The Perfect Compensation Plan

predictable revenue growth

Driving Sales Funnel growth, meeting revenue objectives, and getting sales teams to meet or exceed sales metrics are among the many challenges faced by our clients. Quite often, these problems are self-inflicted. Large salaries and commissions provide little incentive for sales teams to achieve the metrics that drive Sales Funnel and revenue growth.

In order to meet your targets, you need to introduce a compensation plan that encourages the appropriate behavior and provides the right incentives for your team to work towards their goal. Key Performance Indicators (KPIs) are the activities that drive Sales Funnel and revenue growth.  KPIs that fail to be established or met, will result in a loss for your target revenue. Example KPIs for Inside Sales might include:

  • Key conversations with prospects that establish pain & fit. Without frequent conversations with prospects, there will not be enough activity to grow the sales funnel.
  • A Sales funnel that is in excess of 3X the revenue objective.  We suggest that clients analyze the sales funnel activity from the past 3-6 months to determine their closing ratios.  Some of our clients have only required a sales funnel of 1.5X their revenue objective, while others have needed a funnel of 5X, to ensure that their targets were met.
  • A pre-established number of demos.  We suggest that our clients determine the ratio of demo presentations to closed deals, to establish this metric.  One of our clients found that 75% of demo presentations generated closed deals.  For this specific client, demos were very important and became a top metric for their Inside Sales team.

What is the best way to ensure that team members meet or exceed their KPIs? Fifteen years of experience and association with over 100 companies, has led us to this answer. The answer: Build a compensation plan with three distinct components: Base Pay, Performance Bonus, and Commission.

Three Components of a Perfect Compensation Plan

  1. Base Pay: Companies with a high base salary often have poor performance within their sales teams. Base salary should accommodate a decent quality of life within said region. Base Salary should not be able to provide “luxury” items, keeping incentive for the team to meet their established KPIs.
  1. Performance Bonus: Compensation plans must provide a pay-for-performance component to encourage appropriate team behavior.

For example: if the monthly KPIs include a specific number of Key Conversations, Sales Funnel growth, and Demos, the representatives should receive a monthly performance bonus for meeting or exceeding these established KPIs. Performance bonuses work very well to ensure that KPIs are met.

  1. Commission: Commission should reflect the achievement of KPIs.

For example: suppose that 5% is the highest commission rate given at 100% of quota.  If a team member has met 100% of quota and 100% of their KPIs, they should receive the highest commission rate.  If not, the commission rate should reflect their achievement of quota and established KPIs.

Appropriate “Selling” behaviors develop when compensation plans are structured around KPIs and Sales Funnel growth.

Elevate the Morale of Your Sr. Executives and Recapture Hope and Success to improve Corporate Culture

Many of the companies that we have been asked to “turn-around” had executive teams that were without hope.  Despair and lack of faith were the emotions of the day, reulting in a missing sense of community and a negative corporate culture.  These executives couldn’t see a way out and had no vision for the future.

Recently, I was asked to do a GAPaudit (Growth, Accountability and Performance) for one of our clients.  The CEO was at his wits end with the numerous challenges that he had to address.  Some of his challenges included:

  • A “me-too” product that was launched very late in the game and without key features that would make it a compelling solution
  • An ineffective Sr. Management team whose focus was on what the other guy wasn’t doing leading to an eroding corporate culture
  • A sales funnel that wasn’t nearly large enough to support the company’s revenue objectives
  • A non-existent strategy for developing the sales funnel
  • The perception of an “in-crowd”. Every senior manager felt like the CEO was favoring the “other guys”

The atmosphere at the company was so bad it was palpable.  The senior management team was without hope and no one on the team could share with me their thoughts for improving the situation.  Team members were in a state of panic. Corporate Culture was basically non-existent.

When there is no hope, it is difficult to get out of a bad situation.  When communication breaks down, there is no way to have meaningful discussions.  When team members view each other as the enemy, alignment of thought is almost impossible.

