compensation Caboose

“I like to say that the comp plan is the caboose, not the engine,” says the director of human resources and compensation of a Fortune 500 company. “Compensation should never be driving the strategy. The strategy drives the compensation. All very cliché, but it’s incredible – especially in times of stress – how that message can kind of get lost.” Click here to continue reading on our new blog.

 

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by Collette Parker on August 20, 2012  •  Permalink
Posted in Uncategorized

Posted by Collette Parker on August 20, 2012

http://salesglobeforum.wordpress.com/2012/08/20/2-compensation-caboose/

Compensating for Beer

It’s hard to believe convenience store beer can teach us something about sales compensation and strategy alignment, but it’s true. I’ve seen it.

Several years ago a major brewing company hired us to help compensate their driver sales reps according to their new sales strategy. The reps used to be charged with delivering beer to restaurants and convenience stores and basically rotating the stock.
Finish reading it here, http://wp.me/2ASxu

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by Collette Parker on August 7, 2012  •  Permalink
Posted in Uncategorized

Posted by Collette Parker on August 7, 2012

http://salesglobeforum.wordpress.com/2012/08/07/compensating-for-beer/

For the C-Level

Late last fall, a group of senior sales leaders of a high-tech hardware company found themselves stuck. Their problems began 10 months earlier when the sales leaders embarked on their annual sales compensation review and design cycle. They went through the rounds of interviews and surveys with the sales organization, worked through alternatives for the plan, and arrived at a final set of compensation designs in early winter. The CEO, Edward, heard updates throughout the design phase and deferred to the executive steering committee. It was a long process that year because the company had shifted its focus slightly to include some additional software that complemented its hardware products. The sales leaders worked through the complexities with the executive steering committee and kept the sales compensation program relatively simple. The CEO continued to receive updates and defer to the executive steering committee.

As November passed, the sales leaders met with the executive steering committee for final review and approval of the new sales compensation program. The plan had been financially modeled for any imaginable situation, but it still had to be communicated to sales directors, sales managers, and opinion leaders in the field. All that remained was the formality of getting the CEO’s “nod.”

“What do they say about the best laid plans,” one of the SVPs of sales asked rhetorically. “We had the presentation down. It was very simple: a few pages, big diagrams, the strategy, where we are now, and what we’re going to change. Edward had already seen it all, in pieces, as we designed it. But we got a few pages into the presentation, and he started asking questions that sounded like he hadn’t seen the plans before.”

The other SVP chimed in. “The first question was about our planned mix of software and services by segment, and why we didn’t have an incentive measuring that for each rep. We talked about that a number of times with the executive steering committee months earlier and agreed to keep it at the sales management level and have them manage it during year one until we had some reliable numbers to set goals. Then Ed started digging into the financial modeling and challenging us about why the plan would pay more than the targeted cost of sales if we hit our company goal on average but had a lot of high performers. The team had agreed on the above-quota accelerators, and that’s what happens with accelerators. There were a bunch of other questions after that but I started to get a little irritated, because it was clear that Ed just wasn’t connected. We worked hard on keeping him informed, but when he finally locked in, we were at the end of the game. We ran this program by the field, we worked through all the details, and now it’s like we’re starting back in September and it’s practically December. So, we need to make some adjustments pretty quickly to keep the wheels on this thing for January.”

C-level executives get involved in various ways during the sales compensation process. Too much involvement too late can wreak havoc on the labor-intensive and time-consuming design process. It can also undermine the heavy lifting already done by the design team and the confidence the C-level has placed in the team. On the other hand, zero C-level involvement isn’t the right strategy, either. While the compensation design team may be brilliant, a brilliant sales compensation plan must line up with the vision for company-wide growth, which most often must come directly from the corner office.

We recently looked at C-level participation across a range of companies and found in 82% of companies high-value involvement peaks at the start of the process to provide strategic direction and 55% provide guidance on the priorities of the compensation plan.

According to our survey, 23 percent of C-levels participate periodically in design team meetings. However, most C-levels and their teams give caution about getting too involved in the details. It pulls the C-level out of his area of strength and sometimes turns him into the bull in the China shop. About 36 percent of C-levels get involved in the details occasionally, but very few (about five percent) get involved in the details frequently. For the inquisitive, high-IQ CEO or president, it takes a certain level of self-control, and team reinforcement to prevent this from happening.

How can you determine the right involvement points for a C-level executive in your sales compensation design process? How do you ensure his or her engagement?

What Your CEO Needs to Know About Sales Compensation will be available in bookstores and on Amazon.com and Barnes & Noble.com in January 2013. If you would like to pre-order a copy for a discount, please click here. Let us know you pre-ordered and we’ll send you a sample chapter!
To learn more, visit SalesGlobe.

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by Collette Parker on July 31, 2012  •  Permalink
Posted in Articles, Open Forums, Sales Compenation, Sales Compensation, Sales Leadership, Sales Operations, Sales Strategy

Posted by Collette Parker on July 31, 2012

http://salesglobeforum.wordpress.com/2012/07/31/4-the-c-level/

Battle Questions

For literally millions of reasons ($), sales compensation deserves attention from the C-level. How the plan is structured, who gets paid for selling which products or services, and understanding what the ROI is. But senior leaders – from chief executive officers to chief sales officers – usually sit so far above the day-to-day operations they ask only the most general questions, if they ask at all. They miss the opportunity to employ sales compensation as a powerful tool to steer the performance of the sales organization and help achieve their business goals.

Below the CEO, sales compensation has long been a point of conflict in the organization. While its impact can be direct, the compensation plan is a fine blend of art and science. Everyone has an opinion about sales compensation and everyone is an expert, yet few agree on the best approach to drive performance toward the company’s objectives. Sales, sales operations, human resources, and finance regularly engage in battles over questions like:

• Does the plan represent our business objectives?
• Are our highest paid sales people actually our top performers?
• Is the plan too expensive?
• Can we better motivate our organization to pursue the sales strategy?
• How can we promote more of a performance-oriented sales culture?
• Can we make the plan simpler to understand?
• Can we make the plan easier to administer?
• Are sales quotas penalizing our best performers?
• How can we set quotas that better represent the sales potential in our markets?

Too often, these battles lead to sales compensation programs that are compromises between parties, ultimately leading to underperformance in the business. Too many senior executives, concerned about the next quarter and the remainder of the year, miss opportunities to use sales compensation as tool to drive growth.

Where do your challenges lie? Does your C-suite get involved?

What Your CEO Needs to Know About Sales Compensation will be available in bookstores and on Amazon.com and Barnes & Noble.com in January 2013. If you would like to pre-order a copy for a discount, please click here. Let us know you pre-ordered and we’ll send you a sample chapter!

To learn more, visit SalesGlobe.

Shortlink: http://wp.me/p2ASxu-r
For literally millions of reasons ($), sales compensation deserves attention from the C-level. http://wp.me/p2ASxu-r

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by Collette Parker on July 23, 2012  •  Permalink
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Posted by Collette Parker on July 23, 2012

http://salesglobeforum.wordpress.com/2012/07/23/the-balancing-act-2/

The Balancing Act

“All of America trusts us with their bugs, but we can’t get the right message through to our sales force,” the chief marketing and sales officer of a national pest control company recently mused. As an executive, he had cut his marketing teeth at many big consumer products companies. At his current company, he had worked for several years to improve sales productivity and had recently reached the level labeled “sales incentives” where he was charged with motivating the sales force. But there was a problem.

“For a long time we assumed we had a good sales incentive program. But we got all out of balance with profit and growth. We were rewarding for great profit margin, but poor growth,” he says.

President’s Club was a perfect example. Each year the company invites the top ten percent of sales people to President’s Club. It is part reward – usually a trip is involved – and part recognition as peers and upper management get a chance to congratulate the top performers.

But last year at President’s Club amid the festivities…

Finish reading here: http://whatyourceoneedstoknow.wordpress.com/2012/07/17/the-balancing-act/.

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by Collette Parker on July 17, 2012  •  Permalink
Posted in Sales Compenation, Sales Leadership, Sales Operations, Sales Strategy

Posted by Collette Parker on July 17, 2012

http://salesglobeforum.wordpress.com/2012/07/17/the-balancing-act/

Generations: Baby Boomer versus Millennial

So, there you are, managing a company of 20 something’s and every day you ask yourself, ‘what are these kids thinking?’  Your dinner discussions are centered around the idea that an employee would actually send you a text message to let you know he is sick and won’t be coming in to work and how the ‘young guns’ honestly can’t understand why being in the office is necessary.  You are not alone!  Baby Boomers all around the country are discussing these issues.  The SalesGlobe Forum (formerly The Sales Leadership Forum) recently held a panel discussion centered around the now, four generations workplace.  Interestingly enough, we walked away with a better understanding and appreciation of the methods behind what a baby boomer would call madness acted out by the Millennials. One of our presenters from our forum at SMU states she “got a call yesterday from a managing director at Goldman Sachs who had just interviewed one of [SMU’s] top finance students, and the student did exceptionally well…Then walked out of that interview and texted the Managing Director. I guess the Managing Director may have his cell phone number on his business card, I’m not sure how the student got it — but texted the managing director using things like “thx,” you know, “Thx for the interview. Hope to c u soon.” (The SalesGlobe Leadership Forum at SMU, February 15, 2012).  Catastrophic, right?  Not so, if you are a Millennial.

This makes many of you cringe, we are certain, but we also have to recognize that this young Millennial was actually, in his mind doing the right thing by making it a priority to say thank you, yes, in short hand, but short hand has become an actual form of language these days, and the Millennial might even believe he is efficient for using such abbreviated language.

