Sales 101

Before we get too far ahead of ourselves, it's time we start our conversation about Sales. The fact is, most companies do Sales wrong: Wrong expectations, wrong incentives, wrong communication, wrong, wrong, wrong.

Let's start with Incentives. I mentioned in a previous post that an adequate Sales rep should generate 10 times as much revenue as their total compensation. To help make this happen, goals should be based on this metric. Otherwise, you are underpaying some reps and overpaying others vs. what their value is to the company. And believe me, they know it.

Expectations: You spend a lot of money to generate leads, right? So what's the close rate for each of your Salespeople? You should know this, your Sales Managers should know this, and your Salespeople should know this, too. At a minimum, it should be reported monthly, and it should be public information. (Nothing drives performance like spectators.) Regardless of your industry, if you have effective marketing (you do, right?), your Salespeople should close at least 1 out of every 3 leads (a 33% close rate), or you're wasting your money.

Communication: If you sell a physical product, rather than a service, your Sales reps should know exactly how much gross margin each product has. This will make it easier for them to negotiate volume deals - especially since their pay should be based on margin.

Splitting Territories: Because this is often done incorrectly, Sales reps feel like they're being punished when a productive territory is split. This is exactly the opposite of what you want to convey. Generally, if you're thinking about a split, it's because there are Prospects in the territory that the original rep isn't getting to. That's how you need to explain it, and that's how you need to approach compensation: reward the 2nd rep for new business generation, and make sure that the two reps work together by giving the original rep an incentive for turning over Leads that they have not touched. It need not be a large amount - they know they're being comped for zero work; it's more the fact that you are acknowledging the fact that you expect them to be team players and reward them for it.

CANI: The important thing is to look at everything that your Sales staff does, every day, and ask yourself "Why?" It is incredibly easy to fall into the rut of doing things a certain way just because you've always done them that way. The way to keep your company growing is to constantly improve everything you do. Don't expect to fix it all in a day, but do make a list of what to change and do set deadlines and milestones for those changes. (Think CANI - Constant And Never-ending Improvement.)