Re-defining Your Sales Challenge

Picture2Last week we discussed how questions can help to define your customer’s problem. For example, if your customer thinks he has a problem with growth in a particular product category, the right questions – around financial, market, product, and resources goals and limitations – can help you dig deeper and uncover whether another problem lies hidden underneath.

The answers you receive from those questions are very valuable information. They help you to re-define the customer’s problem. Is it really a growth problem, as your customer suspects? Or is it a problem with that customer’s resources (talent, supplier capabilities, etc.) that are in fact inhibiting his growth? Or, perhaps conditions have changed in the overall market, affecting growth.

Re-defining the customer’s problems does several things:

  1. It gives you the opportunity to really listen and respond to your customer. You’re not just shoving samples at him.
  2. It differentiates you from competitors who ARE shoving samples at him.
  3. Finally, it gives you the chance to actually solve his problem.

Addressing superficial needs might temporarily solve the problem. Addressing the root cause of the problem has a better shot at a long-term solution, and a long-term relationship with that customer.

How can re-defining the customer’s problem help your customer?

If you missed our webinar in December, you can still catch it on YouTube: The Art of Innovation. Let us know how innovation can work in your sales organization!

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

 

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What’s Your Problem?

Picture1  Across hundreds of sales organizations, we’ve consistently found that the most effective sales teams aren’t the ones telling the customer what they can do. The best sales teams ask the customer relevant questions, and then determine what the customer should do. They do their homework and they approach the customer’s challenge from multiple perspectives – with questions, not assertions.

To start, you can ask questions related to your customer’s challenge, specifically in terms of financial performance, its markets, its products, and resources. These questions deal with the business’s priorities.

1. Financial challenges apply to the customer’s growth or profitability, either overall or in specific areas. Often, this appears be the customer’s main challenge and it’s usually the topic the customer talks about most.

2. Market challenges refer to issues the customer has in specific segments or geographies. Ask your team: are there specific challenges the customer is trying to address for certain markets? Does the customer want to deal with a certain geography or customer segment that may be feeding into that challenge?

3. From a product or service standpoint, what is your customer trying to accomplish?  Is the customer’s challenge being driven by any priorities that can be solved with certain products or services?

4. Resources in this context are the customer’s challenges relative to talent and organizational capabilities. How can your sales coverage model and your organization’s pool of knowledge contribute to addressing the overall challenge?

What questions help you to understand your customer’s real challenge?

If you missed our webinar in December, you can still catch it on YouTube: The Art of Innovation. Let us know how innovation can work in your sales organization!

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

The Art of Sales Innovation

Innovation

Innovation is usually not just stumbled upon. More often than not, innovative thinking begins with a problem to solve. A tricky problem. Or maybe it’s a typical sales challenge – how to get more shelf space for my product at Walmart – but we don’t want to do it the same way everyone else is already doing it.

When defining the challenge, the real mission is to re-define that challenge.  We may end up confirming and validating it. Or, we may find that we can understand the problem in another way, in a broader context, and open up new possibilities for a solution. “Your approach needs to seek the correct problem,” says Brian Stone, associate professor in the department at Ohio State University and principal partner in the international consultancy Latitude 40 Design, “because everybody’s been trying to solve the same problem using the same tools, and leveraging the same resources. But that particular problem might not be where you need to get to in terms of innovation. It might be a different problem.

“For example, there’s a product called Clocky, and it’s an alarm clock with two wheels on each side. When the alarm goes off, Clocky races off of your furniture and runs around your room avoiding you. You can’t just reach over and turn the alarm off. You literally have to get out of bed and chase it to turn it off.  The issue has never really been waking up – it’s getting out of bed. Clocky looked at the problem a different way.”

What is a current sales challenge for you? How can you get to the root of the real challenge and re-define it?

If you missed our webinar in December, you can still catch it on YouTube: The Art of Innovation. Let us know how innovation can work in your sales organization!

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe

Limitations on Creativity: What Are Yours?

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Constraints and limitations enable creativity in sales. It sounds like a paradox at first, but think about it. Without constraints, options are unlimited. For example, if your customer needs a new CRM system and has no budget or time constraints, it would be easy to sell them a product. It’s more likely that customer has a tight budget, a three-month time frame, and must get approval from the CFO, who may or may not be a fan of your product. You probably need to get creative to close this deal.

The Apollo 13 space mission is a great example of constraints within functional creativity. This rocket was bound for a moon landing until, on April 13, 1970, a spark from an exposed wire in an oxygen tank caused a fire. In an instant, the mission of the three astronauts on board, and the many scientists in NASA’s Houston control center, changed from lunar landing to a nearly-impossible safe return home.