The Baby Boomers generational  characteristic is optimism and often times  very vocal. While young, they protested, were vocal about their opinions and feelings, and then when the time came, they snapped out of it and grew up.  Baby Boomers recognized they  had a life to take care of, family’s to be a part of, babies to raise, careers to mold, that no longer left time for being a protestor at every rally imaginable.   Baby Boomers “tend to be workaholics, very loyal, want to achieve and be recognized and are  fairly materialistic, or at least to their children they appear to be” .

Baby Boomers are still embracing technology (or running from it) while the Millennials act as though it is an appendage they were born with, nearly everything a Millennial does involves the latest technology. 

So, I pose this question, how have you, as a baby boomer actually handled and mentored a millennial employee?  Do you throw your hands up in the air, do you try and teach them your way, or do you actually try to better understand where they are coming from and tweak the workplace to help a millennial to not only make it in the world, but to be successful?Image

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by Collette Parker on May 22, 2012  •  Permalink
Posted in Uncategorized

Posted by Collette Parker on May 22, 2012

http://salesglobeforum.wordpress.com/2012/05/22/generations-baby-boomer-versus-millennial/

2012 Staffing Industry Sales Force Compensation Survey

 

We are pleased to announce the 2012 Staffing Industry Sales Force Compensation Survey, the exclusive benchmark of pay practices for the staffing industry, has launched! We invite you to participate.

This survey is a landmark study of sales compensation and job roles and is the only compensation benchmark exclusively for staffing firms. Last year 60 large, mid and small staffing firms participated in the survey, including Robert Half International, Randstad, and Adecco.

Please use the link below to access the survey:

http://www.surveymonkey.com/s/2012SalesCompJobsSurvey

 Only survey participants will be able to see the final results. Staffing firms can use this report to benchmark their sales organizations.  The 2012 Staffing Industry Sales Force Compensation Survey covers major sales and recruiting roles, pay practices, and performance data for the industry’s leading companies. Topics include:

  • Key job roles for new customer acquisition, account management, and recruiting
  • Hybrid sales, operations, and branch management roles
  • Target and actual compensation levels
  • Pay ranges
  • Incentive levels and pay mix
  • Upside earning potential for high performers
  • Performance metrics and priorities
  • Commission and quota mechanics practices
  • Quota levels and practices
  • Productivity levels
  • Plan administration and challenges

Participants and Report

As a thank you for your participation, we will provide you with a complimentary copy of the Participants’ Survey Report for your use. This detailed report will include statistics on roles, pay levels, and performance levels by job type. All statistics are reported at a multiple company level and preserve the confidentiality of participating companies. The report also includes information on key challenges and trends around performance, compensation and year over year analysis.

The data you will need to complete this survey includes:

  • Basic information on company size and focus areas
  • Information on the roles of each major sales management and recruiting job. NOTE: Participants will only provide date for the job relevant to their company.
  • Most recent year’s compensation data for each role, which should include target and actual base salaries and incentives (highs, lows, midpoints, and averages for the people in each job role)
  • Information on the types of performance measures (e.g., revenue, gross profit, product mix) used in each compensation plan
  • Information on the types of mechanics (e.g., commission, bonus) used in each compensation plan
  • Information on approximate quota size for each job
  • Descriptions of any rewards and recognition programs used by your company
  • Description of how you administer the compensation plan    

 If you have your sales job and compensation data available, this survey should take about 60 to 90 minutes to complete. You may also save your work on the survey by selecting “save and continue,” and then finish the survey at a later time on the same computer.

I am happy to provide an Excel spreadsheet that matches the survey questions to help you gather and track the information needed to complete the survey. Please email me at cparker@salesglobe.com, or Eileen Gold at egold@salesglobe.com.

Please contact me at cparker@salesglobe.com if you have any questions or concerns regarding the 2012 Staffing Industry Sales Force Compensation Survey benchmark study.

Thank you for your participation!

 

 

 

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by Collette Parker on April 6, 2012  •  Permalink
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Posted by Collette Parker on April 6, 2012

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CEOs and Incentive Compensation – Partners or Strangers?

Do CEOs become involved in the design of incentive compensation programs, or just pop their head into a meeting and ask, “Will this cost me more or less than it did last year?” Are there advantages to either approach?

Somewhat surprisingly, in a lot of large companies we see CEOs or presidents that are very involved in the compensation design process.  It doesn’t mean that they’re getting down to the details of the process – modeling numbers and trying to be creative about SPIFFs.  What it means is that they are giving strategic direction and staying informed throughout the process. 

We recently worked with a large telecom company whose CEO is really involved in the sales compensation design process – for thousands of employees and a lot of different job types. It’s an important message for the CEO to communicate, and it’s a positive reinforcement to the sales and sales operations organizations that there is indeed a connection between the c-suite and the front line: incentive compensation.

In our experience, a C-level executive generally asks questions about how the business priorities are represented in the compensation plan.  One key question is: are the problems associated with the comp plans really compensation issues or are they broader sales effectiveness issues? Sales compensation kind of has a magical quality. It’s a tactical program that churns up more strategic issues. For example, a problem that may first be blamed on a poorly designed sales compensation plan might really be the fault of vague and uncertain job roles.  Sales compensation demands specifics, and because of that it can quickly identify other issues – kind of like a circuit breaker that pops. 

So how do you get the C-level involved?  Some CEOs are naturally involved, some are not.  Often the CEOs who came up the organization through sales have more engagement. CEOs with a background in finance might be more interested in the cost rather than the potential to incent behavior.

It’s worth consideration. Several years ago we designed a new sales compensation program for a manufacturing company. Right before we were supposed to interview the CEO, the project leader, who was the head of sales, stopped us and said, “I’ve got to tell you that the CEO doesn’t know why we need to meet.”  I couldn’t believe that the leader of this organization really didn’t understand the importance of the program.  We had the meeting, and about half way through the CEO got it. Ever since he’s been very deeply involved. 

The CEO connection is critical for the sales organization, in terms of strategic involvement. Whether it comes naturally or has to be coerced, it’s a worthwhile partnership.

Talk to us! Please complete a brief, three-question survey about C-level involvement at your company and we will share the results with you. Click here for the survey link.

Please visit SalesGlobe for more information.

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by Collette Parker on March 12, 2012  •  Permalink
Posted in Sales Compensation, Sales Leadership, Sales Operations, Sales Strategy
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Posted by Collette Parker on March 12, 2012

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Sales Roles – Is Simplicity Possible?

It seems like a simple concept – the role of a sales rep – especially when we apply straightforward labels like “hunter” or “farmer;” or our favorites, “Dobermans,” “Retrievers,” and “Collies” (actually, we go on to include Service Dogs, Pointers, and my personal favorite, the Mutt. That’s a topic for another blog). These labels distinctly describe what the role will do.

But as we all know, humans are complex and tend to defy such pigeonholing. So we go beyond the label and design territories and customer segments. Which methods of clarifying the sales role will increase productivity?

We recently worked with a company who had to take five different sales organizations they had acquired over time and create one functional sales organization. Within that entire sales function there were 35 different job titles. They took several steps to simplify.

 

1. Clarifying the Role. Everybody sort of approaches this a little differently.  This company, a major retailer, began with a certain role, clear responsibilities, and a job title. They made everybody very clear on what their operating objectives were.

2. Matching Products and Customers. Then they made sure each role had the right products for the right customers. There are customers in their business that are very sophisticated, and ones who aren’t at all. At the time, this company was trying to move their organization from a transactional sale – “You can have this for a buck” – to somebody selling conceptually by saying, “This is an annual merchandising program where we are going to sell millions of those bottles of water.” Not just that item for that price.

3. Match Talent to Customers.  Another priority of this company was to increase the quality of their sales organization. You don’t want to put the wrong person with the wrong customer; for example, you certainly don’t want to take a person with a Harvard MBA and assign them to a Mom & Pop store that only wants to deal with item and price. Instead, you’d place that person – most likely a person that has tools, perspective, and strategy – with major retailers, because he or she would create business solutions.

Selling is coming down to solutions. Simplifying the role, where possible, to focus on matching the right customer with the right products and the right talented sales rep – the ones that understand the customer – will create points of difference for your organization.

To learn more, visit SalesGlobe.

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by Collette Parker on February 29, 2012  •  Permalink
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Posted by Collette Parker on February 29, 2012

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Sales Roles and Productivity II: Data-Driven Boosts

Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without the talking about the other. — Bill Gates

So what drives productivity in your organization? Is it a matter of management making the sales process easy for the reps? Is it about financial incentives?

We recently worked with an office supply company that tried the information-based approach. Knowledge is power, and while too much data can be overwhelming, especially if it’s unorganized or seemingly irrelevant, specific, pertinent information can increase efficiency. Or so the theory goes.

This company decided to look at customer composition and tried to understand what each customer would buy by product category. Then, they looked at how far that customer had been penetrated by certain product and service segments. The idea was to focus the sales organization on the clear paths of penetration.  

They were able to capture all of the data relative to what the customer was consuming. They were able to see the product details for each customer bought in the paper category, they bought in print/copy category, and in furniture. “Then the game is to maintain the spend, improve it, and get them to spend in categories that they haven’t spent in before,” said the former executive vice president for the business solutions division.

“The overall approach l was to look at the customer and map out their remaining potential. And for those who are pretty well penetrated, assign them to a different sales resource. You have to make sure your data is kept fresh; it’s a reflection of where your customer is today, not where they were three years ago, because things change quickly,” she said.

How do you use information to increase productivity in your sales organization?

To learn more, visit SalesGlobe or attend one of our free webinars.

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by Collette Parker on February 26, 2012  •  Permalink
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Posted by Collette Parker on February 26, 2012

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Sales Roles and Productivity I: Follow Me

 

Let’s acknowledge that different sales roles have different definitions of productivity. For example; the transactional sales rep selling local advertising with a quota of two sales per week will have a very different schedule than a long-term consultative sales rep selling an expensive piece of technology.

