7 powerful tips.
Posted May 1, 2006
Early every year companies worldwide will look at their 2005 sales figures and try to figure out what went wrong, and what can be done better going forward. Some will set unreasonably high sales targets, others will plan exciting sales contests, and still others will look to their top salespeople and try to figure out how to infuse the same talent into the rest of their sales teams. But by understanding a handful of time-tested and universal sales management principles, any company can increase its chances of sales success.
Here, seven tips to help any company achieve and exceed its goals:
1. Avoid goal vacuum--set targets early.
It is important to communicate sales targets as early as possible in the new year. When management is analyzing the past year and working out sales goals for the present one, there's a goal vacuum, and savvy salespeople will often close deals less aggressively to keep from getting too far out in front of their target. By simply setting the goals--even if they're still rough and will need to be adjusted--salespeople will have something solid to shoot for, and they'll start closing earlier.
2. Don't pad the sales target.
In the average company, as quotas push down through the management ranks, each manager builds a buffer to make sure that the person below delivers the revenue needed to make the up-line manager's number. Eventually, what started out as reasonable targets are inflated into unrealistic goals, the sales team becomes demotivated, and the company stagnates. Instead, keep target allocations as close as you dare to the actual goal. In the end it will help everyone.
3. Keep goals simple.
Sales targets (or goals) need to be simple for both executives and the sales team to understand and measure. If you can't properly measure sales performance, it's crazy to put sales force rewards in place, because that investment won't work toward your overall company goals, and neither will your salespeople.
4. Cash is king.
Cruises, vacations, and other prizes are great, but clearly, cash incentives are the reason salespeople come to work every day. Good compensation plans lay it out: "If you do this, you'll get that amount of money." Cash incentives are the only way to be this exact. The problem with noncash forms of compensation is that they're often based on a bell curve of performance or some other selection process, where even if certain goals are accomplished, there's still only a chance that a salesperson will get a particular reward. Think of contests and promotions as fun ways to add to a cash compensation plan--don't make them a substitute.
5. Pay incentives as quickly as possible.
Sales managers often make the mistake of outlining a sales compensation plan that is too long, and they wait too long to pay their sales teams. It's better to set short-term goals and compensate your team regularly as they reach them. While intellectually very attractive and much discussed, long-term goals just don't work. There are too many variables at play for people to believe that by slowly executing toward a particular long-term goal, they'll ever actually reach it.
6. Everyone loves sales heroes, but they don't win the war.
Top sales managers know that in addition to the 10 percent of the sales stars who command the limelight, it's really the other 90 percent of the sales force that fights the good fight day in and day out, and that is actually responsible for winning the war. It can be easy to perceive that it's the heroes who save the day, but in almost all cases it's the rest of the team that gets the job done. Don't ignore the rank and file
7. Use a bit of theater to get everyone on board with the plan.
There's an age-old--and yearly--battle between executives and sales teams when it's time to review sales targets and results. When goals are missed, management says the sales force doesn't get it or isn't motivated, and the sales team says the products aren't any good. This can be prevented with one theatrical but powerful, step: To keep people from passing the buck, just circulate the compensation plan, and get each executive to personally sign it, and viola--no more excuses.
About the Author
Robert Youngjohns is president and CEO of Callidus Software. He holds an MA (with honors) in physics and philosophy from Oxford University. Please visit www.callidussoftware.com
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