Commander Jim Lovell couldn’t just turn the rocket around and head full-speed back to Earth. The astronauts were now in the desperate situation of not having enough power, so they turned off all non-essential systems. The constraints they faced were life-threatening, and they inspired creative thinking at its most impressive. Prime crew member Ken Mattingly, who was grounded from the mission just 48 hours before lift-off after an exposure to German measles, worked tirelessly in the Apollo simulator. He recreated the astronauts’ situation and experimented within the constraints of severely limited power and water, which was needed to cool the capsule’s necessary systems. He configured and reconfigured ways the space craft could safely burn through the Earth’s atmosphere. Finally, thanks to the ingenuity at mission control, Mattingly, Lovell, and the rest of the crew were rewarded with that famous safe landing.

Constraints in sales are usually less life-threatening, but still important. They most often include:

  • Time. A deadline must be met.
  • Organization Limitations. The talent, manpower, or policies of the organization limit what can be achieved for the customer.
  • Supplier Capabilities. Providers have practical limitations including the amount of product they can provide to the organization and how quickly they can provide it.
  • Cost. Labor and material costs limit the company’s margins.
  • Quota. The organization must reach a performance objective.
  • Customer Requirements. Customers have high expectations and performance hurdles.
  • Competitive Environment. Competitors’ capabilities sometimes dictate what the customers want.
  • Price. The customer or market values the offer at a certain dollar amount.

What are your common constraints? How can they compel you to become more creative?

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

More Common Myths About Creativity in Sales

Last week mentioned a few common myths about creativity, and the week before that we asked if creativity even belongs in sales. We’ve had many responses on LinkedIn, and most agree: creativity absolutely belongs in sales. But there’s another myth about creativity that can wreak havoc on an organization’s attempts to bring innovation into sales:

  •  Perception: Creativity is creativity; it’s all the same. A painter, musician, or poet can translate those talents to creativity in the business arena.
  • Reality: All creativity is not created equal. Most creative endeavors fall into one of two general categories: artistic creativity and functional creativity.

When you think about creativity and innovation, names like Leonardo da Vinci, Walt Whitman, or Andy Warhol may come to mind. These talented people were famous for their artistic creativity. Artistic creativity leans heavily toward expression and unconstrained innovation seen from painters, sculptors, poets, musicians, and interpretive dancers. But it’s hard to assign a place for this in a sales environment. Artistic creativity is inherently subjective in the way it’s made, when the artist says, “This is how I want to paint this picture.” It’s also subjective in the way the finished product is judged. Some people may say, “I love it,” while others respond with an equally valid, “I hate it.”

Artistic creativity has limited application in a sales environment, which is marked by goals, expectations, and objectivity. Sales organizations demand a different type of creativity. Functional creativity is defined by its objective outcomes. With functional creativity, there is a right answer. In art school, everyone in a class can feel something different about a project’s end result; but in a sales environment, you want everyone to see the same picture.

Do most organizations understand the difference, or do you still see companies trying to get executives and sales teams to play with toys or sit in bean bag chairs to tap into their inner Picassos?

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

Common Myths About Creativity in Sales

Picture3Misperceptions about creativity and innovation are common, and may lead the sales organization in the wrong direction or prevent you from incorporating creativity into your sales practices altogether. You’re not prancing around with finger paints to find your inner Picasso. You’re solving a sales challenge in a creative way that will differentiate you from competitors. Brian Stone, associate professor in the department of design at The Ohio State University and principal partner in the international consultancy Latitude 40 Design, says many of his students believe real creativity is elusive. “When people tell me things like ‘I’m not creative,’ that’s actually not true. They say ‘I’m not creative,’ because they think there’s this magic bullet or some kind of potion that they take to get creativity. In reality, you just have to change your approach and your mindset around solving a particular problem.”

Here are a few misperceptions – and the realities – of creativity’s place in the real world.

  • Perception: You have to be born with creativity. Innovators are those few individuals blessed with naturally high creative intelligence.
  • Reality: Most creators and innovators have learned how to be creative. Creative processes and principles are easy to learn, but practice and tenacity are required before they produce results. This is particularly true in the sales environment, which tends to be reactive and defaults to pre-conceived answers.
  • Perception: Creative ideas come from eureka moments. Creative people have moments of epiphany that lead to innovation.
  • Reality: Creative moments are usually the culmination of a creative problem solving progression. In the majority of situations, brilliant results come amid numerous other ideas that never see the light of day.

Agree or disagree?