Different types of sellers, different characteristics to their productivity. Demanding a rep with a sales cycle of two years to close deals more quickly probably won’t result in more sales. More likely, it will annoy the potential customers and send your rep looking for another job.

So how can you define productivity in your organization and differentiate it between sales roles?

We worked with a company that recently made a change to build more of an account management focused organization because so many of their people concentrated on just hunting.

But they were in a new market, and both management and the reps were a little disoriented. So, in order to help the reps, the managers temporarily took over the selling. They broke the market, did the major hunting, and passed it along to the reps for account management.

“We said, ‘We’ll go find the customers, we’ll develop the pattern, how they buy, what the customer looks like, persona, cycle,’ everything,” said the vice president of marketing for the company. “And we’ll train the salesman. We will get the first order, we’ll teach you how to do the second order, and then you’re on your own for the third order.”

“We built a war room down on the first floor and started going through this whole process of building this together. The reps wanted to know what we were doing in there, and we said, ‘You focus on the day job. Don’t try to create this new market. Because then, you’ll lose focus, you won’t make quota, and we will go broke as a company.’

“So, we said, ‘We’ll teach you how to do this and add it to your portfolio.’

“There were questions like, ‘Will I lose quota? Will you take business from me?’ So, we had to work through all of those territorial things that we as sales people like to hold on to.”

It was an interesting concept. This company, a major technology company, didn’t put the salesperson out and say, “Go develop the business in this particular area.” They prepared it for them. They went through the process with them, and then repeated it, and let them catch on that way.

“We knew that the first time we were going to get our nose bloodied. We had to understand how the deal happened,” he said. “There were things we didn’t understand when we got started. Our sales guys got chewed up. We figured out what the pattern was, and learned that we had to develop it, and then hand it off to that organization.”

How well would a practice like that work in your organization?

To learn more, visit SalesGlobe or register for one of our complimentary webinars.

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by Collette Parker on February 21, 2012  •  Permalink
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Posted by Collette Parker on February 21, 2012

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Using Customer Insight to Become More Productive

 

We all want to please our customers. But how many of us regularly ask them exactly what they want, versus assuming we know how to please them and proceed about our merry way?

Several years ago SalesGlobe hosted a panel discussion about selling to strategic accounts, and one panelist, who had sold to a major grocery chain for years, recalled the impact of hearing the following sentence:

“You know Tom, it’s great when you sell to us how you want to sell to us. But it’s even better when you sell to us how we want to buy.”

 Simple, yet transformative.

How do you evaluate customers and understand what they are looking for? The goal is to use customer information to become a more productive sales organization. How do you look at the market and where it’s headed for competitors? Are there ways of getting insider information that can improve business results, either in terms of the metrics we’re looking at or what we’re hearing back from customers?

Of course, the more we can partner with our customers the more we can drive productivity together. Partnerships and productivity gains are interwoven. At every front, to listen to the customer – logistics, processing, procurement, billing. Partnering in any way possible to create solutions together will improve our productivity and continue to provide great service. Opening up the entire organization from every functional expert to become more efficient for your customer will help you be successful together.

A client we worked with recently held a partner conference to better understand the needs of their customers. They gathered the CIOs of their top 13 customers into one city for two days. The goal was to listen to their customers and understand not only what the sales people are hearing the market, but why they’re hearing it.

Many companies get voice of the customer in pieces and parts, but we have to amass that information. Once amassed, analyze it for patterns and movements in terms of what we’re missing relative to customer expectations. Why are we losing deals and why are we winning deals?

What practical methods have you found for gathering customer insight and using it to drive productivity?

To learn more visit SalesGlobe.

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by Collette Parker on February 7, 2012  •  Permalink
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Posted by Collette Parker on February 7, 2012

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Sales Productivity Checklist

Sales productivity doesn’t exist in isolation. A sales organization can’t move forward (and in fact can spend lots of time moving in circles) unless its sales strategy, sales coverage model, and sales enablement methods are all well aligned. Before you start calling on customers, ensure the high-level picture is complete with the following checklist:

 1. Insight. The sales organization must understand what’s happening in the market, especially concerning their competitors and customers. Insight can be gathered through forensics on deals won or lost, and by analyzing what we might do better next time. This information is especially valuable if we uncover a pattern within the sales organization of not meeting customer needs or a gap between their expectations and our delivery.

 2. Sales capacity. Sales capacity refers to how efficient we are with the resources we have, and asks how we can maximize their capability through alignment, focus, and sales process. What are our job roles? One very effective method of increasing sales capacity is to decontaminate sales jobs and open up more sales time. Sales capacity is also improved through shifting and lifting jobs: moving some people to cover high priority customers with strategic selling while we ask other roles to focus on transactional selling.

 3. An actionable strategy. Sales strategy defines a clear plan for how the organization can achieve its sales goals. How do we convert our overall business strategy to the sales organization? How do we translate that strategy into day-to-day tactics, and help the reps understand what they’re supposed to do Monday morning when they go out and start  calling on customers? The most sophisticated strategy in the world won’t work unless it can function well on the front line.

 4. Account planning. Defining sales productivity also means understanding our actions that are counter-productive. It is not productive to spend a day (or several days) documenting facts, figures, and guesswork about customers and then shelving it for six months. Account plans that are not used in the daily or weekly management of customers are a waste of time. How can we turn our account plans into living account plans, and use them not only to record critical information but as a basis for coaching?

 5. Sales compensation. Incentive pay can certainly be used to motivate productivity in individuals. The opposite is true, too; people incented to do the wrong thing can lead to an unproductive sales organization as a best case scenario, all the way to a sales organization confidently charging in the wrong direction, as a worst case. Short term incentives including SPIFFs are another way to motivate productivity.

 6. Pipeline. Over the last few years, pipeline management has become much more efficient. This is in part due to the need for more effective lead management in a challenging environment and better application of CRM tools.

 Need help getting greater productivity from your sales organization? We can help here. To learn more, visit SalesGlobe.

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by Collette Parker on January 30, 2012  •  Permalink
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Posted by Collette Parker on January 30, 2012

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Managing a Multi-Generational Sales Force

For the first time in US history, four generations are working side by side, representing a 50-year age and experience span. On the upside, companies benefit from the range of experience and unique views those decades provide. On the downside, each generation has varying cultural and motivational expectations driving their work ethic and behavior.

You might find some of these defining characteristics in your sales organization:

  • The Traditionalist (born between 1927 and 1945). Punctual and conservative, he survived the Great Depression and a world war and believes hard work is its own reward.
  • The Baby Boomer (born between 1946 and 1964). Well-established, loyal and work-centric, he values face time in the office rather than work/life balance.
  • The Generation X-er (born between 1965 and early 1980s). Witnessed the burnout of his parents; hardworking and ambitious, he prefers to set his own hours and values freedom, autonomy, and family time.
  • The Generation Y-er (born in 1980 or later). Smart, creative, optimistic and tech-savvy, she is a multi-tasker who prefers technology over face-to-face interactions. Don’t waste her time making her come to your office.

The challenge is, of course, to aligning these generations toward a common sales goal; and  motivating and retaining talent in each of the generational groups to give your company a talent and performance edge. 

It’s important to start with some insight:

  • Understand who’s in your sales organization.
  • Recognize the factors that matter most when managing the generations.
  • Prevent traditionalist, authoritative management from wreaking havoc on Gen Y achievements.
  • Enable each generation in a larger sales strategy context.
  • Recruit and retain the talent that you need.
  • Set expectations and create effective incentives for each generation.
  • Understand how coaching and development can help the generations to work together.

To learn more, visit SalesGlobe.

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by Collette Parker on January 25, 2012  •  Permalink
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Posted by Collette Parker on January 25, 2012

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That Thing Starbucks Does…

Sales is no longer just about the product. It’s about the entire customer experience. Consider how companies like Starbucks and Apple have differentiated their brands: it’s not just the coffee; it’s the personalized service and welcoming environment. It’s not just the computers; it’s the opportunity to schedule an appointment with a concierge to learn about the latest and coolest technology. These interactions didn’t happen accidentally – they have been designed in a highly creative way.

Your organization, by plan or by default, creates a customer experience. Your customers, in turn, respond to that experience with their loyalty (retention revenue), growth (penetration revenue), and referral of new customers (acquisition revenue).

We’re offering a free webinar that will focus on methods to evaluate the current experiences of your customers, and implement creative ways to improve those interactions and differentiate your organization. Attendees will learn how to advance customer connections from Interaction, to Engagement, to Relationship.

SalesGlobe and The Sales Leadership Forum are pleased to sponsor this complimentary webinar session featuring Mark Donnolo, Managing Partner of SalesGlobe, and Ron Cox, CEO of Tailwind Consulting and former CEO of Acclivus and AchieveGlobal.

Topics we will address include:

 

  • Customer experience within a larger sales strategy context.
  • Understanding how customers see your organization.
  • Understanding how your customers respond to the experiences you currently create.
  • Identifying all of your customer touch points.
  • Building a set of planned interactions across all of those touch points.
  • Leveraging the creative process to create a distinct and differentiating environment for your customers. 
  • Customer experience within a larger sales strategy context.
  • Customer behavior assessment  – Understanding how customers value your organization by how they behave.
  • Clue analysis – Identifying critical clues to indicate how you might improve.
  • Designing the right customer experience.
  • Building a set of planned interactions across your key touch points.
  • Creating a consistent experience across your sales organization.
  • Leveraging the creative process to create a distinct and differentiating environment for your customers. 

 

Register here today. Or, to learn more, visit SalesGlobe.

