Developing Salespeople: Creating a Coaching Budget

Developing salespeople is like saving for retirement. If you don’t create  a realistic plan and invest accordingly you’ll be disappointed when you retire. Salespeople need a plan and an investment of time and energy in order to help them realize their full potential. Too often training and developing salespeople becomes a “round to it” for sales managers because they have other more pressideveloping salespeopleng things to do…like paper work and meetings. This is a mistake you can’t afford to make.

Another mistake sales managers make is treating every salesperson the same. This article will help develop salespeople while getting the most from each salesperson and your time.

Developing Salespeople

Each salesperson will require different approaches and need varying amounts of time.  Since you can’t be all things to all people, you must assess where your management time will bring its greatest return.  This means you must allocate your coaching time to make sure the people who have the greatest need and potential receives the most time.  The people who have the least need and represent the smallest potential for improvement receive the least time.

To make sure that you effectively allocate your time properly you’ll need to take the following actions:

      Create a Coaching Budget — To help you determine how much time you have available to spend with your people. For example if there are 240 work days and you want to spend 60% of your time coaching salespeople then your budget is 144 days. The results you get from developing salespeople are determined by how you spend your coaching budget.

      Assess each salesperson — When assessing salespeople you want to focus on their skills, knowledge and attitude. Make sure that you assess for  both the needs and potential of your people.  This will help you to spend the most time where the need and potential is greatest.

      Allocation of Coaching Days — Based on your assessment you now must commit your time to ensures that each salesperson gets an optimal amount of coaching time.  The key to setting priorities in this situation is to ask these questions “What will happen to performance if I don’t spend time with the salespeople?” and, “What will happen if I do?”

      Coaching Calendar — This formalizes your allocation of coaching time.  Since coaching time is the most important activity you can perform schedule it in your weekly and monthly plans first.  Then schedule other activities around your allocated coaching days.  Doing so will help prevent you from getting bogged down doing unimportant but urgent tasks instead of spending time with your people.

Developing salespeople won’t happen unless you make the time to do it. There are always going to be activities waiting to steal your time and distract you from your most important responsibility. If you want your salespeople to be peak performers then create your coaching budget and stick with it. Committing your budget to your calendar helps create the necessary discipline to make it happen.

If you’d like more information on creating a coaching budget and developing salespeople check out my eBook “Coaching for Peak Performance”. 

Developing Salespeople with Effective Coaching

Developing salespeople doesn’t happen automatically. Many sales manager never invest the time and attention to do so and end up paying the price in turnover and poor sales. Developing salespeople requires you to understand and apply a simple yet powerful coaching process.  This process involves three steps. They are:developing salespeople

1.    Recognize coachable moments. Coachable mo­ments are specific opportunities where coaching is most likely to make an impact. Coachable mo­ments fall into three ar­eas:

  • When sales­people perform well;
  • When sales­people fail to per­form; and
  • When salespeople seek help.

2.    Engage. This means taking the coach­-able mo­ments and turning them into performance discus­sions. These performance discus­sions should be brief, very fo­cused, and viewed as helpful by salespeople. These are great  opportunities for developing salespeople.

3.    Mobilize. To effect change, man­agers must con­vert the perfor­mance discussions into actions. These actions can be comprehen­sive (e.g., devel­op­ing a key ac­count plan) or focused (e.g., use visuals during a presentation). Developing salespeople requires that you monitor your salespeople’s progress with the actions you assign.

Coachable Moments

In order to get peak performance from your salespeople you have to use every opportunity to develop their effectiveness. You as a coach must recognize and respond to coaching opportunities as they present themselves. This means using a different approach with each coachable moment. We’ll discuss each one separately.

When salespeople perform well.  Your objective in this situation is to reinforce the salesperson’s positive behavior. This coachable moment is often overlooked because many managers feel that salespeo­ple don’t need positive reinforcement. Unfortunately, this is a faulty assumption. Reinforcing positive behavior increases the frequency of the behavior. If you fail to reinforce positive behavior, it will occur less often.

When you want to reinforce or praise the perfor­mance of a salesperson, use the BIT Model.

B= Behavior Describe what the salesperson is doing that is positive.

I= Impact Describe why the salesperson’s perfor­mance is important and how it contributes to the organiza­tion.

T= Thank You Deliver a specific expression of appreciation.