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

Why, Yes … Creativity Does Belong in Sales

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This post is in response to last week’s question: Does Creativity Below in Sales?

For Tracy Tolbert, executive vice president of global sales at Xerox Services, creativity is an essential part of the business and an essential characteristic of successful reps. “In almost every case, our most successful sellers are the most creative. We occasionally get a salesperson who’s in the right place at the right time, and it’s the perfect storm and they get a big deal, and that’s great. But those who deliver it quarter after quarter, year after year, are the creative thinkers, who put themselves in the client situation and figure out how to make the environment better. And by the way, that’s true for salespeople who are hunters, who are out there trying to find new clients, and it’s also true for our account executives who are managing existing customers. It’s the same kind of thinkers that are successful year after year.”

Innovation has to be a priority for the organization, says Tolbert, and not just the initiative-of-the-day. “You have to be relentless. You can’t just write about it in some newsletter one month saying, ‘Okay, well, make sure everybody’s got it.’ They have to get sick of hearing it from you, because then it becomes part of what they’re naturally thinking. You have to push, push, push and constantly expose your organization to creativity and the demand for innovation, or they just won’t pay attention.”

The consistent delivery of innovative ideas has paid off for Tolbert’s sales organization. For example, the CEO of a current customer came to one of Tolbert’s senior sales executives and told him about a financial problem they had. He essentially asked that executive to create solutions for his company’s budget crisis. “This sales executive just got directions from the CEO to take tens of millions of dollars of cost out of the organization,” says Tolbert. “He came to us and asked, ‘Hey how can you help me do this? Not in reducing the price on the service you already deliver for me, but here’s the rest of my organization. How can you help me take the cost out?’ It’s because we have a great relationship with the CEO and have delivered creative solutions in the past. We wouldn’t even be talking to these guys if we were not delivering service to them perfectly on the other side of the business.

“In response to this challenge, we have to be creative. We have to say, ‘Yes, we can think of new ways to deliver for you.’ I think our customers see us as really, really good creative thinkers around complex solutions. And they believe it because we’ve demonstrated it to them, rather than just talked about innovation.”

For Xerox, number 127 on last year’s Fortune 500 list, creativity belongs in sales.

Where does it fit in your sales organization?

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

Does Creativity Belong in Sales?

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I love to draw.

When I was a kid I drew all the time and I drew everything I saw. I took all the art classes I could, starting with Saturday morning instruction from a television cartoonist and later progressing to regular classes at a local art museum, sitting among students who were two to three times my age. So, I grew up, graduated from the University of the Arts, and entered a professional world of New York design at a top branding agency.

During my work, I crossed over the creative line and learned about how design integrates with marketing and sales to help companies grow. Fascinated with the intersection of business and design, and inspired by my Wall Street stockbroker roommates who had decided to enroll in business school after a few years in the work world, I wanted to learn more. Instead of furthering my design education through an MFA, I too went to business school to get an MBA. My artsy friends thought I was nuts. My Wall Street friends agreed. At the time, the business schools accepted a few of what they called “dance students” into their rigorous programs, but luckily I was accepted.

After earning my MBA, I played down my design background. But over the years, working with leading sales organizations around the world, I noticed an interesting pattern: sales demands creativity and innovation. I realized – even in the analytical world of sales forecasts and quotas – I relied on the lessons I had learned in art school to push my thinking and come up with better answers. It includes listening, understanding the customer, gaining new insight, getting beyond our standard offer, creating divergent ideas, pushing the customer’s thinking, and coming up with an answer that leads the customer ahead rather than simply meeting a requirement. Without creative thinking, sales is reduced to the role of order takers and replicators of the competition.

Sales creativity is not an elusive quality. It’s not for the few with natural talent – we all have it. It’s not only for sales people working in companies labeled by the business press as innovative. It’s not about eureka moments. Sales creativity follows a clear approach to get results.

Do you believe creativity has a place in sales? I’d love to hear your comments.

Mark Donnolo is the managing partner of SalesGlobe and author of The Innovative Sale, available in bookstores in January. To learn more, visit SalesGlobe.

Two Basic Quota Setting Methods

So most of us can probably agree that adding 10% to last year’s quota (despite impassioned pleas from some that “It’s sales 101!!”) isn’t always the most effective quota setting method, especially from a rep’s perspective. But setting quotas based on Historic information is the most common method.

