Why Do You Need a Sales Commission Scheme?

Posted by admin in Sales Management on January 26, 2012

The underlying assumption is that rewarding salespeople financially for performance will encourage them to work harder and sell more in pursuit of those rewards. This view is not borne out by academic research but in practice sales commission schemes are almost universally used. A carefully-designed commission scheme when implemented on top of good management practices and a solid sales process is a useful management tool – but it is not a substitute for these things.

How to design a sales commission scheme

    • Commission schemes are usually implemented at individual level
    • Ensure that the rewards incentivise the behaviour you want. You may want different behaviours from an account manager and a sales representative
    • Think carefully about the balance between basic salary and commission. The two combined form the OTE (on-target earnings) and the balance will have a strong impact on the motivation and behaviour of the salesperson:
      • The lower the proportion of basic salary the higher the OTE, since you are transferring risk to the salesperson
      • A high basic may mean that salespeople do not need any sales to achieve their minimum acceptable income
      • A low basic may result in aggressive sales behaviours or high staff turnover
    • Decide whether the scheme should be based on sales revenue or gross margin:
      • Revenue is relatively easy to measure but may result in unwanted price discounting
      • Gross margin supports prices but is more difficult to measure and can be open to manipulation
    • Implement appropriate controls on the sales process:
      • A pricing model or pricelist
      • Sign-offs
      • Commission payments only after contracts are signed
    • Understand that every commission scheme will have unwanted side-effects:
      • If a salesperson feels they are not going to achieve targets they will hold back new opportunities to the next year
      • Individual targets will prevent salespeople working as a team or spending time on anything that does not contribute to the current target
      • Salespeople will go after the easiest opportunities, which might not be the ones that matter most strategically
    • Check that you can afford all possible outcomes and that better performance against the commission scheme results in improved net margins for the business under all circumstances
    • Make sure that commission targets in total exceed the sales income budget – assume a conservative proportion of target sales will actually be achieved
    • The overall commission scheme rules should be published annually and each salesperson should have a written copy of their own targets and rewards, signed by them and their manager
  • Review performance with each salesperson monthly
Article Source: http://EzineArticles.com/6805188

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7 Daily Sales Management Strategies

Posted by admin in Sales Management on January 26, 2012

Daily sales management is about focusing sales reps everyday on selling to help potential and current customers focusing on their needs and problems. As a leader, you need to coach, train and promote everyday with every rep. Too many sales managers are pounding out reports from behind a computer and are not engaging their sales teams. Without your efforts most reps get locked into a ceiling of effectiveness-in other words they get comfortable. With your leadership you will keep them motivated to reach and exceed their sales goals. Sales Reps will also do a better job and get excited about making much more money. Here are the seven successful ingredients.

Sales Planning and Goal Setting

Meet one on one and establish clear sales goals and action steps with each member of your team. Put them in writing and clarify the goals. Identify what’s in it for the reps relating to their income, and the personal impact their success will have in their life. Schedule this but flex with the individual’s territory and needs. You need to have this conversation at least monthly to quarterly depending on each person’s performance. The more success and longevity, do it less frequently. The less success the person has had and the more they need to learn, do this more frequently. Always follow-up and tie in to your every day conversations.

Coaching One on ones

Every week have at least a brief discussion on the phone with each rep separated by distance or in the office for those close to home: How did it go this week? What did you sell? (Of course you have the reports but you want to hear the rep reply.) Who do you need to follow- up? How can I help? Good job on…, or nice work with…. Redirect them constructively as needed-you closed three sales, let’s get one more next week. How important is that personal goal we talked about? Let’s make more of an effort. What’s the plan this week? Always keep it as positive as possible!

Field Coaching

Make a plan and get in the field. Sales reps need your personal attention and with your help they will improve sales and service. Make sure you goal is to help, teach, support and sell. Don’t just do it to get out of the office, or to “rip” on the salesperson for poor performance or to make catch-up phone calls in the car. Your goal in the field is to help the rep be a better rep and increase sales. Also, do this with your best team members not just the least best performers. You can help them sell even more.

Marketing Plan

One of our customers achieves fantastic results. He is a master at using all the company marketing literature or programs. Teach your team to do the same. Too often companies invest big money in marketing resources and they aren’t used. Be the leader here and execute brilliantly. It will payoff for your team and you. It’s easy success if you do it. Lead by example in all communication with your reps.