An example of giving a BIT would be: “Making those extra calls this month has really paid off. Your 20 percent over budget really helped us get over the top this month. I really appreciate the extra effort you’ve put in. Keep up the great work!

When salespeople fail to perform. Your objective for this coachable moment is to give feedback and help salespeople improve a specific area of their performance. Giving negative feedback is not always easy, but it is necessary for improvement. To mini­mize the potential of causing salespeople to become defensive and not motivated, make sure your feedback is specific, focuses on behavior, and helpful. Using the BIEC Model should help you do so effectively.

B=  Behavior-Describe what his/her behavior is doing or not doing that needs improvement.

I= Impact-Describe how the behavior is impact­ing performance.

E=  Expectation-Explain what you expect the salesperson to do or not do to change.

C=Consequence-Explain what will happen if the salesperson changes or the consequences if the behav­ior continues.

He­re’s an exam­ple of the BIEC Model:  “Mary, this is the fourth time this month you’ve submitted sales orders with incomplete or inaccurate informa­tion. When you do this, the order has to be re-written and reprocessed. This adds to our costs and delays the order from being pro­cessed. Delays in orders can lead to lost sales and dissatisfied custom­ers. From now on, I expect your orders to be submit­ted with all the information complete and accurate. Doing so will make it easier to process your orders and keep your customers happy. Also, we can’t afford to jeopardize business because of poor paper­work. If there are future prob­lems, we’ll have to review your account list”.

When your salespeople seek help in solving a problem or maximizing an opportunity. Too often, managers solve their people’s problem instead of managing the problem-solving process. Managers take this approach because it seems the most expedient. In the short run, it probably is. But in the long run, the approach creates salespeople who are dependent on their managers. If you want to develop salespeople who take initiative, accept responsibility, and hold themselves accountable, then remember, the goal of this coachable moment is to support their efforts, not solve their problems.

Using the CEAC Model will help you draw your salespeople out and identify how you can best support their efforts.

C= Clarify the problem or opportunity.

E= Engage in a discussion of what options are available to address the issue.

A= Agree on actions to be taken with deadlines (What, by when and by whom).

C= Commit your support to the initiative.

Summary

Developing salespeople with effective coaching is an investment that requires both time and effort. A few minutes before and after a sales call or while a salesperson is developing a proposal can pay huge dividends.  Therefore,you must view coachable moments as opportunities to make a difference, not a distraction from your job.  Remember, sales managers who are constantly looking for oppor­tunities to make a difference, generally do. So, don’t let your coachable moments go unful­filled.

Developing Salespeople with the OREO Model

Developing salespeople is easy when you can understand and apply three basic concepts:

1.  “Winning is fun, losing isn’t!”

2.  “Winning is different for every person!”developing salespeople

3.  “Your job as a manager is to help your people win everyday!”

When you discover what winning is for your people, then you are well on your way to helping them succeed. The quickest way to help salespeople win is to have a clear description of where they want to go or what they want. This is called an outcome. Using their outcomes to achieve business goals is an effective method of getting results and developing salespeople.

One way to organize a plan for achieving an outcome is the OREO Method developed by corporate trainer, Gerry Schmidt.

  •  Outcome: What is the desired result?
  • Reality: What is the current situation, including the resources available and the resources that are needed to change the  current situation?
  • Evidence: What evidence will be used to demonstrate that the outcome has been achieved?
  • Operations: What will the salesperson do to achieve the desired outcome?

Here are some important guidelines for Applying OREO while developing salespeople:

1.    Key to successful coaching is having a clearly stated and well-formed outcome. To discover someone’s outcome ask, “What do you want?”

To ensure that the person’s outcome is well-formed, make sure that it is:

•      Stated in the positive (describe what the person wants and not what the person doesn’t want).

•      Within the person’s control. The actions that will lead to the desired outcome must be within the person’s control.

•      Actions must be small enough and specific enough to facilitate immediate action.

•      Actions must have time frames.

•      Achieving the outcome will produce or lead to achieving a larger goal or outcome.

To determine the larger goal or outcome ask, “What will ________________ (insert desired outcome) get you or allow you to do?

2.    The next step is to assess the person’s current reality and compare it to the desired outcome. To assess a person’s reality, ask the following questions:

•      Compared to your desired outcome, where are you now?

•      What stops you from having the desired outcome now?

•      What are you doing that is keeping you from having the desired outcome?

•      What resources are available?

•      What resources are needed?