 Let’s look at two basic quota setting methodologies:

 

  1. Flat quotas: This is your most basic technique, where everybody gets the same goal; say $3 million for the year. The assumption is that all opportunities and resources are equal. Everybody has got free run of the market, there are no boundaries, and we can go out and we can capture as much of that market as we want. And then we’ve got people that are of relatively similar capability. This might work great for a startup company, or moving into a new market – like a new country. But once the organization becomes a little bit more developed and we start to put territories in place, then sometimes it becomes a constraint on being able to set those flat quotas. 
  2. Historic Quotas. This is the most common way to set quotas, and it’s based on a belief that history predicts the future. One of the main problems is that it creates a performance penalty: you punish your best reps with a higher quota the next year, when likely their market is now even more saturated.  

As you move toward market-driven or account-driven quotas, you can start by taking the training wheels off here. Look at the historic trend but then acknowledge the difference between some of your markets. For example, we might find out that Arnold has a market that’s more competitive than Jones. Or Smith might have a higher market share than Hamilton. Make some adjustments in that historic based on what’s going on with that particular market relative to the other markets.

 Next week we’ll look at two better quota setting methodologies: market-driven quotas and account driven quotas.

 To learn more, visit SalesGlobe, read What Your CEO Needs to Know About Sales Compensation, or contact Mark Donnolo at Mark.Donnolo@salesglobe.com.

 

Setting Quotas: The Art & Science

About a year ago, we met with a company whose sales organization struggled to meet quota, year after year. The president of the company, who had grown up in sales, could not understand why her salespeople struggled, or why they complained that quotas were too high.

Her quota setting process was simple: “You add 10% to last year’s quota. It’s Sales 101,” she said multiple times.

While adding to last year’s quota may seem sensible, and may be the only quota setting process she’d ever heard of, it’s really not a great idea.

Quota setting is part art and part science. On the art side it’s important to ask a few very practical questions. What percentage of your salespeople are hitting quota? Look at the distribution of performance to make sure the numbers you will realistically get will total to the organization’s goal.  Does it have to be a best practices number, for example, 90% of people making quota each quarter? You can have any distribution you want; you just want to build a predictable distribution of performance.

We want quotas to be attainable, but not for everybody. Motivational – but not too easy. We want a certain portion of the people to be at or above quota because we want to see a culture of winning.  In terms of benchmarking, most companies typically have 50%-70% of reps at quota or above.

That’s a significant number of people; if you have a majority of people at or above quota, then you have a culture of people winning. Some organizations will have only 10% or 20% of people at or above quota. Sales leaders in these companies say, “We want quota to be a very tough thing for people to get to. We want it to be quite an achievement.”

That’s great. But if most of your organization is below quota then how do they feel about themselves? What are you doing for the morale of the organization?

You can get to that mathematical result with only 10% of people at quota but you create a less motivational environment. Don’t penalize your best reps with your quota process.  Reps who do well in the organization get rewarded next year with a bigger quota based on the current year’s performance, creating a performance penalty.

Automatically adding 10% to last year’s quota may sound like firm science, but it’s not good science, and it doesn’t account for the art of motivation.

 

Mark Donnolo is managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation and The Innovative Sale. You can reach him at mark.donnolo@salesglobe.com.

 

 

 

 

Three Quota Setting Mistakes to Avoid for 2014

Picture2Every year we do a survey of the top sales compensation challenges companies face. And every year – consistently – quota setting is the number one problem.

You could argue that quotas aren’t even part of the compensation plan. In fact, we set quotas after the plan is complete. But quotas are really the linchpin between the compensation plan and performance. You could have a very effective compensation plan, but if you don’t have effective quotas, it can derail the entire plan.

Below are three common mistakes to avoid as your plan for next year:

1. Don’t have your quotas ready. In our most recent survey, about 30% of companies did not have their quotas ready by month one. In fact, quotas actually may not be ready in the first quarter of the year. A lot of times, this is because the numbers aren’t available from finance until the end of the year and the quota setting process can’t begin until those numbers are ready. This also leads to a rush-job of quota setting.

2. Adjust quotas mid-year. Because too often we rush through quota setting, and for a variety of other reasons, about half of companies will adjust quotas during the year. Sometimes there are valid reasons to adjust quotas: if there’s a major change in the market or your production capabilities, for example. Some companies, however, adjust quotas mid-year to manage pay, which, in our opinion, is usually not a great idea. When making quota adjustments it’s very important to have policies set ahead of time for why you would make those changes.

3. Base quotas on historic performance only. When quotas aren’t set correctly they don’t reflect actual market opportunity. Instead, they tend to be historic – just add a certain percent to last year’s quota. A better method combines a bottom-up perspective from the front line, assessing real market potential, with a top-down perspective on what needs to be sold in order to achieve the company’s revenue goals.