 

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by Collette Parker on January 16, 2012  •  Permalink
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Posted by Collette Parker on January 16, 2012

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Coaching the Coaches

 

Sales training and development can make or break an organization. Whether auditing your existing program or designing something from scratch, it doesn’t have to be hard. We recommend the following five key points:

1. Leadership must make the mandate for coaching clear. If coaching is not a priority in the organization, it will only be conducted by those who are interested. Many of the top performing sales organizations around the world require that their managers spend target amounts of time weekly on coaching. To ingrain the process in the organization some companies will go as far as requiring managers to post their coaching time on a public calendar, making it visible to the organization. Like most business priorities, coaching has to be viewed as essential by leadership in order for managers to make it a priority in their own jobs.

 

2. Build a coaching program and methodology that fits your organization. Using a standard coaching program – one off the shelf or one being used by another company – is certain to fail. A program that is a good fit for one organization may be a poor fit for your organization. Determine the priorities for your coaching program. Understand from a customer perspective where your weak points are and engage your leadership team in developing the right program for your business.

 3.      Decontaminate your management roles and your sales roles. One of the greatest robbers of coaching effectiveness is lack of time. Define the top three to four critical roles for your sales managers. Make coaching one of those critical roles and determine the amount of time managers should spend on coaching. Identify any other roles – good or bad – that managers play or tasks that managers conduct and perform a value-added analysis on those tasks. For low value tasks for the manager, either eliminate those tasks or shift them to the right resource to make time available for coaching. Conduct the same type of decontamination process for sales roles to increase their available time to sell. The average organization spends 50% of time selling. Identify your actual performance and set an achievable improvement objective.

 

4.      Lead ongoing deal level coaching with the team to challenge thinking. Take coaching down to the micro level, developing strategies for key customer pursuits. Use the sales pipeline as more than a review tool and leverage it for coaching. This can provide new accountability for pipeline management and challenge thinking around specific deals. It is also effective for collaboration between the sales rep and the sales manager so that coaching has a purpose and an objective: to close the deal.

 

5.      Make the process transparent and measurable, including deal forensics, win/loss analysis, and living account planning. What gets measured gets accomplished. If you are not measuring the effectiveness of your coaching program, you risk missing some significant returns. Key to transparency and measurement are tools that provide customer responsive information to coach with. Deal forensics or win/loss analysis looks at major lost deals from the customer perspective and why we lost them. It helps us identify areas for improvement that can be used for coaching the sales team and making strategy changes in the organization as a whole. Living account planning takes the stagnant account plan off the shelf and assigns a process and goals to working the account plan on a weekly basis. The living account plan can be used by managers as a coaching tool to set objectives, track reps according to attainment of those objectives, and coach them to improve their results.

 

For guidance or help on building your coaching program or coaching your managers and reps to a higher level of sales performance, continue the conversation or visit SalesGlobe.

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by Collette Parker on January 11, 2012  •  Permalink
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Posted by Collette Parker on January 11, 2012

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It’s Good For You: Coaching and Development

Sales training and development can be a little bit like eating your vegetables. Or exercising. You know it’s the right thing to do, but the excuses are so easy and there’s never enough time.

But as 2012 kicks off there’s really no better way for sales organizations to achieve goals than through coaching.

It’s a critical role for sales managers. Despite its importance, however, it’s under-practiced in many organizations. Sales managers don’t coach for one of two reasons; they don’t have the time, or they don’t know how to do it. But balancing out the role between sales and sales management is crucial to allow bandwidth for coaching time, and setting priorities for sales managers is the first step.

Most companies realize how important sales coaching is. In a recent survey conducted by The Sales Leadership Forum, 84% of companies perceive coaching as either “very important” or “one of the most important factors of sales success” for their organizations. But are sales organizations really interested in doing the work? Surprisingly, although sales people often take a cynical view of training, most sales people are open-minded when it comes to coaching and development that contributes to their success. In fact, 75% of sales leaders see their organizations as receptive to coaching.

If coaching and development are important, what are the benefits? Many of these same companies (44%) aren’t clear on the benefits and don’t measure the effectiveness of their sales coaching programs. Of those who do measure the effectiveness of coaching, the top benefits they see from their coaching programs are:

  • ·         an increase in sales productivity per rep
  • ·         an increase in close rates
  • ·         an increase in their ability to cross sell or sell complex solutions or complex products
  • ·         an increase in revenue or profits.

 

In terms of ROI, about half of companies (48%) report that they get a return greater than their investment in coaching and development, or a return multiples greater than their investment. And an additional 32% of companies at least recover their costs from coaching. 

Companies report several challenges in measuring the return on investment in their coaching programs. For example, on the “investment” side of the ROI calculation, coaching in many organizations is conducted informally at the manager level and is not practiced consistently in the field. This makes it difficult to measure the actual resources, both hard and soft dollars, invested in coaching. Also, coaching is often blended with other management roles and not clearly tracked by the organization. 

On the “return” side of the ROI calculation, the outcome from coaching is not always clear or near-term. While productivity levels and close rates may appear to be clear metrics for coaching success, those metrics may be driven by other organization and market factors in addition to the coaching program. Improvements in sales capability can develop over time as well. For instance, learning more effective methods for developing the business case and value proposition for strategic accounts may yield results months later when those opportunities naturally present themselves over a long sales process. While the effect of coaching is there, its impact may be latent for some period of time.

 

How much should a sales manager focus on sales coaching? When we ask managers about how much time they spend on coaching versus other activities in their role, we often get a puzzled look as they think about their range of responsibilities. The fact is spending time on coaching is a challenge for most managers. From the sales executive perspective most leaders (63%) think their sales managers should spend between 30% and 40% of their time on coaching.

 

But the reality is most sales managers spend less than 20% of their time coaching. That statistic illustrates a gap of about 60% between how much time managers should spend coaching their organizations and how much time they’re actually spending. Such a large disparity may indicate that the message isn’t getting through from executives to managers.

 

That gap leads to the question of why managers spend so little time actually coaching. One of the biggest challenges we see in both sales management jobs and sales jobs is the time available to focus on their core responsibilities, whether they are selling or sales management. If coaching is a major priority for sales managers, then a premium portion of their time should be dedicated to coaching. That’s not the case. In fact, the top reason companies cite for sales managers not spending more time coaching their teams is they have other management responsibilities that take too much of their time.

 

A full 70% of companies say that sales managers are held back from coaching because they are too busy with other aspects of their job not always related to sales or sales management. A deeper look reveals that many of these responsibilities are administrative or operational in nature – responsibilities that do not have a direct impact on either revenue growth or development of the team that produces revenue.

 

Forty-seven percent of companies say that managers are not able to coach because other sales responsibilities take too much time. While more productive than administrative or operations activities, this indicates that many sales managers are actually selling rather than coaching. A clearly defined “selling sales manager” job may indeed have both management and selling responsibilities – a hybrid role used occasionally that is typically not as effective as a true sales manager. This allocation of sales manager time begs the question: What is the role of the sales manager? Is it managing or is it selling? High performing sales organizations understand that they gain a greater revenue impact from managers focused on coaching their teams to sell than from sales managers selling directly.

 

Time constraints can take another form. Forty percent of companies said that sales managers just do not make the time to effectively coach, meaning they are finding other things to do with their time. Perhaps they are even deliberately avoiding that ominous task.

 

We know from our research and our work at The Sales Leadership Forum and SalesGlobe that a big part of coaching comes down to the priorities of the organization. About one in seven companies (14%) do not require their sales managers to do any kind of coaching or development. If coaching is not a requirement of the organization, other responsibilities – whether they are selling or administration – will always take the front seat.

 

Beyond time, the other top barriers are around knowledge and importance. Forty-four percent of companies said managers do not know how to coach effectively. Therefore, even if they are given the time they do not know what to do with that time. Another 19% said they do not have a methodology for managers to use when they have time to coach.

 

To learn more visit SalesGlobe.

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by Collette Parker on January 9, 2012  •  Permalink
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Posted by Collette Parker on January 9, 2012

http://salesglobeforum.wordpress.com/2012/01/09/its-good-for-you-coaching-and-development/

Targeting & Segmenting Customers

A former vice president at a major office supply company recently talked to us about targeting and segmenting her customers for the sales organization.

Below is some of her wisdom and advice:

“We tried to help our sales people understand where they could get the best return. It was pretty scientific actually.   We found a way to design potential by customer size, by territory.  Really, it’s sitting down there, and it’s not glamorous.  It’s a lot of sweat equity as you figure out what the territories need to look like and then actually measuring people against that potential.  You get people who say, ‘My potential is not very good.’ Too bad.  You’ve got to get people to understand where you are going. Then they can change and you manage according to potential. 

 

We took a look at the geography, understood the customer that was set within that geography, understood what the buying habits were of the potential customer set within that group and then applied that to territory design. 

 

“It also spoke to organizational design because we had overlay organizations.  Everybody was a generalist and we had to determine what levels of productivity we could see improve with some specialization.  There was a need to get some specialization in the organization – - people who could hunt, people who could farm, education people, government people where buying cycles and purchasing patterns are unique and procurement policies are different. 

 

“But you can take that too far, and I think that’s what happened.  I would caution people to try to step back every once in a while and look at the whole forest, because those trees get in there and get you kind of confused sometimes. Eventually we knew we had gone too far. It happened over time. We got away from a sales operating perspective.  We didn’t keep a focus on ensuring that it remained clean and pure, so we ended up with all of these overlay organizations. People would tell me, ‘This is my sales territory and I’m the business development manager of this territory and, oh by the way, here’s my partner from the education sector, my partner from the government sector, my partner from copy and print, etc.’  There became so many segments that it became diluted. The cost of sales needed to be examined more closely than what it was.”

 

To learn more visit SalesGlobe; look for SalesGlobe’s upcoming white paper on Sales Productivity.

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by Collette Parker on January 6, 2012  •  Permalink
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Posted by Collette Parker on January 6, 2012

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Every Customer Happy Every Time?