3.    Evidence defines how people will know that their outcome has been achieved. To determine a person’s evidence ask, “How will you know when you have achieved this outcome?”

To help clarify the evidence, ask the following:

•      What will other people see, hear, and feel when you achieve your outcome?

•      What will be the first indications that you’re making progress towards your outcome?

•      What other benchmarks will you use?

•      What will be the long-term impact of achieving the outcome?

•      How will achieving this outcome impact other areas of your life?

4.    Operations outline the person’s plan of attack. To discover a person’s operation, ask “What will you do to achieve this outcome?”  To make the plan as practical and effective as possible, ask the following questions:

•      How else can you achieve the outcome?

•      What are you going to do first?

•      Specifically, when are you going to do it?

•      What could get in the way of your success?

•      What support do you need to be successful?

•      How certain are you that you will carry out the agreed upon actions? (Use a scale of 1-10, with 10 being absolutely certain.) If the rating is less than an 8, find a new outcome or a new plan of action.

When salespeople do things for their reasons they are far more motivated than if they were doing things for yours.  Using the OREO model for developing salespeople helps you keep them focused on activities that produce meaningful results.

Sales Process: The Key to Growing Sales, Profits and Customer Loyalty

sales processThe sales process is one of the most overlooked assets a small business has for growing sales, profits and customer loyalty. If you want to grow your business this is one of the first places to look for dramatic results. I’ll explain why and what you can do to get the most out of yours.

A sales process is a series of documented steps salespeople follow to move prospects from first contact to purchase. It should include:

  • Each specific step a prospects take
  • Knowledge prospects need to move to the next step
  • Resources you can provide to help prospects move forward
  • Length of time a prospects need at each step
  • Metrics that measure conversion rates (the percentage of prospects that move from one step to the next) for each step

With a documented sales process, you have a powerful tool that enables you to:

  • Sell more efficiently
  • Create more accurate sales and revenue reports
  • Estimate the revenue and return on investment (ROI) of your marketing campaigns
  • See which stages take the most time and find ways to move prospects forward
  • Create better literature and tools
  • Improve your campaigns
  • Minimize time your reps spend on estimates and forecasts

Unfortunately, with all the benefits of a defined sales process 70% of companies don’t require their salespeople to comply with a standardized, documented set of sales processes.*(*ES Research Group)

Not getting  compliance may be caused by any number of factors including:  the process is poorly designed, or it’s not understood or it’s not supported by the organization. For whatever reason, allowing salespeople to “wing it” is a very expensive business strategy. Without a defined sales process resources can’t be effectively allocated, revenues can’t be accurately forecasted and customers may not get the information they need when they need it. All these factors contribute to lost sales, lower profits and diminished customer loyalty.

Even if your company has a defined sales process, that doesn’t guarantee success. Your next challenge is to make sure that your sales process aligns with your customers’ buying process. Starting the sales relationship just after a customer purchased from a competitor is far more challenging than starting when the customer first becomes aware of a need or want. When do you want your salespeople to start allocating selling time and company resources? Aligning your sales process with your customers’  buying process ensures your selling efforts begin as early in the buying process as possible. Thus giving you the best chance to influence the sales outcome.

Does your sales process make sure that you use the right selling effort supported by the right resources to make sure that sales are made in the shortest time with the fewest resources? If your answer is not a definite yes then you have a great opportunity for growing your business without adding costs. Improving your sales process doesn’t add costs because it’s simply directing your selling effort more effectively. The sooner you start the sooner you’ll start seeing bottom line results.

Sales Message: Is Yours Positioning You to Win?

Sales MessageIs your sales message positioning you win, draw or lose? The answer depends on several factors including if your sales message is  heard, who is hearing it and how effective it is.

Having your message heard is a role of the media, message, timing, frequency and delivery. A recent LinkedIn survey revealed the number-one challenge on the minds of sales professionals was “getting the attention of prospects”. Customers are bombarded with information, so much so everything begins to sound like “Blah, Blah, Blah”. Making matters more challenging is only 3% of your target market is in the buying mode at a given time. If they aren’t buying they aren’t listening.  Getting your sales message to your customers too early, too late or without impact is a waste of time, money and energy.

In the communication jungle, there are just too many products, too many companies, and too much marketing noise. The mind, as a defense against the huge volume of today’s communications, screens and rejects much of the information it’s offered. The only hope to deliver your sales message is to be selective and to focus on narrow targets. In a word: “positioning.”