Effective quota setting is critical for the sales organization. Ultimately, the implications of an ongoing quota process that’s not working well can be misalignment of goals to markets and misalignment of opportunities and also eventually missing goals year after year. No wonder this is a challenge area year after year.

Mark Donnolo is managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation and The Innovative Sale. You can reach him at mark.donnolo@salesglobe.com.

C-Levels in Sales Comp Asking Good Questions 2

We’re wrapping up our series on C-level participation in the sales comp process. The role of the C-level varies among companies for many reasons, but high performing sales teams using have at least one C-level executive asking good questions.

 We suggested some questions dimensions last week, but your organization’s specific situation will determine the best questions.

 Representation Questions

These questions ask how the sales compensation plan incorporates each of the C-Level Goals around Customer, Product, Coverage, Financial, and Talent. Remember to include only the essential performance measures in the sales compensation plan, and give management the responsibility to manage to the rest.

 Motivation Questions

These questions ask about the types of behaviors the sales compensation plan will drive. While most organizations think about the positive behaviors, also test for behaviors that may conflict with the strategy or with the workings of the sales team. This is a great opportunity to test the plan with experienced managers and reps to expose the full range of motivators in the plan.

 Results Questions

These questions ask about the measurable, tangible results to expect in each C-Level Goal area. This is a question that seeks specific answers rather than generalities. How much does the company expect to grow a particular customer segment or product group? What indicators will show that the organization has successfully supported its new sales coverage model?

 Dependency Questions

Recognize that the sales compensation plan isn’t the only driver of performance in the organization, but is a supporting program in the Enablement layer of the Revenue Roadmap. These questions ask about other organizational and environmental factors that could affect success.

 Risk Questions

These questions ask about all the things that could go wrong, either with how the program operates or how the dependencies play out. In most cases, predictions about sales performance turn out differently than anticipated. The idea is to acknowledge that likelihood and anticipate those possible occurrences. A useful exercise when addressing major change is to identify the possible challenges, assign them probabilities, and determine how to address each. It simply helps to stay realistic and better prepare to make the change work.

 Simplicity Questions

These questions ask about how to strip the sales compensation program down to its essence to make the message clearer and make managing the program easier. Asking questions about why the organization really needs a sacred component of the program can create some discomfort with a team that has invested so much hard work to that point. But these questions are valuable as a final push to the thinking around design.

 Change Questions

These questions ask how to turn the design into reality. The team should be planning for change from the inception of the program and continue through finalizing the design and preparing for roll-out.

 When the team is discussing the objectives of the program at the start, working along the way, or evaluating the results of its work, using the C-Level Question Dimensions can help team members and executives cycle around a dynamic questioning model that stays current with the challenges at hand.

 How would these questions impact your sales comp plan?

 

Mark Donnolo is the managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation and The Innovative Sale. To learn more, visit SalesGlobe.

 

C-Levels in Sales Comp: Asking Good Questions

Most C-level executives know good questions are more powerful than statements. Effective C-level executives ask the right questions about sales compensation, as well as sales effectiveness more broadly.

We recently asked C-level executives about the top questions they ask their organizations about sales compensation. We wondered where they got involved in the process – whether evaluation, design, or implementation. We also wondered if there were some common questions – those that almost all C-levels ask about sales comp. In our research, we heard these five questions most consistently:

  • Are we driving the right behaviors? (65 percent of C-level executives) When we cut through all the structures, measurement, and math, sales compensation is really about moving the behaviors of the sales organization in the right direction.
  • What are the financial returns and risks? (53 percent of C-level executives) When making a change in the plan, the anticipated benefits and the known risks should be clearly understood.
  • Does it align with the strategy? (40 percent of C-level executives) One of the likely reasons the organization made a change to the sales compensation program was to support the current or near-future sales strategy.
  • How will it affect our ability to recruit and retain top people? (34 percent of C-level executives) The plan should address talent management objectives.
  • Is it easily understood? (20 percent of C-level executives) Sales compensation is ultimately a communications tool. Its ability to clearly get the message across within the organization’s parameters is a true test of its effectiveness.

How does your C-level get involved in the sales compensation process? What questions have you found most helpful?

Mark Donnolo is the managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation. To learn more, visit SalesGlobe.

 

C-Level in Sales Comp: Getting Involved and Supporting the Program

In order for sales compensation to work, the C-level goals of the company have to be incorporated. But at what point should the C-level get involved to communicate those goals?

Certainly at the beginning of the process, to discuss strategic direction and short and long term goals. And in fact, 23 percent of C-levels participate periodically in design team meetings, according to a recent SalesGlobe survey. 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.

