Sales Staff Management

27 Oct Sales Staff Management

Compensation for Sales Staff

Elizabeth Wasserman, author of How to set up a Sales Compensation Plan, states that “One of the biggest management challenges for a growing business is compensating salespeople effectively. You know you need an incentive compensation plan that encourages your sales force to land new accounts and continue to upsell existing customers, but where do you begin figuring out the best way to compensate them? It often boils down to finding the right balance between base pay and commission. But other questions also may come in to play: Will a commissions-only model work for you? How do you set parameters for performance? How do you measure that performance?”

Below are some suggested steps in setting up an effective sales incentive plan.

Put the plan in writing and make sure that front line managers have access to the plan. A thorough understanding of the plan will make it easier for the sales staff to be motivated, the management staff to review their performance and the accounting staff to calculate commissions and bonuses. While writing the plan you should include

• Your business sales strategy such as the type of clients you are interested in attracting
• Performance measures or benchmarks for performance for commission or bonus levels
• Payout formula for how the sales staff will be paid given their performance
• Management procedures for handling commission splits or commission disputes

Develop meaningful and realistic sales goals that take into consideration hitting sales quotas, managing profit margins and retaining clients. Scott Shimamoto, principle for ZS Associates, indicates that “tying individual performance parameters to a company’s broader growth objects is crucial for the success of any sales incentive program.

Sales Compensation Formulas can consist of 100% commission, straight salary and a hybrid of base salary plus commissions. According to an Inc.com article “The vast majority of businesses opt for a middle ground. In 2008, WorldatWork surveyed its members in conjunction with the National Association of Sales Professionals (NASP) and found that a mix between base salary and variable pay were the most prevalent forms of sales compensation. Eighteen percent of respondents used a mix of 80 percent salary and 20 percent commission. Sixteen percent used a 70 percent salary, 30 percent commission ration. And 14 percent reported a mix of 60 percent salary and 40 percent commission.”

Evaluating Sales Staff

The process of evaluating the sales staff should be two fold. First you should evaluate how your sales plan performed. It is not fair to evaluate the sales staff against a plan that flopped. So first and foremost, you need to look at the corporate strategy and evaluate it.

According to Vanessa Cross from Demand Media, she states in her article “How to Evaluate Sales Strategies” that there are six steps to evaluating sales strategies:

• Review the original sales goas and objectives
• Identify performance gaps in the sales goals and actual outcomes
• Evaluating the effectiveness of promotional sales strategies
• Review sales staff performance
• Calculate the internal rate of return on the sales plan
• Perform qualitative analysis of sales performance

The next step is to evaluate the salesperson’s actual performance. According to Doug Kelly in his article Top Ways To Evaluate a Salesperson’s Performance he states that “Effective sales performance tracking begins with clear, defined goals that are aligned with your company’s core objectives for the year.”   You need to evaluate a salesperson’s performance looking at not only their sales volume but also their profit margin on the sales. You don’t want to reward a high sales performance if the company does not make money on the actual sale. You can also have specific bonuses or commissions tied to areas of emphasis such as new products, new clients, and new market segments. Most companies value client retention and happiness so sales people can be compensated on their ability to maintain their core client base.

Controlling and Directing Sales Staff

According to Mark Christie who wrote 9 Tips for becoming a great sales manager for Sales Force Training and Consulting’s website there are nine tips to focus on:

• Set goals and priorities
• Establish a way to reach those goals
• Earn the trust of their sales team
• Help your sales force achieve their potential
• Shares credit with their staff
• Accepts responsibility
• Delegates but never “dumps” on their staff
• See opportunities in problems and lessons in mistakes made
• Learns that the sum of the parts can be greater than the individual pieces

Ultimately it is the sales manager’s responsibility to develop a lasting professional relationship with their staff that garners both respect and admiration. Sales people tend to work harder for people that they like and respect. A part of earning that respect is creating a positive sales culture. According to Mike Brooks, who wrote the article 3 Keys to Transforming Your Sales Culture for NASP (National Association for Sales Professions), “There are three keys to ensuring you achieve that by in. Careful and thoughtful implementation of these strategies will not only give you the best chance of bringing your team on board, but also help you to sustain the early momentum and success required to make transforming your sales culture possible.” He felt that having a clear strategy for initiatives, winning key buy in from top performers in the company and finally giving the program time for implementation would help you transform your company’s sales culture.

Ethics in dealing with Sales Staff

According to Paul DiModica who wrote Managing Sales Team Ethics and Sales Morality there are six guidelines on how to communicate and deploy ethical standards to your sales team.

• Ethics must be a verbalized and demonstrated sales process
• Develop a detailed presentation for your products and services so the sales force has a roadmap for how to do their sales presentations
• Management must demonstrate the standards that they expect their sales team to exhibit
• When hiring people to join your sales team have them sign an ethics clause in their employment contract
• Communicate monthly your position on company ethics
• Don’t always assume the worst with your sales staff. Potential clients may also be subject to ethical considerations. Especially if they are lodging an unfounded complaint.

Ethics Question: How do you handle situations where one client is asking you to give them information on their competitor who just happens to also be your client? Although that conversation is bound to create tension and feel quite awkward it is a pretty easy question to answer.   You should never reveal private information about one client to another client. In fact according to the web book article Ethics in Sales Management “courts are likely to agree with the buyer that the seller has an obligation to protect the buyer’s information”

Reference Materials:

http://www.inc.com/guides/sales-compensation-plan.html

http://smallbusiness.chron.com/evaluate-sales-strategies-20565.html

http://www.prosalesmagazine.com/business/sales/top-ways-to-evaluate-a-salespersons-performance_o

http://www.salesforcetraining.com/sales-training-blog/sales-management-training/9-tips-for-becoming-a-great-sales-manager/

http://www.nasp.com/article/9F637282-A63D/3-keys-to-transforming-your-sales-culture.html

http://www.pauldimodica.com/blog/index.php/item/24-managing-sales-team-ethics-and-sales-morality

http://www.web-books.com/eLibrary/ON/B0/B64/082MB64.html