According to John Foley CEO of Interlink One,“This is a one-on-one world…you have to really be more relevant with the marketing channel and the media you use to the people you’re trying to reach and not only relevant in those channels or media, but also the content, messaging, timing, and even how they’ll respond.”

To effectively position your your products and services you must find out:

  • How the marketplace sees your company
  • How your ideal or target customers see your company and what they value
  • What you know about your own company and the customer value it creates

Positioning your sales message should be a foundation for action to design, manage and defend your brand. It should inform everything you do, including:

  • What  customer value you create
  • What you value
  • What’s your sustainable competitive advantage
  • How you conduct your business
  • How you communicate and interact with customers

Business consultant and CEO of Grow My Revenue Ian Altman worked with a health insurance company who was getting a 1% response rate to their cold calling efforts. Sales were down and morale was even lower. Altman helped the company change their generic sales message to one that highlighted what the company did best and appealed to a large segment of the market. Selling the same products with the same salespeople, the company saw its response rate increase to 30%. Achieving such a dramatic increase was accomplished by simply delivering a better sales message.

You must view your sales and marketing messaging as an asset that  you can quickly leverage into increased sales and profits.

Take a close look at your sales message and ask yourself: How does it help your ideal customers  clearly understand how your solution uniquely satisfies their buying criteria and emotional needs; and is it delivered when it most influences the buying decision in your favor? If you answered no to either one you’ve got some work to do. Improve your sales message and watch sales grow.

Developing Salespeople While Coaching on the Run

One of the biggest casualties in the battle to “do more with less” is developing salespeople. With fiercer competition, shorter deadlines, and the urgent replac­ing the important, sales managers are starting to view developing salespeople as a luxury they just can’t developing peopleafford.

Although common, this approach to manage­ment is short-sighted and can lead to long-term disaster. Even with more demands on your time you must realize that developing salespeople isn’t something you do instead of your job. It is your job!

This means finding opportunities to make a difference as they present themselves.

The key to coaching on the run is the “hand in the bucket” test. When you put your hand in a bucket of water, the water level rises.  This is the case when a you spend time with a sales­person. While you are present, the sales­person’s level of perfor­mance is elevated.  The real test for developing salespeople occurs when you are no longer present. Does the salesperson’s performance return to the previous level, or does it stay elevat­ed?  In other words, did you leave something with the salesperson to make a real and lasting difference?

Before we discuss some of the specific aspects and techniques for coaching on the run, let’s review what it takes for salespeople to perform at their optimal level. Use the checklist below to determine if you’re giving your salespeople what they need to win.

Coaching Checklist for Developing Salespeople

  • Do your people have a clear understanding of what they are expected to do?
  • Do your people have clear standards for ac­ceptable performance?
  • Do your people have the authority and re­sourc­es to perform effectively?
  • Do your people encounter little task interfer­ence (e.g., conflicting goals, objectives, procedures,   etc?)
  • Do your people receive timely and accurate feedback on their performance?
  • Do your people receive positive conse­quences and reinforcement for performing the job as it’s supposed to be done?
  • Do your people experience negative conse­quences when they fail to perform?

These guidelines apply to performance in general, as well as specifics tasks and assignments. Use the questions to assess your coaching abilities and to analyze performance problems.

Each “no” represents a potential performance problem for developing salespeople. Taking action to convert your “no” respons­es to “yes” will go a long way toward improving your people’s performance.

Hiring the Right Candidate: The Final Decision

Hiring the right candidate for a sales position is a challenging task because if you miss the mark you lose time, money, enehiring thr right candidatergy and customers. I recognize that it is impossible to completely eliminate “hiring mistakes.” However, it is possible to significantly reduce them as well as minimizing their impact when they are made.

Even when you use a hiring process like Top Grading or though the Performance-Directed Selection System (PDSS) your emotions and intuition will still play a big role in the final decision. I look at the final decision being a 50/50 proposition.

Half the decision is technical in nature. It is based on all the quantifiable data, scorecards and information obtained from reviewing resumes, telephone screenings, personal interviews and reference checks. It may also involve your team’s assessment of the candidate’s ability to perform the job. This tells you that the candidate is a “fit” for the job.

The second half of the decision is interpersonal and emotional. It involves your intuitive feel and desire to manage the candidate you choose. This part of the decision is explores the candidate’s “fit” with you.

