How Much Should You Really Compensate Your Salespeople?

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We all need motivation to do our best work – and money is a great source of motivation.

But the structure of salesperson commissions can only matter as much as the actual amount. We aim for salespeople compensations to reward for big sales, give opportunity for growth, and keep people motivated to sell even more. Here’s how we do it.

Foster the Mini-Business Mindset

Good salespeople have spirit. When they use that spirit to operate their sales like their own mini-business, they’re successful. Start by making them financially literate about the business so they understand how and why they’re paid. That doesn’t mean you have to divulge all the company’s financial information to them. Instead, explain how the company gets paid. Does the company earn recurring revenue from a sale, or is all payment up front? Then structure their pay similarly. If it’s a one-off sale, they’ll get paid once. If it’s recurring revenue, they’ll earn a recurring commission.

When salespeople understand how the company makes money, they’ll mimic that in their sales approach. Plus, they’ll learn that what’s good for the company is good for them. The more ownership they take in growing their own “business”, the better they become at their job. They’ll foster a consultative relationship with their customers, doing whatever it takes to keep that customer satisfied and offering additional products and services that meet their needs. In turn, they understand the business on a deeper level, which makes them an even better salesperson.

But, if they don’t get paid the same way as the company, mistrust starts to grow. If you get paid recurring revenue, but the salesperson doesn’t, they feel cheated. They start to distrust leadership. And they stop treating their job like a business.

The Average Commission for Salespeople

Since salespeople want opportunities to grow their business and income, try to match commission structures to how the company is paid. As a rule of thumb, the average commission is one sixth of what the company makes. So, with every sale, the company makes six times what the salesperson is paid.

The 3 Phases of Sales & How to Separate Them

Should you offer more commission for a new sale or a retention? If you offer more for a new sale, will your retention levels drop? How you weigh salespeople compensation depends on the business. But separating types of sales strengthens your business and better equips your team.

Think of sales as three phases: hunting, farming, and account management. We want to separate those roles as much as possible so people can focus on the area in which they’re most skilled.

Hunting

Hunters are the people who go out and find new sales. They find prospects and qualify them — and they’re good at it. If you have someone who finds new opportunities, keep them hunting. You want them capitalizing on their strength of bringing you new customers.

Farming

Once a prospect becomes active, you move them to the farming category. This is the nurturing and cultivating stage. It is where you want the salespeople who can close a deal. Farmers are people in front of customers, moving deals through the pipeline.

Account Management

These are the people who keep the client happy. They provide customer service to the client, answering their questions or coordinating repairs. Maybe this is your technology person who can keep things running smoothly. Sometimes the best technology or service people aren’t great salespeople. It’s just a different personality type.

The more separate you keep these roles, the better. But also, remember to move clients between categories. You don’t want a salesperson servicing the copier, but they can still coordinate the relationship between the client and the service technician. And, when the client is up for renewal, it’s the farmer’s turn to deal with them again.

Capping Commissions

When you have a cap on a salesperson’s commission, you’ll stop making money off of them. And it’s an easy way to make your sales team unhappy. Find a solution where, if they make a million dollars, you make six million – then it’s worth it for everyone.

The exception comes when the salesperson no longer services an account. Let’s say someone just gets paid on monthly recurring revenue from something they sold but no longer manage. In those situations, limit the timeframe on the payout or scale down the commission over time. Maybe the first year they earn 5%, the second year they earn 2%, and then the third year they earn nothing. Why? Because if a salesperson always gets a piece of the pie, they’ll stop hunting. They won’t look for new prospects because they won’t need to.

Bottom line: make your sales commission structure clear to your salespeople. Make sure they know what it’ll take to succeed and that sales are worth their time. After all, when your sales team does well, your company does well too.

How Women In Sales Can Succeed In The Male-Dominated Industry

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Sales used to be an industry dominated by men. Why do you think we still default to “salesman” rather than “salesperson”?