Once upon a time a woman went to work for a new company. As she walked around the halls she noticed posters everywhere that read “Every Customer Happy Every Time.”

 So she went to the CEO. “What’s with all of these posters?” she asked.

 “Aren’t they great?” said the CEO with a proud grin.

 “No,” said the woman. “Every customer is not a good customer. We have to take them down. We have to take them down now.”

 It’s a common misperception. Since we all want more customers, it’s natural to assume all customers are good customers and therefore we should do everything we can to make them happy. But it’s also a way to dig yourself into a losing situation.

 One way to prevent a relationship with a losing customer through targeting or segmentation.

 Targeting customers is a practical way to look at customers differently, and can help us to concentrate in some better places.  If we’re going to line our resources up in a place, how do you know where to put them?  It’s about understanding a new market and finding the right customers in that market.  The product or service you are offering is the same, but the customer’s needs might be different. Understand what that customer’s business problem is, how they’re thinking about the problem and how you can address it. 

Do you agree or disagree that “Every Customer Every Time” is a bad idea?

To learn more visit SalesGlobe.

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by Collette Parker on January 4, 2012  •  Permalink
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Posted by Collette Parker on January 4, 2012

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Communicating Change to a Sales Team

Perhaps the hardest aspect of business communications is the timing. You’re always behind the 8-ball. So much of communication is formally announcing what people already know thanks to the rumor mill and the water cooler.

 So there’s a natural pause. “Do I really need to announce to my sales team that we’re redesigning territories? They already know it.” But avoiding that formal announcement is a mistake: it’s a missed opportunity to frame the change in positive language and directly address the natural fears associated with change.

 Before you talk yourself out directly communicating to your sales team what to expect with their new sales comp plan or job roles, consider making time for an “assessment phase” to do the following:

1. Send a clear message from leadership making a compelling case for why change is necessary now.

2. Gather input from the people who will be most affected by the new sales comp plan or territory redesign (or other change) through formal or informal interviews and/or mini-surveys.

Whether rumors have begun flying about an expected change, or you’ve just noticed a few fearful glances around the office, beginning effective communication early will usually garner a greater percentage of buy-in from people who feel they’ve been heard.

To learn more, register for SalesGlobe’s free webinar, Implementing and Communicating the Sales Comp Plan on December 13, or visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on November 30, 2011  •  Permalink
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Posted by Collette Parker on November 30, 2011

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Part III: Aligning Comp with Sales Roles

This is the second installment of a blog series on Rapid Sales Comp Design.

MARK DONNOLO: I’d like to spend a few minutes on the aligning of the sales roles and some practical thoughts on that. We do a lot of work with companies that have multiple sales roles and multiple groups for the sales compensation plan. We recently worked with a company that had 57 sales roles. I’d say they probably represented the 50th or 60th percentile in terms of complexity – certainly I’ve seen them with more than this. But this company is a good example of an organization with unnecessary complexity and too many mechanics to measure the plan.

This company had 57 unique roles and unique definitions and alarmingly unique compensation plans. You look at a situation like this and you think, “Wow. How do we make some sense out of this? Are there really 57 roles? Do we really need 57 different compensation plans?”

Sales roles and compensation plans are like tree roots. Uncontrolled they’ll branch out and organically multiply. So we took these 57 roles and sorted them by looking at their strategies and the responsibilities around the sales process and markets. That group of 57 actually sorts out into about eight different job families.

For an organization trying to manage compensation plans in this range, they become unwieldy. Each of those 57 plans had multiple measures, more than three – in some cases five or six measures. It can become really a nightmare in terms of communication and administration. It also raises questions about whether it’s really supporting the business as best as it can. Simplifying to eight job families makes a big difference.

How do you get a handle on something like this from a comp design standpoint?

PANELIST 2: I really try to keep it simple when I’m dealing with the sales leadership and even the operations leadership. I ask, “What of this is core critical?” So if we agree on
the account manager structure, in principle we try to keep it straightforward and consistent across the globe. Of course, I can see here how this actually translates into the plans that we have to operate on. We’ve got multiple variations for different reasons and nuances that each person gets approved for the exception.

I think what I try to do is to keep it as close to the core that’s been approved.  Identify why we have a nuance. We’ve done some interesting things in the matrix that we use to line up the systems we need. I try to make it as straightforward and simple for our operations teams and sales leadership as possible. “Here is what we’re using; this is the core.” We try to keep it to a select group that can manage through that and understand how that translates when you’re talking about 300+ plans.

MARK DONNOLO: Wow, so 300. That’s quite a number to manage. Do you manage that to a smaller number?

PANELIST 2: We usually start off the year with 35 different core plans, from your top management plan down to your inside sales specialist or your technical role. The reasons we’ve got so many permeations – and I’m sure a lot of other people struggle with this same thing – how the information flows determines how we design our compensation system to make that core plan work.

It doesn’t originally start off as 300. I would say we have 35 really core plans that we have designed with our leadership and have rolled out globally, and then there are variations that happen over the year. This year we’re probably closer to 200. But that’s how it happens.

MARK DONNOLO: How do you sort those out? We tend to sort it into different sales strategies: new customer selling or current account management, for example. Or, are they covering a range of products or single products? Are they specialized? Are they focused on certain segments? Do they cover a certain piece of the sales process or the whole sales process? Do they have certain technical knowledge or even management responsibility? Are they selling sales managers?

We tend to group by dimensions like that. Do you use a process to sort down to the true core roles?

PANELIST 2: Yes. It’s pretty easy once you become familiar with it. It’s sorted by management role. Usually we define it as the general management of the field, channel management, and technical management.

We’ve really got this definition of a front line vs. non-front line role. Then you’ll see which ones are more of your generalist that will receive credit for all variations. Then you’ll get into your specialists roles. So I’d say over the last couple of years we’ve gotten to the point where it’s very intuitive as to what that role will receive and what their responsibilities are. The
number of variations is voluminous, and that’s where we get lots of questions. “Why do you have to have lots of nuances?” I won’t bore you with all of the reasons why. It’s pretty intuitive. We separate it out by responsibility and then all of the unique specialty type roles we try to keep clustered as a group so we can identify the product specialty or service specialty.

To learn more visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on November 14, 2011  •  Permalink
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Posted by Collette Parker on November 14, 2011

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Part II: Sales Strategy Dimensions

This is the second installment of our blog series on Rapid Sales Comp Design.

 

When you go down to the next level, we get to the question about strategy. As we look at where the organization is going over the next year, the elements that may show up in the compensation plan tend to be the following:

 

  1. Customers. Determine the focus for certain markets or certain types of customers in terms of acquisition of new customers or penetration.
  2. Products. Determine which products or services are priorities for your organization.
  3. Channels. If you’re working in a multichannel environment, establish a balance between direct and indirect sales and how they work together.
  4. Financial. Clarify financial objectives, what you want to accomplish within the business and the financial parameters.
  5. Talent. There may be certain people objectives we want to accomplish in terms of certain types of talent, or retaining certain types of people or building out certain types of sales roles or parts of the business.

 

Those five elements – customers, products, channels, financial and talent – will tend to show up as big drivers to consider as part of the sales comp plan.

 

Register for a free webinar on November 8, 2011, sponsored by SalesGlobe. To learn more, visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on November 2, 2011  •  Permalink
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Posted by Collette Parker on November 2, 2011

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Rapid Sales Comp Part I: Setting Limits on Change

SalesGlobe and The Sales Leadership Forum recently conducted a panel discussion with several experienced compensation executives to explore last minute sales compensation design. Mark Donnolo, managing partner of SalesGlobe, facilitated.  In case you’re scrambling to put together a sales comp plan for January 2012, or maybe your plan is complete and you’re curious what the procrastinators have in store, here are a few of the highlights around Step One: Setting Limits on Change.

 

MARK DONNOLO: How do you look at change at your company, and what drives any shifts in the plan?

 

PANELIST 1: That’s a good question. For us, we try to keep the North Star really around what the strategy is for the business. Our fiscal year starts October 1, so the whole process starts in January after the end of our Q1 or calendar Q4 end. There’s a nine month planning cycle, so a lot of time is spent with the CEO and his executive staff to really understand where the company is going in the marketplace, our strategy, and which customer segments we want to be in. Are we rolling out solutions? How do we want those solutions to mix with our existing strategy? From that we start to build what the coverage model looks like and how we are going to deploy resources. The sales comp plan really is one of the last things we talk about, even though it’s one of the first things that everybody likes to jump to. “How am I going to pay people? We hope to roll out a new product and I want to pay them more for this.”

 We have done a nice job of coaching the leaders that sales compensation is really the caboose; it’s not the engine. While it tends to be the solve-it-all solution for everybody, it’s really not, right? We need to solve how to run the business and drive the business first, understand how we want to go to market, and then let the sales compensation plan structure really be the vehicle for executing on the strategy. That’s important for us.

 MARK DONNOLO: You’re getting a head start then. I think nine months ahead is insightful, especially for a lot of organizations that will pop up at the last minute and say, “Hey, we have to look at the sales compensation plan.” It’s been talked about during the year, but it hasn’t really been part of an evaluation or planning process.

 PANELIST 1: Yes. And I’m not going to lie to you, because it sounds like, “Oh wow, you start nine months ahead. Everything must be perfect and everyone is aligned.” But just like in every company, the executives change their minds a lot. For example, recently we were hosting a call with the international and U.S. divisions, and finance and operations were saying, “We’re three weeks away from the launch of the new plan and the end of the year. Here are the critical changes that we are aligned on. Is everybody prepared for communications? Are we ready to start rolling out quotas next month?”

 

And a lot of the sales leaders started questioning some of the decisions that we had aligned on in July. “Is this the right decision? Should we maybe change the mechanics of the plan? Should we go to this third measure vs. this measure we took out?”  And you’re sitting here thinking, “We’ve got three weeks left. It’s not like it’s a quarter to go.”