As a manager, you can’t ignore either part of the decision. An unqualified candidate you like will probably fail just as readily as the qualified candidate you don’t like. Hiring the right candidate requires you to consider both aspects.

The following procedures outlined in the Performance –Directed Selection System or other systems like Top Grading will allow you to place the candidates interviewed into two categories:

1) those that are qualified, and
2) those that are not.

Then you must assess the candidates that are qualified against the specific demands of the job. Finally, you must ask yourself, “Do I have the capability and desire to help make this candidate successful?”

If you can answer “yes” to that question, we feel that the odds of you hiring the right candidate are quite good.
For more information on Hiring Winners click here hiring-winners.

Managing Poor Sales Performers

One of the most difficult task for a manag­er is managing poor sales  perform­ers. Hoping a salesperson will “self-correct” usually doesn’t get the job done. Perfor­mance prob­lems occur for specific rea­sons and they usual­ly don’t go away unless they are effective­ly addressed.

managing poor sales performers

When a salesperson’s performance begins to slips, you need to act quickly and positively. Remember, small performance problems are easier to resolve than large ones.

 As a manager, you have three management tools for cor­recting performance problems. They are:

  • Counseling
  • Probation
  • Termination

 We will examine each one separately in this article.

Counseling

Counseling is your first option for correcting p­erformance problems. Counseling is used to address performance problems with any sales­person. Your goal is to bring the sales­per­son’s perfor­ma­nce up to the mini­mum stan­dard. This can be the salesp­erson’s overall performance or in a specific area (e.g. cold calling, negotiat­ing, closing, etc.).

The key to successful counseling is recog­nizing problems early and targeting them for corrective action. Often, a positive coun­seling meeting and regu­lar feedback are enough to boost a salespers­on’s performance. If this doesn’t work, your counsel­ing may need to become frequent.

If a salesperson repeatedly fails to respond to counseling, probation may be your next option. If the necessary corrections are not made during probation, termination may be the final solution.

Probation

Probation is a management tool that is de­signed as the last attempt to correct unaccept­able performance or behavior, prior to termina­tion. It is not an attempt to motivate, nor to punish.

Performance problems rarely go away by ignoring them. They must be recognized, given increased attention, and then appropriate action taken. Probation should be considered when:

  • All appropriate performance manage­ment actions have been tried.
  • The salesperson’s actions have failed to improve positively as a result.
  • If the terms of the probation are not met, you are ready and able to termi­nate.

Probation Guidelines 

If probation seems like the most appropriate action, there are several issues you should consider. The following guidelines are designed to help you address those issues:

1. If probation is warranted, check with man­agement or review company policy before proceeding.

2. The length of probation and its focus should be determined by the severity and duration of the problem, as well as the perfor­mance history of the sale­sper­son.

  •  Unacceptable performance. Proba­tion due to a failure to meet estab­lished per­for­mance standards should usually be 30 to 90 days in duration. New s­ales­peo­ple must be given an appropri­ate start up time.
  •  Breach of Company Policy. The pro­bation period will depend upon the seri­ous­ness and frequency of the in­fraction.

3. Written documentation during proba­tion is critical. Action plans and re­ports must be specified and fully com­pleted. De­tails of discussion should be careful­ly noted.

4. If a salesperson on probation decides to resign, ask for a letter of resigna­tion. If a letter is not forthcoming, a company letter, confirming the terms, should be sent to the individual as soon as possi­ble.

Termination

When it becomes apparent that a salesper­son on probation is unwilling or unable to perform the given tasks, termination is usually justi­fied. If you select this action, be sure to follow company policy.

Immediate termination, without a probation period can also be justified for a serious breach of company policy.

The objectives of termination are to formally end a salesperson’s affiliation with a company. This also includes communicating to the em­ployee the company’s responsibilities and commitments, such as back pay, benefits, time of departure, etc. At this time it is important to secure all com­pa­ny documents, equipment and other property that may in the individual’s hands.

Although it is a difficult and an uncomfort­able task, terminating unproductive or irrespon­sible per­sonnel is a necessary act; and should not be swept under the carpet. The conse­quences of not taking the appro­pri­ate action can create additional problems for you and the company, including the continua­tion of poor performance of the individual and the erosion of the organization’s suc­cess. Consider that your time and the time of others will be contin­ually wasted and the atti­tudes of other staff members could be in jeopar­dy.

On the other hand, termination often produc­es positive benefits to all concerned. Termina­tion allows the salesperson to move on to a career, company, or position that is more suited to his abilities. The sales staff can focus on their performance and you can hire a per­son more suited for the job.