However, there are more women in the job market today than ever before. In fact, women make up about 45% of the workforce in the United States. And sales is no different; as the number of women in the workplace rises, so does the number of women in sales.

Men vs. Women in Sales

Like men, women can be excellent at sales. And like men, some women struggle at it. The qualities of a top salesperson are the same. Everyone needs confidence. And everyone needs a process for collecting leads, following up, and closing sales. But a person’s level of confidence and the quality of their sales system depend much more on the individual than on their gender.

That being said, there are parts of sales where women generally have an advantage. For example, many women get better results in prospecting. Women listen differently than men. And whereas men may listen to see how their solution fits your problem, women hear the emotional undertones of the conversation. They can often figure out a customer’s real problem and offer the best next step. Men, however, often push people to the next step without considering what the correct next step should be.

That also means men generally close more sales, more quickly. They’re less concerned with the emotional implications, not overthinking each step, so they negotiate to close and then move on.

Yet, these are just stereotyped advantages. While some women hold an advantage in face-to-face or phone prospecting and men take the advantage in negotiation, individual work ethic is much more important.

The Most Successful Women in Sales

Some of the most outstanding salespeople I know are women. And, though the sales industry is often perceived as a “man’s world”, some of our most groundbreaking leaders have been women. From Mary Musgrave, who used fur trading posts to establish peace with the Europeans during the 1700s, to Estee Lauder, who introduced the idea of incentivizing purchases, to Oprah Winfrey, who is often called “the most powerful woman in the world”, women have been revolutionizing sales for hundreds of years.

Those women were successful in their own right. They didn’t do the same thing as everyone else in their time. They didn’t learn how to succeed in sales by copying the people before them. Instead, they listened to others and found the approach that worked best for the surrounding needs. They didn’t let gender stand in the way of using their strengths to succeed.

Sales Tips for Women

People who make it in sales are disciplined and intentional. They have a plan for how to do business and who to work with, and they make it all better with their personal strengths. So, if you’re wondering how to succeed in sales, here are three tips for moving in the right direction.

1. Have a System

The single biggest differentiator in your performance is how you move prospects through your pipeline. Man or woman, you need a way to keep track of people, no matter where they are in the sales process.

2. Capitalize on Your Own Talents

What are your talents as an individual? Leverage those to your advantage in the sales process. Whether your strengths are gender-specific is irrelevant. It’s all about how you use your best qualities to move clients through your system. Focus on your own strengths.

3. Look for Leadership

It’s always helpful to work with and for strong leaders. It’s not as common as we’d hope for new salespeople to surpass the leaders who train them. Usually, you’ll find the best people in sales have a good leader… and good leaders have good salespeople.

There aren’t just good salesmen. There are great salespeople. And today, we’re glad that more of those people are women.

How to Cut Your Sales Training in Half and Improve Retention

Cut Your Sales Training in Half

When you hire a salesperson, you look for a few basic qualities: confidence, assertiveness, strong communication skills, and so on. The right strengths always help new salespeople, but there’s another piece to the puzzle of success.

If you want new hires to succeed, you can’t just hire the right type of person. You need a person who puts in the right type of activity.

Why Don’t New Salespeople Work Out?

Here’s what often happens when you hire a new outside salesperson:

  1. You train them for a few weeks on products and services.
  2. They put together spreadsheets/activity logs to show what they’re doing.
  3. Six months later, you realize their sales numbers aren’t there.

Our first instinct is to blame the salesperson. Are they not capable of closing deals? Do they understand the product?

But their ability isn’t usually the problem. The issue is their activity level. If they don’t talk to enough prospects, they won’t have the numbers needed to make enough sales.

Salespeople have to make phone calls and meet people face to face regularly. Yet, most salespeople would rather walk into a burning furnace than make a sales call. So they find things to do that keep them busy: making logs, running reports, putting together proposals. And activity suffers.

Salespeople fight this by making tons of cold calls at once. Then they spend weeks following up on those calls by traveling to appointments and making quotes. After they finish, they start from scratch again. That way, they end up in a good quarter/bad quarter cycle.