 

But I think the planning process is continual until you actually communicate it. Because you might have someone from the product house say, “I told you I wanted to pay this product differently.” And maybe you structured the plan to have a separate measure or a multiplier or something. But what we find is that it’s very difficult to corral the leaders and have them stick to something. So we are going to be tweaking things almost up to the last minute, which I guess is appropriate for this topic. But I think the overall structure – we’ve done a very good job of keeping that consistent from the decisions made a couple of months ago. Even though the mechanics might change slightly with three weeks left to go in the year.

MARK DONNOLO: I know one question that comes up is: where do you stop? How do you put an end to it? Someone said recently, “It’s as if our sales leaders have free reign to continue to change things all the way up until the last minute.” We really need to end it at a certain point and move ahead. Is there a way you’ve found to do that?

 

PANELIST 1: I think you’ve got to be positioned well in the organization. I think the sales compensation function has to be seen as a leadership role that has authority to push back. If it’s not, I think it’s going to be much more difficult. The sales leaders or the others will run wild.

If you’re set up in your organization to have that leadership role, it’s just a matter of saying, “Guys and gals, it’s T minus three weeks, these are the decisions we aligned on. Here’s why we can’t make a change. Here are the cost implications. Here are the ramifications. We’re going to move forward. If it’s a tweak – change this accelerator, change this threshold level – you can do this until after the plan rolls out. But as far as large structural changes, we’ve made it clear.”  

 

I don’t know if you’ve ever seen that movie Armageddon where there’s an asteroid coming in and there’s a little plane on the computer, where, if the asteroid passes that point the earth will blow up. We sort of set that up for the sales compensation design changes. We have said, “Beyond this date it is not feasible to make structural changes because quotas can’t be set on time. You won’t be able to pay people on time because you’ve got to redo the structure of the Oracle or Callidus or Excel or however you’re calculating sales compensation.”

 

You lay out exactly what the implications are, right? So if the business says, “I value your opinion but we do want to make the changes.” Then you’ve got to make it very clear. “Ok, guess what? You’re not going to pay people accurately in month one; or quotas won’t be out until month two.” They can think through it and say, “What is the business rationale for the change? Are we willing to take that risk for the change we’ve requested?

 MARK DONNOLO: Good point. So the wheels start coming off at a certain point, if we go beyond that.

 PANELIST 1: Correct.

 TSLF Member: We definitely have this problem. We have constant change. We just recently went through a pretty large change and we’re just trying to get our arms around some things. We definitely had that issue ongoing.

 MARK DONNOLO: It seems, and you described it well, that having the authority to push back and let people know what the implications are, that things really do start to fall out. Have you been successful in being able to push back effectively?

TSLF Member: Yes. One of the key things I think you hit on is making sure that we have leadership buy-in. If we don’t have leadership buy-in, it’s very difficult for us to limit the process. And a lot of times we’ve noticed what you’ve mentioned before, where we are trying to do the compensation plan as the forerunner rather than trying to support what the sales strategy is. I think sometimes we get it backwards. We try to flip flop that to indicate we need to know what the strategy is and we’re really here to help set the behavior vs. drive that behavior. I think that’s something that’s really important. But I think at this point the success we’re seeing is making sure we’re getting executive buy-in. If we don’t have that it makes it really difficult.

 

Register today for a free Rapid Sales Comp Design webinar on November 8, 2011, sponsored by SalesGlobe and The Sales Leadership Forum.

 

 

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by Collette Parker on October 31, 2011  •  Permalink
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Posted by Collette Parker on October 31, 2011

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The Revenue Roadmap

The Revenue Roadmap model is something that we put together after working with hundreds of companies and asking, “What is the difference between high performing sales organizations and the average (or lower than average) organizations?” It really comes down to four major competency areas: Insight, Sales Strategy, Customer Coverage, and Enablement. These four disciplines, and their relationship to each other, provide a context for any driver of sales effectiveness – especially compensation and quotas.

 

1. Insight: Insight refers to how much we know about what’s happening in our market and understanding what’s happening with our competitors and our customers. If we don’t have our finger on the pulse of the macro market, we can’t develop our strategies with any degree of precision.

 

2. Sales strategy is an action plan to achieve a sales goal. The strategy converts high level (often financial goals) down to the front line that we can take to market. So it involves the types of services and products that we’re going to offer, our customer segments and our target customers. We have to have a solid value proposition for those products and services that translates well into a message sales reps can take to the customer.

 

3. Customer coverage: Customer coverage refers to how we align to our customers in a very practical, tangible way. What types of sales channels are we using? Direct sales organizations or other types of third party channels outside the organization, such as resellers, distributors, or other partners that help us during the sales process. The sales roles and the structure define how our organization lines up to the customer. Are we using different types of account managers, and are they focused on different segments? Do we have major account managers? Do we have new business developers?

 

The sales process itself should simplify customer coverage by outlining how the organization moves from the generation of an opportunity through the close and implementation. (And one of the pitfalls of simplifying the sales process is putting too many parts of the process on one sales role.)

 

4. Enablement: Once we’ve answered all upstream questions – Insight, Strategy, and Coverage – we finally get to the level of enablement. Sales compensation, quotas, recruiting and development of people and all the other support programs live here. But none of these programs – or the people they were designed for – can succeed without a solid foundation of Insight, Strategy and Coverage.

 

To learn more visit SalesGlobe.

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by Collette Parker on October 25, 2011  •  Permalink
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Posted by Collette Parker on October 25, 2011

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How to Set Bad Quotas and Destroy Your Comp Plan

If quotas are so critical to the performance of a business, why are they set with so little thought or methodology (with apologies to those who put in the thought and methodology)? Typically, a team spends months designing a compensation plan, and then hurriedly sets goal numbers based on financial information handed down by CFOs. Poorly designed quotas can significantly weaken sales comp plans. If quotas don’t represent true market potential, the sales comp plan itself will break down. And if the plan doesn’t perform as designed, ultimately the business could be at risk.  

 

So here are the top five ways to set bad quotas and accidentally sabotage your business:

 

1. Set quotas using historic information. According to a recent SalesGlobe survey, the top quota setting challenge companies are facing today is that quotas are driven by historic information; they don’t represent real opportunities in the market. Instead, quotas are set looking in the rear view mirror; we’re not looking at market potential – at both those positive opportunities and the places where prospects have dried up.

 

2. Don’t bother to have your quotas ready by month one. In about 30% of companies, quotas are not ready in the first month of a new comp plan. In fact, quotas actually may not be ready in the first quarter of the year. It happens because a lot of times the numbers aren’t ready until the end of the year, and the quota setting process can’t get started until those numbers are ready.

 

3. Adjust quotas mid-year. Because quotas aren’t ready by month one (and a few other reasons – legitimate and not) about half of companies will adjust quotas during the year – legitimate reasons and not. (Of course, when adjusting quotas, it’s really essential to have policies for why you would make those adjustments.)

 

4. Punish your best reps by giving them a higher quota every year. Companies that don’t have an effective quota setting process inadvertently create a performance penalty. The highest performing reps are rewarded with a higher quota each year, often in the same increasingly saturated territory.

5. Make the quota setting process top secret. About 29% of companies we surveyed said the process wasn’t transparent. People don’t have any idea how their quotas were set. And about 29% said they don’t believe in the process. Inequitable quotas weaken the effectiveness of the sales comp plan and raise questions about the accuracy of the information.

 

There’s a pattern in these bad practices, which I think is really fascinating. The top issue is about information: quotas don’t reflect market opportunity. So quotas are not good because they’re not representative of what the sales reps can do. But the other challenges are around people and around process. I think that’s a key point: is that as much as you get into the idea of the quota being a number, it’s very much about the process and abut the people.

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by Collette Parker on October 21, 2011  •  Permalink
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Posted by Collette Parker on October 21, 2011

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Top Comp Challenges — What’s Yours?

Every year, SalesGlobe conducts a survey to find the top sales compensation challenges. And as varied as businesses are, as unique as some industries are, so often sales compensation problems unite them all. Below are a few of the top challenges that plague sales organizations large and small.

 

1. Setting effective quotas. Almost every year the top sales compensation challenge is actually setting effective quotas. And arguably, quotas aren’t even part of the compensation plan. Quotas are typically set after the compensation plan is designed. But quotas are the linchpin between the compensation plan and performance. You could have a very effective compensation plan, but ineffective quotas can derail the compensation plan. Quota setting, obviously, is critical.

 

2. Differentiating top performers. Too often in companies, it’s easy to make a good living with a mediocre performance and very difficult to make a great living, even if you knock your quota out of the park. How we do we take the top people and differentiate them significantly from the mid range or the lower performers? We call the solution the Reverse Robin Hood Principle: take the performance pay from the lower performers and provide that to the higher performers with the objective of being able to recruit and retain the best talent.

 

3. Supporting the sales strategy and sales roles. One of the first steps in designing a sales compensation plan is to make sure we understand the direction of the business. How do you connect the corner office to the front line? The vision of that C-level whether it’s the CEO, CSO or COO, has to flow through in the compensation plan. It’s amazing the number of times we see a disconnect between the priorities of the business and what’s actually being paid for.

 

4. Driving solution selling. How do we make sure that we’re enabling solution selling through the sales compensation plan and that solution selling is also being supported through other elements of the growth management system? Solution selling itself cannot be driven by paying people multipliers for different sets of products. Product mix is actually a surrogate for solutions. Effective solution selling starts with the strategy and understanding directionally where we’re going. Enable people to sell solutions and have the right offer. Then compensation can come into play and make sure we can motivate people in the right direction.