Termination seldom comes as a surprise, especially if you have done your job effectively.  Salespeople on probation sometimes welcome termination because it disengages them from the uncomfortable situation of failing.

Summary

Your job is to get results through your peo­ple. Ideally, you hire and develop people who have the ability and willingness to perform the job.  When people fail to meet their perfor­ma­nce goals, you have three tools available to you: Counseling, Probation and Termina­tion. Using each tool effectively and in the appropri­ate situations should help when managing poor sales performers and to become a suc­cessful manager.

Sales Training:Six Tips for Success

sales trainingWill your next sales training event get rave reviews or be panned by a group of disappointed salespeople? Delivering successful sales training requires careful planning and preparation.The six tips described below will help make sure that you cover all the bases needed to succeed.

1. Assess Needs

The key to successful sales training is not just doing things right, but doing the right things. Training events should address an area where there is room to improve and where improvement will result in a payoff for the participant. Conducting a needs assessment prior to training ensures that your training is relevant and needed.

You can assess needs informally or formally. The key is to avoid designing training in a vacuum.

2. Establish Learning Objectives

“If you don’t know where you’re going, any road will get you there.” This saying is particularly true for sales training events. Objectives help focus the participant and the trainer on achieving specific results. When determining learning objectives, remember that they should closely reflect the expected behavior participants do on the job.

3. Select the Appropriate Activities

Based on the experience and learning styles of the participants and on your own comfort with the material choose activities that best match your learning objectives. Select several types of activities to make sure you have variety and that you address all learning styles.

4. Develop An Agenda

Whether you are planning a one-hour training event or one that lasts three days, your event will benefit from a well-thought-out agenda. When developing your agenda, make sure you allow adequate time for each activity or topic, especially those with the highest priority. Also, sequence the activities logically and with consideration for how each activity relates to each other.

5. Make Arrangements for the Training Event

Successful sales training events, like successful sales calls, require adequate planning, preparation, and follow-up. Make sure you include the following in your preparation:

• Prepare Materials. Prepare all classroom materials (handouts, review sheets, etc.) in advance.

• Check the Equipment. If you need equipment such as flip charts, projector, lap top etc., make sure they are properly set up and working before the meeting begins.

• Check the Room. Check the room to make sure that particulars such as seating arrangements, lighting, room temperature, etc., all meet your requirements.

• Include Breaks. If your meeting agenda is more than a few hours, be sure to schedule adequate breaks. Remember: “The mind can absorb what the rear-end can endure.”

• Don’t Forget To Use Energizers. For longer programs, don’t forget to include energizers that involve physical movement. Consider using them after long sessions or before changing from one major topic to another.

• Plan The Evaluation. Determine how you’re going to evaluate the session. This can range from class evaluations to on-the job assignments. Decide before you conduct the training and tell the group why it’s important and how they will use the information.

• Prepare Yourself. Every training event is really three entities:the one you prepare, the one you deliver, and the one you evaluate when it’s over. The more you prepare, the better the other two entities are.

6. The Ultimate Test

The last and most important test for any training is, “Does it help salespeople make more sales?”

Depending upon your sales cycle, it may take several months before the results of this evaluation are in. However, bottom-line results are a powerful tool for motivating salespeople to change behavior, because they show a direct link between the training and enhanced results. An even stronger and immediate reinforcement for applying new skills is rewarding salespeople. Use intangible rewards (e.g., feedback, praise, recognition, etc.) or tangible (e.g., contests, prizes, rewards, etc.). The key is providing rewards that are meaningful to your people. Remember, well-planned, concerted effort to reinforce and reward participants for their efforts is your best opportunity to cultivate the behaviors you want participants to show in the long-term.

To make sure your next training event is well received and produces the expected results use the six steps outlined above.

For more information on successful sales training go to: trainingwinnersnow.com

 

Sales Compensation Plans Pitfalls and How to Avoid Them

    How effective is your sales compensation plan? Does it help you attract the  people you    need     and are you able to keep your top performers? If you’re not  satisfied with your compensation plan, you may have one or more of the following sales compensation plans pitfalls. As you review each one, think about your own sales  compensation plan.

1. One size fits all.

Having a uniform compensation plan may sound fair, but is rarely effective.  Unless all your salespeople enter your company with the same experience and do  exactly the same job, compensation becomes an issue. Such factors as size of the  territory, potential of the territory, types of accounts and experience of the  salesperson usually necessitates some adjustments in the compensation plan.