The head of sales compensation at a large software company limits the number of design options he shows the CEO, in order to prevent him from spending too much time on the details. “It works very well,” he said, because, “too much information and too many options can be confusing. But our CEO got involved this year at the end of the process. We were pretty much done with the plans, and then all of a sudden he wanted to take a look at them. He comes at it with a very different style. …We had to change the plans, and it took us another month and a half to get them approved, which made it interesting. He was definitely involved to a degree this year to where next year, we’ll integrate his expectations before starting the design.”

In our study, the more than 50 companies we examined that had a blend of C-level involvement had an average three-year compound annual growth rate of approximately 7.5 percent compared to the Fortune 500, which had growth of about half a percent and the Fortune 100 which had growth of  about 2 percent over the same period ending 2012.

While the right type of C-level involvement in incentive plans is certainly not the primary cause of higher growth, it is likely indicative of greater C-level involvement in the workings of the sales organization overall and the practical drivers of growth.

Join us for a complimentary webinar today, September 17, 2013, at 2:00 PM eastern, on making the C-level to street level connection through your sales compensation plan. Or, contact us at Mark.Donnolo@salesglobe.com for a recording of the webinar.

 

Mark Donnolo is the managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation. To learn more, visit SalesGlobe

C-Level in Sales Comp– Providing Strategic Direction

Picture1C-level executives (CEOs, COOs, CSOs, CMOs, and presidents,) get involved in various ways during the sales compensation process. Sometimes, as you may have seen in your own experiences, it’s not in the optimal way. Too much too late can wreak havoc on the 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 that high-value involvement peaks at the start of the process to provide strategic direction, at occasional review points to keep current and test the team, and again towards the end to review, approve, and support the plan from an executive level.

 From our research, 82 percent of C-level executives provide strategic direction on the priorities of the business relative to sales. These are the C-Level Goals described last week. Fifty-five percent also provide direction on how these strategies should be emphasized in the sales compensation plan.

Jeff Connor, chief growth officer for ARAMARK, describes his strategic involvement: “My role, at the end of the day, is for sales to function as a center of excellence.  I sit down with the people and make sure that we’re thoughtful about the strategy, the insights we’re building off of. I look at all the comp plans from a benchmark perspective and to try to help people understand whether they align with the strategy.

“Recently a business unit was looking at the Insight area, to use the Revenue Roadmap, and the strategic alignment,” Connor explains. “They built a model and straw person example. When I got involved my first role was to push and poke around the model to see if in fact it makes sense. Another thing I do, because I grew up here and was a direct seller for nine years, is to always put myself in the shoes of a sales executive. Do I understand it? Is it simple? Are the incentives things that I can control?”

How have you seen the C-Level successfully – or not – offer strategic direction in the sales comp plan?

Mark Donnolo is the managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation. To learn more, visit SalesGlobe.

 

 

 

C-Level Involvement in the Sales Compensation Process

Picture2As sales executives determine priorities for their sales compensation, they need to set their C-level goals. These will define the major priorities for the organization that will be converted to the sales compensation plan. Those priorities provide clarity for the behaviors the plan’s going to drive in the organization.

While the Revenue Roadmap defines all our possible destinations, the following dimensions help us to make the right strategic alignments and stay on track.

There are five C-level goal areas that can describe our strategy. Articulating these from the C-level to the organization helps to simplify the critical few from the trivial many.

Most organizations can concentrate on building programs that support these five major areas.

  1. Customer. The Customer dimension describes priorities in terms of buyer types and segments. Who are the right types of companies and buyers for our business?
  2. Product. The Product dimension identifies which offers will get the most focus. What products and services should be emphasized? Which are strategic and which are critical for cash flow? What are the priorities for cross selling?
  3. Coverage. The Coverage dimension articulates the major methods of matching sales resources to each customer segment. What are the routes to market? What is the role of third-party channels? What will the sales organization look like?
  4. Financial. The Financial dimension specifies monetary goals. What growth results are necessary for revenue, profit, and market share? How is the return on investment measured, with improvements in the organization and sales programs?
  5. Talent. The Talent dimension defines who the sales organization needs in its coverage roles to reach its goals. What types of skills will execute the strategy? What’s the talent inventory? Where does the organization need to build strength? Where do we need to source new talent?

Looking at the complexities of the growth plan, setting the priorities around the Customer, Product, Coverage, Financial, and Talent goals can provide clear direction for a range of sales effectiveness programs, including sales compensation.