 

5. Keeping the organization engaged.  This was a bigger issue in the past couple of years than it is at the moment.  But over the last couple of years it’s been a big question: how do we keep the organization involved when they’re not hitting their quotas and they’re not in the money on their sales compensation? If we have people floating down around 80%-85% of quota, how do we keep them from riding out the storm and waiting for the year to pass? Are there other types of reward and recognition, or are there adjustments we can make to the plan?

 

6.  Plan complexity. Plan complexity tends to be an underlying issue and an underlying challenge in most organizations. We see this in particularly complex organizations or organizations that are oriented around multiple products or services. When we try to represent too many things in the sales comp plan we create complexity. Then two things happen. First, the message of what the sales comp plan is telling the organization to do starts to break down. And second, we increase the complexity and the difficulty of administering the plan.

 

Of these six challenges, what is the biggest problem for your organization? Or is there another challenge not on this list?

 

To learn more, visit SalesGlobe.

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by Collette Parker on October 17, 2011  •  Permalink
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Posted by Collette Parker on October 17, 2011

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Lead Busters Part II

Sales pipelines bloated with low quality leads can throw off organization sales forecasts, inflate rep quotas, and lead to missed expectations. Poor lead qualification can also rob the organization of valuable sales headcount by misdirecting thousands of hours of sales time a year toward no-win opportunities. To improve lead qualification and enhance sales force effectiveness, high-performing sales organizations use some of these best practices.

Sell to the right location. Many sellers find out too late that they’re pursuing a lead from a non-buying location. For companies selling to major accounts with multiple buying points, one key is to correctly identify the roles each location plays in the decision. There are essentially three models that most strategic accounts use to make buying decisions that can be matched against each lead. First, headquarters makes a company-wide buying decision that is mandated to all locations, which suggests that most quality leads will reside at that level. Second, headquarters selects preferred vendors the local locations may use. Under this “hunting license” model, the successful sales organization may find a quality lead at both the headquarters and local levels. Third, headquarters allows local locations to make the full buying decision. In this case, the quality lead will reside with each location. Matching the lead location with the decision model identifies potential dead end leads.

 

Manage to the metrics. Most sales organizations have a wealth of information on past sales processes that can provide them with metrics to manage leads. Two key statistics, expected value and lead age, can act as effective lead management metrics to churn out low quality funnel fodder. Expected value is the product of the budgeted sale and the probably of the close, which, over a large number of accounts provides an accurate sales estimate. Lead age is the total number of days the lead has existed in the funnel. While these metrics are not new, their value is in using historical data on actual probabilities and actual average days to close by customer segment, to force out low quality leads. As a rule of thumb, leads that are one standard deviation older than the average days-to-close for that segment are subject to automatic review and those that are older than two standard deviations are removed from the funnel and forecast.

 

Build the business case for better lead management. Organizations that are effective at lead qualification and lead management typically drive the change by understanding the cost of their current practices. Sales leads are typically used as a basis for sales forecasts, especially monthly or quarterly forecast adjustments that are within the timeframe of a typical sales cycle. Poor lead qualification can directly affect company sales forecasts and result in visible gaps that create costly market and investor reactions. Just as costly are the direct SG&A dollars spent on low quality leads. For a typical sales force that spends 50% of its time selling with 10% of that spent on no-win leads, recapturing that low quality lead time through better qualification can add the equivalent of one new rep for every four currently employed. This equates to a 25% increase in sales capacity without adding headcount. This is a compelling case for making a systematic improvement to the organization’s lead management capability.

 

 

 

 

 

Before After
For each sales person: For the sales organization:
2,000 hours worked per year Recapturing 10% time or 200
hours per year per rep
x 50% selling time (10%
poor leads)		 x 4 reps
1,000 hours selling time 800 hours or the equivalent
of one new rep’s sales capacity
800 hours quality leads  
200 hours poor leads  

 

 

Make lead busting a team practice. Critically managing leads as an individual seller can be a challenging process. Many companies find it more effective to instill a process of team lead busting in which sales teams share funnels on a regular basis and rigorously question top opportunities using basic qualification metrics. In addition to helping each rep objectively evaluate his funnel, the lead busting process often produces team ideas for moving key opportunities ahead.

 

Create a systemic process for managing leads throughout the organization and aggressively audit lead flow and lead quality. Making lead management an organization discipline can convert sales funnels and sales forecasts from works of fiction to reliable planning tools. Effective lead management can directly increase forecast accuracy, highlight weak points and redirect sales resource time toward productive high probability opportunities.

 

To learn more, visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on October 11, 2011  •  Permalink
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Posted by Collette Parker on October 11, 2011

http://salesglobeforum.wordpress.com/2011/10/11/lead-busters-part-ii/

Lead Busters: Building a Stronger Sales Funnel Part I

Sales people are traditionally quantitative people. Give a rep a new compensation plan and, within five minutes, she’ll tell you how to earn the most with it. However, give a rep a sales funnel and she’ll become fogged by the same optimism that drives her. Most sales people find comfort in a full sales funnel. It looks good to management and creates a personal sense of abundant opportunity. However, funnels bloated with low quality leads can throw off organization sales forecasts, inflate rep quotas, and lead to missed expectations. Poor lead qualification can also rob the organization of valuable sales headcount by misdirecting thousands of hours of sales time a year toward no-win opportunities. To improve lead qualification and enhance sales force effectiveness, high-performing sales organizations use some of these best practices.

 

Start with rigorous targeting. A quality lead starts with a quality target customer. Since most leads are generated by sales and marketing, this puts the onus on them to select the most attractive customers or potential customers at the outset. The most effective method to select target leads is to translate the organization’s target customer segment definition to clear criteria that sales and marketing can act upon. This includes company characteristics, typical buyer titles, and attractive opportunity types. To test the effectiveness of your targeting, select a good sample of reps and match their target customer and prospect account lists with the company’s target segment definitions. Does the sales organization’s tactical action align with its strategic segment targeting? Do reps self-select their target accounts based on personal preference or comfort level? Targeting prospects that have a poor fit with the company’s objectives dramatically lowers the potential for quality leads.

 

Map the customer’s buying process. Knowing where the lead is within the customer’s organization can help the rep to improve or write-off the opportunity. It is essential to know the complete buying organization in terms of its decision-making process and criteria. Relationship sellers often rely too heavily on a single close contact to pull through a sale and therefore overrate lead quality. A good place to start is to understand how customers within certain target segments typically make their decisions by mapping the steps, players, criteria and interactions using a number of historic sales processes both won and lost. Consolidate these actual buying process maps and use them to test assumptions on the quality of specific live leads for the same customer segment. Knowing your true position helps you better qualify your opportunities.

 

Part II will appear next week. To learn more, visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on October 6, 2011  •  Permalink
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Posted by Collette Parker on October 6, 2011

http://salesglobeforum.wordpress.com/2011/10/06/lead-busters-building-a-stronger-sales-funnel-part-i/

Top 5 Ways to Make Culture and Compensation Sync

Consider your current sales culture and the following points when evaluating and designing a compensation plan.

 

1. Understand the factors that define culture in your organization. What are the assumptions that surround decision making? Are these flexible or hard-lined? Identify the sacred cows in your organization, and gauge whether they are healthy or not. If your sacred cows are unhealthy, what are the gradual steps that can be taken to remove the sacristy and shift toward beneficial cultural elements?

 

2. Acknowledge how well your organization adapts to change. Whether change is a welcome part of your business or is avoided at all costs, few organizations can survive without some degree of evolution. Understanding your organization’s tolerance for change will suggest ways to manage necessary changes in compensation that may affect the entire business.

 

3. Align the goals of the sales compensation plan with the goals of finance. When properly aligned, both sales and finance are happy, even within a dysfunctional culture.

 

4. Healthy cultures enjoy transparency. Crystal-clear financial objectives help to create simple compensation mechanics that motivate the sales people in the right direction. Visibility across the many functions that are involved in sales compensation limits the confusion that can muddy the waters.

 

5. Make your culture a competitive advantage. What does your ideal culture look like?  Add procedures and processes where chaos rules and release the grip of authority where decisions can be made lower down the ladder.

 

To learn more, visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on October 3, 2011  •  Permalink
Posted in Sales Compensation
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Posted by Collette Parker on October 3, 2011

http://salesglobeforum.wordpress.com/2011/10/03/top-5-ways-to-make-culture-and-compensation-sync/

Defenders of the Status Quo: Compensation and Culture II

Every company has its defenders of culture who – for better or for worse – maintain the status quo. Close inspection of what these people are defending reveals the root values of the organization. The root values branch out across the company and manifest as various practices by each function, from sales to finance.

 

But culture is organic. It evolves. And sometimes you have to prune it back a bit to keep it in shape. Not surprisingly, changes to the sales compensation plan inevitably breed conflict.

 

In our work with companies, a few compensation challenges stand out:

 

1. Job roles. Conflict can arise from inconsistent definitions of job roles. A company we worked with recently said, “We want to put a new business developer role – an aggressive hunter role – in the organization.” But that was very contradictory to the service-oriented, account management culture they had encouraged for years. So there was a question of whether to move current people into those roles or bring in new people. Current people felt threatened and worried about a potential loss of income.

 

2. Paying top performers. Compensation issues such as pay mix and threshold present questions as well. An aggressive job role demands a certain pay mix and threshold, which might conflict with a moderate culture. Certainly if we have plans that provide less pay on the downside and more pay on the upside (so you’re paying a significant amount more to top performers) can conflict with a culture that’s accustomed to less disparity.

 

3. The timing and urgency of the plan. We recently worked with a company that has two different organizations. One is paid on bookings; the other is paid on billings. They have very dissimilar dynamics and very distinct cultures because of differences in the way they’re paid (they’re paid that way because of separate features in the business). The part of the company that uses bookings has more contracted revenue. So they can pay on bookings and the rep can move on to the next deal. With billings it’s not a hard contract, so it takes a while for that revenue to actually show itself. And the company wants the rep to be involved. It creates a very different level of urgency and a different level of account management. The selection of a mechanic or a measure like that can make a big difference in terms of how that aligns with culture.