Tip: Make sure your compensation plan fits the various needs  and demands of your people, the job, and the company’s goals.

2. Punishing high performers.

Some companies have a philosophy of “how do we prevent our salespeople from  making too much money?” This approach de-motivates high performers. Basically,  the plan tells high performers “once you make this much, your income potential  stops… no matter how much extra revenue you could bring in for the  organization.” This doesn’t mean companies should give their people a blank  check. It means that if high performers can find ways to increase the company’s  revenues and profits, compensate them accordingly.

Tip: To maximize the potential of your sales force, give  worth-while incentives for your high performers. Give them a reason to  stretch

3. Subsidizing mediocrity. Many compensation plans set the  performance standard too low. Salespeople receive better than average  compensation for doing average performance. Plans that encourage salespeople to  “just make quota” settle for too little… and usually get it. High performing  organizations view quota as the minimal standard or starting point for achieving  financial success.

Tip: Make sure your plan is both challenging and  realistic.

4. Discouraging rookies. Most sales jobs take time to learn.  During this learning period, new salespeople usually produce less revenue and  make less than experienced salespeople. If the new salesperson can’t make enough  to live while learning the job, they will become discouraged and look for  another opportunity.

Tip: Create a compensation plan that helps salespeople make  the financial transition from rookie to an experienced salesperson.

5. Playing games with people’s paychecks. The quickest way  to destroy trust and de-motivate salespeople is to play games with their  paychecks. When any change, mistake, or adjustment to a paycheck happens handle  it quickly, accurately and with a proper explanation. If you change the pay  plan, make sure people understand it before rolling it out. If you miscalculated  a bonus or commission, correct it immediately. How you respond in these  situations is as important as what you actually do.

Tip: Be honest, direct and responsive in all actions that  impact salespeople’s actual paycheck.

6. Looking at compensation as a cost not an investment. The  goal of sales is to acquire customers. The goal of a compensation plan is to  motivate salespeople to acquire as many of the right type of customers as  possible. Managing compensation as a cost requires organizations to restrict it,  which in turn restricts the organization’s ability to acquire customers.  Managing compensation as an investment focuses on the return generated by the  compensation plan and not just the amount spent.

Tip: Develop a compensation plan that products the best  ROI.

7. Providing incentives for the urgent and not the  important. Why do so many companies experience peaks and valleys in  their sales? Often it’s because they only focus on short-term goals at the cost  of long-term growth. One company placed a premium on acquiring new business and  succeeded. However, they neglected their existing customer base and lost as many  existing customers as they gained new ones. Churning customers is a dangerous  and unprofitable practice. Remember, when you introduce an incentive for one  thing, something else suffers.

Tip: Before introducing an incentive, make sure you  understand its full impact.

8. Letting the compensation system manage performance.  Compensation plans give structure and incentives for the sales force. They  should support management’s goals and strategies, not replace effective  leadership and coaching. The compensation plan is a tool for managers to use  with other performance management tools and activities (i.e., performance  appraisals, forecasting, training, etc.) to maximize sales performance

Tip: Integrate the compensation plan with your other  performance management tools to maximize performance.

9. Failing to teach people how to win. One definition of  motivation is “winning is fun and losing isn’t.” If this is the case, a  manager’s job is to help his/her salespeople win. Since the compensation plan  provides the rules of the game, managers must show their people how to play and  win the game. This is particularly true when you introduce a new compensation  plan or for new people. Showing them how to win motivates and invites  loyalty.

Tip: Know how to win with your compensation plan and teach  your people how to do it.

10. Overlooking the power of psychic compensation. Money is  a strong motivator, but it’s not the only motivator. By leveraging such psychic  compensation as recognition, praise, feedback, teamwork etc., you can elevate  your sales organization’s performance to new levels.

Tip: Besides money, find out what winning is for each  salesperson. Then help them make their personal wins.

Summary How many of the pitfalls have you experienced? How  many are exist with your compensation plan? Developing the right compensation  plan requires a careful analysis of such factors as:

• The market

• Your work unit (region, office, etc.)

• The Company

• Your Personnel

• Your Goals

• The Resources / Tools Available

This analysis helps you develop a sales compensation plan tailored to your  needs. Take the time and effort required and both you and your people will be  justly rewarded.

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