Mark Donnolo is the managing partner of SalesGlobe and author of What Your CEO Needs to Know About Sales Compensation. To learn more, visit SalesGlobe

The Sales Comp Report Card

Report CardIt’s back to school time, so let’s talk report cards. Specifically, (honestly) how would you grade your current sales comp program? What about the one you’re designing for next year?

Designing a great sales compensation program that connects your company’s business strategy with your front line sales reps – a sales comp plan that makes the front line do what drives revenue for the business – can be complex and time consuming. But the return can be significant.

When we wrote “What Your CEO Needs to Know About Sales Compensation,” we developed a Sales Compensation Report Card. The idea is to assess your sales comp program on how well it matches up to five different factors:

 

 

1. C-Level Goals and Sales Roles

2. Framing the Plan

3. Linking Pay and Performance

4. Aligning the Team and Financials

5. Operating for Results

 

You can take SalesGlobe’s Sales Comp Report Card here, and see how your scores match up to other companies’.

For each of the five categories in the report card identify your lowest grade and determine specific actions you can take to improve that grade.

Drop us a note here or at mark.donnolo@salesglobe.com and let us know what you think of your results.

 

Best of luck,

Mark

 

 

To learn more, visit us at SalesGlobe or order a copy of our book, “What Your CEO Needs to Know About Sales Compensation.” 

Sales Comp Strategy From the Top

MB900385751It’s sales compensation season, so we thought we’d highlight the five most important points to remember as you begin designing this critical program.

First – and really foremost – the sales compensation plan has to align with the strategy for the business as a whole. Typically, it’s the CEO who sets the strategy and it’s this original version that should be top of mind when thinking about how to pay the sales reps.

The 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. Central to the strategy, you have 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.

These priorities gave us a clear direction for the business, which we could then translate to customer coverage and sales compensation. The company wanted a more sales driven culture.

To make the connection between these business priorities and compensation, the company’s leadership should focus on their priorities for the design of the compensation program. They should know what they needed to accomplish. Once they get down deep into the compensation work and the team starts getting uncomfortable, making comments like, “Do we really want to do that?” and “I’m not comfortable with this measure,” and “Finance is not going to support that upside,” it becomes easy to say, “Look, here’s what you want to accomplish as a business. We’re going to have a hard time going back to the CEO saying we missed a couple important points.” Nobody wanted to return to the CEO with anything that didn’t support his goals for the business. And, the C-level to front line connection is made.

 

Sign up for our complimentary sales compensation webinar on Monday, August 12, by emailing mark.donnolo@salesglobe.com.

Why Gone So Long?

And, we’re back.

It was a long hiatus, I know. I’m sorry.  But we have a very good reason.

Amidst the hustle and bustle of regular work, we’ve written a new book.

Here’s the short version: I went to art school as an undergrad — University of the Arts in Philadelphia — and then worked as a designer in New York for several years before getting my MBA and moving into sales work, where I’ve been for the past 20 years. I love working with sales organizations; but, for the first 10 years anyway, I felt I had to hide my art background. After all, I thought, who would want to hire the art guy?

Actually, a lot of people, it turns out. Before clients knew about my creative background, they recognized my creative thinking and they appreciated it because it was in the context of sales. A lot of what I had learned in art school applies very well to sales — both to how large sales organizations are managed and run AND how sales reps at every level can think creatively to solve their customers’ problems.

So I wrote a book. It’s called The Innovative Sale, and it will be available for purchase in January 2014. You can take a look on Amazon here. Please let me know what you think. I’m interested to learn how you think creative thinking might help with your sales challenges.

 

Mark

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.

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.

Your Revenue Roadmap: Driving Your Sales Strategy with Compensation

Revenue RoadmapOn 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.

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.

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.

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.

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.

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.

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.

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.

 

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.

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.

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.

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.

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.

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.

The customer dimension. What customer segments will we target? We may have unique customer segments on which we want to focus such as national accounts, key accounts, and mass market accounts. These may be further segmented by industry, sector, or customer needs. Within those groups, there are really only three types of growth opportunities: current customer retention; penetration of current customers; and acquisition of new customers.

The product dimension. What products or services are we going to offer, and what is the value proposition to each customer segment? We may wish to prioritize certain products, services, or combinations to reach our growth goals. These offers and priorities may vary by customer segment.

The market coverage dimension. As we align to our target markets, what sales channels and sales resources are we going to use? Are we going to use third party channels covered by channel managers? Will we use a direct sales organization?  Will we use a combination of field and inside resources?

The financial dimension. What financial results are critical for the business?  What is the anticipated ROI for the sales comp plan? In the end, the business needs to reach its financial objectives from a growth and profitability standpoint.