Here are 8 things that you can do to massively improve morale and turn your company into a successful, high-performance, high-energy culture of respect and success:

  1. Admit that there is a problem.  Burying your head in the sand while this negative activity continues will not help you to get out of your mess.  If you have a lot of finger-pointing and bad vibes amongst your team, you need to nip it in the bud and now.
  2. Find a conference room that you can spare for 6-8 weeks.  This room will become your success room; much like the cabinet war rooms that Churchill and his team operated during World War II.  I refer to this space as your success room, because this is the place that your team will use to map out a turn-around strategy.  The success room is the place where your senior managers will meet, twice a day, to hash out the issues and map out a recovery plan.  This room should be available only for this team and for the period of time outlined.
  3. On the first day, have your Success Team map out all of their complaints, grumblings, upsets and write these on the white board.  I highly recommend that you use an outside facilitator to help coach your team through this difficult process, as this allows objectivity and avoids accusations of ‘favoring’.
  4. Once all of your key issues have been identified and listed on the board, use brainstorming sessions to outline possible solutions to each of the problems.  Everyone on the team needs to be part of these sessions throughout the time allotted.
  5. Once you have identified your Goals, Objectives and Strategies, assign team members tasks that will move your company out of the problem(s) and into a viable solution(s).  There will be many tasks, as you uncover the issues.  Make sure that the tasks are broken into do-able daily, weekly, monthly and quarterly chunks.  Highlight the tasks, as they are completed.  Everyone will need to assume responsibility for achieving their tasks on time.  If a task is going to slip, the person responsible should let everyone know, ASAP.  The team should ask why the task(s) can’t be completed on time.  Perhaps they need additional resources (brainstorm on how to get these) or more information (brainstorm on where to gather this information).   Whatever the case, there will be no hiding out.  Get the information to the team and resolve the issue with the team.
  6. Have each team member write down what they appreciate about each of their team members.  You can do this on the board or distribute “thank-you” cards for each team member, so they know that they are valued by their colleagues.  While this may sound like a silly exercise, it does work.  When people feel appreciated, even a bit, it frees their energy so that they can focus.
  7. Hold 2 success room sessions each day, for the period allotted (I recommend a period of 4-8+ weeks).  In the morning, meet to ensure that everyone is in alignment with the plan and discuss items that need to change or be moved out to a later date, as above. During the afternoon session, ask team members to list any challenges or issues that may keep them from being successful.  Some of your strategies may need to be re-worked.  That’s ok.  Be willing to keep going until you get it right.  The more your team effectively communicates with each other, the better the communication will become.
  8. Make everyone in the room responsible for sales.  Revenue can’t happen if the product isn’t right or if there isn’t enough demand generation to build a viable sales funnel.  Revenues will be lost if customers move away from your company to your competitors.  Everyone needs to have an idea of how you will hit or exceed your quotas.  Everyone must contribute to supporting the Head of Sales to ensure that the company meets its growth goals.

This process will be tough going at first.  Over the weeks and months (hopefully no more that 2 or 3 months) your team will learn to trust each other, communicate more effectively and take responsibility for making a positive contribution to your company.  The uplift in atmosphere will improve your corporate culture, thus elevating moral and productivity. Where there is hope and energy, there is fire.  That fire will transform your company.

Sales Management: Sales Performance Incentive Funds (SPIFs) That Work

Business man giving a thumbs up for es Performance Inventive Funds(SPIFs)

Sales Performance Inventive Funds (SPIFs) are a great way for Sales Management to motivate their teams. A SPIF is a bonus, paid to Teleprospecting and Sales teams for their achievement of specific goals. SPIFs are paid separately from the commission plan, and can be used to drive specific behavior or achieve specific goals.

In my experience, I was given a specific SPIF budget ($900-$1,200) per quarter and asked to determine the areas that required improvement. Having identified the issues, I would assign a SPIF day and week(s), and gather the team to focus on the issue that requires attention.

Done correctly, SPIFs are a great way to re-energize teams and shift their focus from daily, tedious work. Teleprospectors carry out 50-100 dials per day. Many times they are received with rejection. Team success and confidence can degrade over time. SPIFs create a competitive atmosphere, as spot bonuses are distributed when each objective is reached.

SPIFs are also effective training methods, with team members competing against each other, while collaborating skills and experience.

My most effective SPIFs have aimed to improve the following Key Performance Indicators (KPIs):

  • C-Level /Key Decision Maker Conversations:  These are the conversations that a Teleprospector has with a C-Level Executive or a person who is a key decision maker.  Conversations with these prospects tend to improve the quality of leads.  These are the people who understand the issues and can provide the best insights into their needs and pain.  These leads are most valued by Sales Reps.
  • Teleprospecting Funnel: Effective Teleprospecting teams are assigned a monthly lead quota.  In order to achieve this quota, they will need a list of “potential leads”.  These potential leads may have some of the qualification criteria.  They, however, are not quite ready to turn over to sales.  For example, if the lead quota is 8 per Teleprospector, per month, the list of Potential Leads should be around 3X that number of 24, to ensure that 8 will be turned over to Sales by month end.
  • Key Conversations:  A Key Conversation is a conversation with a person who can provide insights and answer the basic qualification questions that are required to make a lead qualified.  The more Key Conversations a Teleprospector has, the more likely they will meet their monthly lead quota.