 

5. Governance. When you make a change in the plan, how do you accomplish it within the company’s cultural tolerance for change? For example, if a company wants to put in a new customer selling role, or really make that a focus in the organization, how fast should we make that change? Is that something we can afford to do right away or should we do that over a period of steps in order to make it a little easier for the organization to handle that change?

 

Even though change is inevitable, every company has its defenders of the status quo. In fact, according to research, when implementing a cultural shift, 20% of the people will be change friendly, 50% will be fence-sitters but 30% will deliberately resist or try to make the change fail.

 

To learn more, visit The Sales Leadership Forum or SalesGlobe.

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by Collette Parker on September 29, 2011  •  Permalink
Posted in Sales Compensation, Sales Leadership
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Posted by Collette Parker on September 29, 2011

http://salesglobeforum.wordpress.com/2011/09/29/defenders-of-the-status-quo-compensation-and-culture-ii/

Compensation and Culture: Subtle — and Strong — Powers

A company’s culture and its sales compensation plan are related by one element: power. Both have the ability to dictate the direction, speed, and effectiveness of an organization. When we work with companies who want to dramatically change their sales compensation plans, we immediately look at their culture.

 

Consider these questions:

  • Is our organization closer to a Cisco or a Georgia Power?
  • Can our culture sustain change?
  • How difficult will this change be?
  • Do we encourage ideas from the front line or are we a top-down driven organization?
  • When was the last time we implemented a change in our compensation plan, and how well was it received? (Usually the longer the current comp plan has been in place, the more resistance the current culture will be to any changes in incentive pay.)

 

There are several factors to take into account when evaluating your culture:

 

1. Urgent versus laissez-faire. Company culture can affect the level of urgency. For example, sometimes an organization might say they want to step up the level of pressure in the sales organization; the leadership doesn’t feel people are really pushing. At one company people were taking vacations at the end of the year rather than trying to close business. The culture permitted lackadaisical behavior and lacked urgency.

 

2. Visionary vs. reactionary. Many organizations are trying to move toward a visionary culture; a more solutions-oriented culture versus a transactional culture. Most companies are familiar with the complementary/contradictory relationship of hunters and farmers and the differences in the culture they pose, in terms of how your sales organization is oriented.

 

3. Team-oriented versus individually-oriented. Some companies prefer people to collaborate, while others prefer each man for himself.

 

These factors act as a foundation when we begin to look at sales compensation. How a company defines culture offers important hints about the priorities of the business, which are the starting points for any well-designed sales compensation program.

 

To learn more visit SalesGlobe or The Sales Leadership Forum.

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by Collette Parker on September 27, 2011  •  Permalink
Posted in Sales Compensation, Sales Leadership
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Posted by Collette Parker on September 27, 2011

http://salesglobeforum.wordpress.com/2011/09/27/compensation-and-culture-subtle-and-strong-powers/

Sales Comp for Strategic Selling

Think about the strategic importance of a particular product or service. Usually, there’s at least one product or service that is strategically more important to sell than others. But sometimes these products or services are outside the comfort zone of the reps, for one reason or another. We often hear: “We’ve got these new products we want people to sell. They’re really important, but the reps aren’t selling them because they’re focused on the current stuff or the core products. How do we motivate behavior there?”

 

A lot of times, the answer is weighting. It could be literal weighting of a commission rate, or it could be weighting through linking measures together. But it’s basically like product bundling. It’s saying: we’ve got some really good stuff here that our customers are not buying or our reps aren’t selling, but then we’ve got the stuff the reps are all going after. How do we get them to sell more of the stuff we want the company to sell?

 

There are two variables to examine here. You could look at the strategic importance for the company – on a scale of unimportant to very important. Then you could look at the difficulty for the rep to sell that, or the attractiveness of the rep to sell that product or that service, on a scale of not difficult to very difficult.

 

So very simply, the middle would be selling something of average difficulty and average strategic importance. That, call it a commission rate, represents a one. So average difficulty, average strategic importance is a commission rate of one. But then as it gets more difficult for the rep and more strategically important for the company, that’s where you really start to weight things up.

 

Several years ago we worked with a directory company (similar to the yellow pages advertising business). For years they sold advertising for the big book that ends up on your doorstep. Then they came up with online advertising through Yahoo or YellowPages.com. And they said, “We want to sell more online advertising.” But there were problems. It’s a different sales cycle and the advertising goes up immediately; customers didn’t have to wait for the book to publish. The company liked that better because they get immediate revenue and more immediate advertising for the customer.

 

The company knew strategically that’s where they were going in the future. But the reps wouldn’t sell it because all the money was in the yellow page books. So the company asked: “How do we get them to do that?”

 

Weighting was one answer. We looked at the strategic importance and we started to weight up the online advertising. The company made an investment in that online advertising. They were paying more dollars in incentive for online sales than they were for the published directory sales. And what happened? It pushed the company in the right direction and set the course for the future.

 

Weighting offers one way of sorting out those strategic priorities.

 

A note to our readers: The Sales Leadership Forum is a member-driven think tank for SalesGlobe, a sales effectiveness consulting group. This blog reflects the ideas of both The Sales Leadership Forum and SalesGlobe. To learn more, please visit www.TheSalesLeadershipForum.org or www.SalesGlobe.com.

 

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by Collette Parker on September 22, 2011  •  Permalink
Posted in Sales Compensation, Sales Leadership
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Posted by Collette Parker on September 22, 2011

http://salesglobeforum.wordpress.com/2011/09/22/sales-comp-for-strategic-selling/

The Laffer Curve

Once upon a time a smart man named Arthur Laffer, former economic advisor to Ronald Reagan known as the father of supply-side economics, drew a bell-shaped curve and came up with a new application. You’ve probably heard of the Laffer Curve; it refers to tax rates and the fact that you can only raise them so much. After a point, revenue actually  begins to go down.

Years later, another man named Steve W. Martin looked at the Laffer Curve and applied it to sales. His theory basically says (with apologies to Abraham Lincoln), “You can please some of the people all of the time, all of the people some of the time, but you’re never — ever — (probably) going to please all of the people all of the time.”

Reach Martin’s blog, and check out The Martin Curve. Does his theory hold true?

To learn more visit The Sales Leadership Forum or SalesGlobe.

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by Collette Parker on September 18, 2011  •  Permalink
Posted in Sales Leadership
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Posted by Collette Parker on September 18, 2011

http://salesglobeforum.wordpress.com/2011/09/18/the-laffer-curve/

Quota Setting: Historic Based vs. Market Based

Effective quota setting is a combination of art and science. While too many companies set quotas based on historical information, quotas based on the real market potential is a much better approach. Consider the following:

 

1. Flat Quotas. Flat quotas are usually used when companies have unconstrained market environments. You might have wide open markets where reps could go anywhere in the country; or the markets have unconstrained potential and the reps have relatively equal capability. In this situation it could make sense to set flat quotas; for example everybody gets a $5 million number.

 

2. Historic Quotas. For better or for worse, most organizations use historic quotas: they take what people achieved last year and add a projected increase.  The risk is that history does not necessarily represent the future potential of the business.

 

3. Market Based Quotas. Moving toward a quota-setting process that is driven by market opportunity or account opportunity requires taking your historic numbers and modifying them based on relative market opportunity (e.g., relative growth rate of the market, relative growth rate by product, relative potential, competitive environment). Moving to an opportunity driven approach can incorporate market level data, account level data (customers and prospects), or a combination.

 

How to Get There

Most companies move toward opportunity-driven quotas in steps over time, starting with a market level hybrid solution and eventually progressing to account driven goals that are formed in a bottom-up, top-down process. Improving the quota process can be a challenge for organizations because it requires the cooperation of several different roles. Many sales organizations also have to battle the legacy factor: if quotas have been set by the finance organization using historical data for decades, it may have become a sacred process – even if it’s a bad process – and will be difficult to change.

But there are risks to maintaining those bad processes. According to a survey by The Sales Leadership Forum, 84% of sales organizations say poorly-set quotas put the motivation of their sales force at risk; 59% say that not fixing the process contributes to missed targets for the business, and one in three companies said high sales turnover was a potential consequence of poor quotas.

 

The End Result

The ultimate goal for most companies is account opportunity driven quotas. Account-driven quotas go down to the account level – our customers and our prospects – and find indicators or predictors of sales potential, apply those out to our entire base of customers and prospects, and use that information for quota setting. Initially, as the organization begins on the path towards account opportunity quotas, they collect this information and use it for territory design and deployment. Once they are comfortable with the data, hot spots of opportunities and markets become apparent, and they can set quotas that are much more opportunity-based.

 

It is critical to make sure the quota setting process works correctly because it is so closely tied to both the motivation of the sales organization and to the attainment of the company’s objectives. Over the long term, a broken quota-setting process can erode the sales performance and put the business at a disadvantage. It’s imperative that companies examine their quota setting process and develop their case for change around the kind of risks it presents for them and the potential positive impact that can be gained from making an improvement. Setting and allocating quotas effectively will ensure the sales compensation plan is motivational, help us more effectively align sales costs and revenue, and increase the predictability of the company meeting its business objectives.

 

For more insight, register for The Sales Leadership Forum’s webinar on Tuesday, September 13: Setting Quotas for the New Year.

 

If you have questions or require assistance please visit The Sales Leadership Forum or SalesGlobe, or call (770) 337-9897.

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by Collette Parker on September 8, 2011  •  Permalink
Posted in Sales Compensation, Sales Operations
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Posted by Collette Parker on September 8, 2011

http://salesglobeforum.wordpress.com/2011/09/08/quota-setting-historic-based-vs-market-based/

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