The talent dimension. How are we attracting and retaining the right talent to accomplish these goals? Does the current compensation plan drive the right behaviors to accomplish these goals?  Our business priorities and strategies will dictate a certain mix of sales talent necessary to reach our goals.

To help facilitate the discussion, ask the following four questions for each dimension. For example, for the customer dimension, ask: What is important for the business to accomplish in terms of customer retention and acquisition in the next 3-5 years? What must we accomplish in terms of customer retention and acquisition this year?

1. What’s important for the business to accomplish in the next 3-5 years?

2. What must the business accomplish this year?

3. Does the current performance of the sales compensation plan align or not align with these priorities?

4. Where are our weak points?

What other important questions help define strategic goals for the company that the sales compensation plan can carry out?

To learn more, visit SalesGlobe.

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.”

Compensation is often a symptom, and it’s the easiest, most tangible thing to look at, he says. The challenge is to examine all the essential elements of a successful sales organization around compensation. Do we have the right job designs? Do we have the right people? Do we know what our competitors are doing in the market? Are we using the right channels to go to market? Do we want better pricing or do we want better volume? Those are harder conversations to have, and instead, too often people pull out their calculators and start crunching numbers: weighting products and adding performance measures until the plan is so complex everyone is confused.

“People confuse incentives with alignment,” says the CSO of another Fortune 500 company. “And they jump to incentives as the answer, as opposed to the hard work of alignment, if that makes sense. In my experience, when you talk sales compensation everybody wants to just take big business objectives and assign incentives, as if the sales people will go after anything where there’s a buck.

“In reality, anybody who’s every worked on this stuff knows it doesn’t work like that. The alignment work – getting the correct insight, aligning it to the sales strategy – the last think you do at the end of the day is work on the incentive plan. So for me, confusing incentives for alignment happens all the time. People just go right to the ideas; if I incent the three things I want without understanding do they have a foothold on what I’ve already told them to do? I think this idea of alignment becomes really important as part of the whole piece.”

Does your company do the hard work of alignment or just jump to compensation, calculators at the ready?

To learn more, visit SalesGlobe.

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?

To learn more, visit SalesGlobe, email mark.donnolo@salesglobe.com, or read What Your CEO Needs to Know About Sales Compensation.

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 or email mark.donnolo@salesglobe.com. 

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, he had already begun to play with measurement, and it wasn’t adding up. He looked at their branch level data and at the reps who were ranked at the top of the list. “What did we get from our top branches in the company? A lot of revenue, but zero growth.”

Zero growth.

“So the sales managers are running around wearing the fancy camel jackets that they just earned being the best branches, and they didn’t grow a single customer,” he says. “As a matter of fact, they actually had a net loss of customers because of intense competition. The only reason we kept our margins intact was the company had a pricing action, which was led by upper management and had no involvement from the branch level. They had lot of revenue at a high margin, but the bottom line was they had not grown the business.

“It was then we realized we had a real incentive alignment problem.”

Once this executive turned on the lights – in this case through measurement – the company could see the bugs in their sales compensation program begin to scatter.  By aligning the goals of the company – growing new customers – with the incentives for their sales team, the company could drive performance toward its goals.

He is one of the enlightened ones – a business leader who understands the connection between incentive pay and business goals and the power an effective incentive program can have. But too many senior executives worry about the cost without seeing the incredible return on their investment, if their strategic input is included.

How should the C-level get involved with sales compensation?

To learn more, visit SalesGlobe or email mark.donnolo@salesglobe.com. 

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?

 

To learn more, visit SalesGlobe or email mark.donnolo@salesglobe.com. 

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!

 

 

 

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.

Please visit SalesGlobe for more information or email mark.donnolo@salesglobe.com. 

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 or email mark.donnolo@salesglobe.com.

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 email mark.donnolo@salesglobe.com.

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 email mark.donnolo@salesglobe.com. 

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 or email mark.donnolo@salesglobe.com. 

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? To learn more, visit SalesGlobe or email mark.donnolo@salesglobe.com. 

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 or email Mark.Donnolo@SalesGlobe.com. 

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).

Methods we’ve studied include evaluating the current experiences of your customers, and implementing creative ways to improve those interactions and differentiate your organization, and advancing customer connections from Interaction, to Engagement, to Relationship.

 

Important considerations 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. 

 

To learn more about creating a customer experience, visit SalesGlobe or email mark.donnolo@salesglobe.com.

 

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, visit SalesGlobe or email mark.donnolo@salesglobe.com.

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