Sue Barrett’s post on LinkedIn entitled “How to stand your ground and hold your margins” provides useful hints for the sales person in front of their customer, but could the dilemma be avoided through use of appropriate targeting?
The way in which commission schemes are designed should take full consideration of the behaviour they will encourage. As a general rule commission earned should be based on two basic principles:
The scheme should motivate the staff to modify their behaviour such that their efforts are fully aligned with the objectives and goals of the company.
- The scheme must be seen to reward people for their efforts and most importantly, reward them in line with their relative contribution.
- If commission is earned purely on revenue, what incentive is there to not give away discounts, which in turn impact on margin?
Likewise, if the sales force are not well informed on how prices are calculated and the underlying cost structure, then the impact of discounts and give-aways on margin will be less well understood.
Why might it be beneficial to use margin rather than revenue as the incentive?
- What keeps a business fed is the margin so by paying against margin you focus the sales people on what the business wants. When they are doing their deals they will be more appreciative of a discount’s impact on profitability as it also hits their pocket.
- Let’s assume you make 10% gross margin; so 10% of margin will pay the same as 1% of revenue. 10% is much more motivational than 1% even though it pays the same.
If you’d like some help with designing effective commission plans, and helping your team improve their negotiating to reduce need to discount, why not give us a call.
If your customers are slow to make decisions and your pipeline forecast is forever moving, we can help you.
If your sales force are submitting bids with a low uptake so you feel you are just providing free consultancy, we can help you.
Markets are changing and customers have more opportunities for research before they buy, consequently the sales force has different challenges in order to engage with customers. Gaining insight into your Customer’s world and thereby understanding how you can deliver greater value than your competitors can be key to how you approach your target market.
We have helped companies in various sectors re-focus their propositions and markets for greater customer engagement, leading to more new and extension business. This also assisted the sales management to obtain more reliable forecasts.
“Working with Performative greatly improved the quality of engagement with potential customers and our ability to forecast outcomes from those.” MD, Mobile Technology company.
Feel free to call us for a confidential discussion.
Are your sales people as good as their recruitment interviews? Are they working together to the same game plan?
Recruitment, training, bonus & commission plans are often mechanisms used to address poor performance. However, sometimes this becomes reminiscent of that old song “There’s a hole in my bucket …” with its ceaseless cycle.
To have a lasting impact generally requires scrutiny of other factors which are influencing the end results. So, rather than just focusing on the performance of the sales people and their managers, focus is needed on the entire selling environment; team structure, recruitment, training, motivation, tools, methods & processes, market intelligence, management and leadership.
So if your sales force is not delivering the performance you need to achieve your goals we can help you in:
- Recruiting the sales team appropriate for taking your business to market; placing the right people in the right roles to create opportunities and close deals. Read more
- Developing professional selling and sales management skills for all your customer facing staff. Read more
- Putting in place those elements required to ensure they are your staff, doing things your way. Read more
If you’d like a confidential discussion on achieving your sales targets, why not give us a call?
“The Performative Sales Performance Transformation programme enabled us to develop a much stronger sales culture and focus on key accounts. Sales skills were developed in customer-facing staff and a clearly defined account management process implemented, putting the management team in control of sales outcomes and enabling improved business performance.” MD, Management Consultancy
“This was very successful measured in terms of increased levels of business from existing customers, an increase in the number of new customers and a consistent increase in the overall level of bookings. In the area of weddings we had a phenomenal success with bookings more than doubling between 2002 and 2003 and as we start a new year, I am confident this trend will continue.”
“I have no hesitation in recommending Performative to any other organisation seeking a solution to business and/or sales performance issues.” MD, Wadenhoe House
Wadenhoe House is a magnificent Jacobean manor house in the rolling Northamptonshire countryside. It is recognised as offering the highest levels of residential and non-residential conference, training and special occasion facilities to meet the needs of the most demanding clients. The Wadenhoe House management team approached Performative to help bring about long-term improvement in the performance of the business.
The Performative Solution
Performative worked with the Wadenhoe House team over a two year period to achieve improvement in a number of areas, the key ones being:
- Using the Market Focus Review process, implementation of a dramatically reduced prospect database to enable much more focused selling effort to get the best return.
- Creation of a selling model specifically tailored to the Wadenhoe House business. This gave the sales team tools and processes to support all aspects of their selling activities.
- Introduction of tools for the Managing Director to easily manage the process and, in particular, the sales pipeline.
- Creation of a proper selling team based partly on existing staff and partly on a new recruit. In particular, Performative helped identify the talent in one existing team member, who then became the team leader.
- Introduction of the concept of meeting prospects as well as talking to them on the telephone. This was unusual in the venue business and was acknowledged to be one of the reasons behind subsequent improved performance especially in the weddings area of the business.
- Development of a customised training and development programme covering; general selling principles, use of the telephone, handling objections, negotiating and closing. This brought all the other work together and contributed to a significant improvement in confidence and morale across the whole team.
- Provision of a telephone support service to coach through individual sales negotiations and any general sales or business issues.