While dials are important – Teleprospecting is a telephone job – they are not directly responsible for Sales Funnel and revenue growth.  KPIs such as C-Level conversations, Teleprospecting Funnel size and Key Conversations have a more direct impact on lead quality and sales funnel growth.  I have, however, used a “Dial-Ramp” SPIF when team dials have dropped by 25-30%. Power-dial days show the team how making more dials can dramatically impact their KPIs.

Make a big deal out of your SPIF days.  Create a flyer to announce the SPIF goals and objectives, the rules and hours of “play”.  If your budget allows, bring in lunch and take a team lunch break to enable them to share their experiences and early results. I recommend that small bonus amounts, for specific objectives, be paid out hourly.  For example, every hour set a Key Conversation goal.  The first person to meet that hourly goal would receive a $50 bonus.  Then at day’s end, have a big celebration, to celebrate the winners of the hourly bonuses and announce the over-all winner for the day.

The rhythm of your SPIFs will depend on team morale and performance issues.  SPIFs shouldn’t be the norm.  Rather, they should be used to re-energize the team and improve specific areas of performance.

Sales Management: How to Refocus Complainers at work to be Positive

complainers at work

As I sat at my desk browsing LinkedIn, I came across a Slideshare that was funny and clever and made me laugh out loud. It was about people who complain at work but let me tell you, for Managers, complainers are not fun. Complainers at work can suck the positive energy out of a team and bring morale down in a flash. This is where it is essential for good Sales Management to step in. Here are 6 strategies that I have personally used to refocus complainers at work to get them back on track:

  1. Let them vent. Set up a meeting with your complainers and let them tell you their perspectives about everything that’s wrong with the job. Let them vent about their frustrations and write their complaints down on your whiteboard. Review their complaints and ask the complainers to prioritize the most important issues. Let them know that you believe that there is a solution to every problem (which there is) and you will work with them to resolve the issues to the best of your ability.
  1. Select the top 2-3 issues and create task forces to address these issues. Each task force should be comprised of a group of 3-5 team members. Give the complainers at work a leadership role on some or all of the task forces. The goal of the task force is to brainstorm to find a solution. After the brainstorm session, weed out the ideas that aren’t viable and build a plan around the viable solutions. Present the solutions to the senior executives who, ultimately, will need to approve the plan.
  1. Tell your team to bring their complaints and solutions to you. Once your team sees that you are open to finding solutions to their issues (perhaps you’ll need to run several task forces to build trust), let your team know that you will listen to their complaints and work with the team to find workable solutions.
  1. Create a solutions board. Set up a whiteboard in the team area. This board is a place for team members to outline issues and possible solutions. Once a week, meet your team at the board and review issues and solutions. Prioritize the issues and create a plan (and maybe a task force) to resolve the issues.
  1. Personal complaints need HR support. If your team member is spreading rumors, gossiping about others, or is randomly ranting about unspecified “things,” I recommend that you work with HR to come up with some team building exercises to rebuild morale. When people meet outside of the office, they may gain a new perspective about the people or person that they think they dislike. Set an example of respect and make sure that you respect every team member and show it. Make it clear that every team member is to be treated with respect and dignity.
  1. Hold a team appreciation day. Set aside one day where everyone on the team is appreciated. During the appreciation day, get a big thank you card for each team member. Pass the cards around so that everyone can write statements of appreciation for each team member. If you have 5 team members, you’ll need 5 cards, for example. At the end of the day, each person gets their card. Each person has to think of a positive aspect to write about each team member so once team members receive their cards, they will understand that they are appreciated. This is a very powerful exercise and I have seen amazing results while applying this process.

If the complainers at work are under-performers, take time to provide additional training and support. It is the Manager’s job to help team members meet performance objectives, so ask them to outline where they feel like they need support to grow and provide them with constructive feedback. Good Sales Management means realizing that sometimes complainers need more attention. The additional training and support will help them to be more effective. With this approach, their complaints may decrease as their performance improves. If you work with your team and give them opportunities to find solutions, your complainers will feel valued and see fewer reasons to complain. We are all just people and you need these people (your team) to meet your objectives. In short, “you are all in this together.” Value your team and they will value you and the job!


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