Sales Training

Set up a schedule and train your team regularly. Don’t make the mistake almost everyone else does: doing only yearly sales training. This isn’t enough. Yes, have an annual event if you can but also do weekly, monthly or quarterly sessions in group meetings. Use WebEx if you are limited on budget and are separated by distance. While this is not a daily sales management technique, you can send reminders by text and email on a more regular basis. Always keep these positive and upbeat. Share good sales books with your team as well. Over one thousand new sales books come out every year. You can’t read them all but you can read more than your competition.

Sales Reports and Goal Board

Update your numbers daily or at least as often as you can. (In this day and age world-class performance requires “real-time” results.) Post the big picture results on a company or department dashboard. Show what is being sold by whom. This visibly shows and creates a sense of urgency.. It’s a visual and immediate recognition for your reps. It fans the flame of competition between reps and communicates openness about how we work together.

Promotions/Incentives/Contests

If you do all of the above strategies your team will do a better job. This strategy, then, can put the exclamation point at the end of the sentence. You do contests or incentives to excel not just to make the numbers. So whatever your budget, always have something going on and a goal to achieve as a challenge for your team. If you do a contest give every sales rep a chance to win. Otherwise the top performers win most of the time. Personalize some incentives, keep things interesting and have some fun! And, remember recognize progress and achievement as you go.

Finally, remember this, if you want your people to be better you have to be better as a leader. Engage these seven strategies to win big this year, and make them your own.

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Sales Peak Performance: Creating the Emotional Resiliency of a Champion

Posted by admin in Sales Management on January 26, 2012

Eight decades ago, Dr. Evan O’Neill Kane of New York’s Kane Summit Hospital felt doctors were losing too many Customers in appendectomy surgery, many because of the effects of general anesthesia. He felt that local anesthesia would be better for the Customer but, not surprisingly, no volunteers came forward to test his hypothesis. Until, that is, February 15, 1921. That’s when he finally performed an appendectomy with local anesthesia — on himself! In the process, he changed accepted medical practice. To be your best you can be in sales, you often need to change too; sometimes that change means operating on yourself! Begin analyzing your own situation by simply counting the how many times the letter f appears.

FEATURE FILMS ARE THE RESULT OF YEARS OF SCIENTIFIC STUDY COMBINED WITH THE FORMAL EXPERIENCE OF YEARS.

How many did you get? 3? 4? 5? 6? 7? There are a total of seven! Most people get four or five. If you missed some, why? Why would anyone miss an f or two or three? It has to do with our mental model or the way we perceive things and act on them. This little exercise points out that what you are missing in terms of sales performance improvement is most likely right in front of you. Sometimes the solutions to your challenges are there, but you just don’t see them. Why? Because of entrenched habits, perceptions and beliefs. When you try to improve, it seems as futile as trying to lose weight with fad diets.

So what’s the key? How do you breakthrough? Dr. Charles Garfield of the Peak Performance Institute has discovered exercises that help individuals tap their personal best performances. Garfield experienced these techniques himself as a world- class weigh-lifter and researcher. Garfield explains, ” In the process, the researchers discovered that mental training techniques not only combated negative reactions, but also threw open the doors to hidden reserves of energy and endurance.” Dr. Denis Waitley identified similar peak performance strategies in his work with Olympic athletes and business people. To begin remember these important principles to achieving sales peak performance:

Self-development is self-management. There is no self-improvement only increasing in the ability to be all that you already are. You can’t change others but you can change yourself.
To manage yourself better to sell more effectively you must be willing to change some habits to increase productivity.
A foundation to self-management is to respond to all events based on your goals and priorities rather than reacting to spot urgencies, problems or needs.

Mind and body are intricately intertwined; to control what you do, better control what you think. Just like a champion athlete systematically physically and mentally prepares to win the gold, champion salespeople do likewise. Know your product, learn selling techniques to be customer centered and prepare mentally too. It will help you handle the setbacks, the no’s and rejection that go with the job and think creatively. We call it Emotional Resiliency.

The Best of the Best Exercise

Think of a time in your sales career when you did your best work ever. Choose a situation that exemplifies your highest performance. Get a clear mental picture of the event. Replay it in your mind as if it were a movie. Think of the details –people, problems, sounds, feelings, and surroundings. Review in your mind what happened, how you behaved, what you felt and achieved. Capture your thoughts with the questions below:

What was the situation?
What was your motivation to succeed or act?
How did you feel?
What key behaviors or strategies did you use?
What lessons can you learn or relearn about your Peak Performance?

By learning to replicate that experience and improving the result as well, you’ll become a sales leader. To be the best you can be, make a commitment to personal development and excellence. If you want to be exceptional, do exceptional things. The difference between sales winners and losers is that the winners do what losers won’t do at all or won’t do enough. Never forget that success is not accidental. Achieve peak sales performance by continuing to learn from your experiences and others.

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