Instead of leaving salespeople to figure out how many cold calls to make and when, sales managers should set clear expectations and hold them accountable. Work backwards through the data to see how much activity produces the desired number of sales. Then track activity in real time with CallProof. If you see a person isn’t hitting their daily numbers, the sales won’t follow.

When you work through those numbers, you’ll be able to calculate exactly how many phone calls and meetings individual salespeople need weekly, even daily, to achieve their goal. Then you can check if they’re doing that.

Without a real-time CRM, it takes about six months to see a salesperson’s activity. Only then can you determine retention. CallProof cuts that time in half by showing you activity in real time. When you use the tool that lets you inspect what you expect, you’ll see how successful they’ll be within 60 days (including two weeks of training).

The Value of Training Your Salespeople

Training aims to turn sales talent into sales productivity. And that’s done through activity. So focus your salespeople’s training more on interactions than product knowledge. First, help new sales reps understand the importance of activity. Then teach them how to ask prospects questions to find their pain point. That’s what brings success.

Back in the ‘80s, there was an IBM saleswoman who sold record numbers of mainframes. She went out and asked her prospects questions, then brought the information back to the technical people to find solutions. Realizing how astounding her sales numbers were, IBM decided to give her in-depth training on the technicality of their products. After about a year of this intense training, she returned to the field. Her numbers were thoroughly average. Never did she achieve great sales figures again. Why? Once she knew everything, she no longer asked questions.

Many companies emphasize product knowledge in training. But the best training is learning to complete the activities that lead to sales (like making phone calls and meeting face to face). That’s more important than the person knowing what they’re talking about.

How to Cut Sales Training Time in Half

Managers, you don’t have to wait six months to find out if a rep is going to be a good fit. With a solution like CallProof, you can find out in two months or less. First, train them in the science of activity level and give them clear activity goals. Then teach them how to make calls and meet with prospects. Give them just enough product knowledge to solve pain points and offer a great service to your clients.

All the while, keep your finger on the pulse of their activity to see if they’re booking the numbers. If not, you can correct or move on quickly. If they’re doing well, you can encourage them to keep doing what works.

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What Parenting Taught Me About Sales Management

What Parenting Taught Me About Sales Management A few days ago, I was standing in my kitchen, preparing my coffee. My five-year-old son came up to me, tugging at my shirt-tail. “Daddy, Daddy look at this, I drew it!” Perhaps one day, my five-year-old or his two-year-old brother will become great artists. But right now, the drawings won’t probably be considered for the National Gallery. “Awww… wow, Champ! That’s amazing! Did you do this?” He nodded, trying to hide how pleased with himself he really was.

Now, I’m not comparing my salespeople to five-year old kids. What I’m saying is, it’s amazing what we can learn about sales management from parenting. Studies show that financial rewards are around 50% less important than they were 25 years ago. And anyone who thinks running a sales office like a tyrant dictator has the figures showing that this is not the way forward. Here are some good examples for you.

1. Give Your Sales Team Recognition

Imagine one of your salespeople walks into your office and hands you a signed contract. You could tell them to stick it over there with the rest, not even bothering to look up, or you could give them some recognition for their efforts. How much of a difference do you think it would make if you stopped, looked them in the eye and said something to the effect of:

“Hey John, good work on this contract, I heard it was a tricky one. You know, your close is getting really solid, so, thank you and keep up the great work.”

There’s no reason not to make your salespeople feel appreciated for doing what you pay them to do. Even if it’s not a record-breaking account they’ve just signed on. By recognizing their deeds, whether it’s booking an appointment with a difficult prospect or making even a small sale, your positive words will make them want to excel and seek more recognition. And that’s good for all parties involved.

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2. Avoid Disasters by Predicting Them

One of my boys recently had his first ever interaction with two-wheeled transportation. He was so excited about getting on this little scooter. But no sooner than he’d traveled around 6 ½ meters had he fallen square on his butt. He came running to Daddy holding his tailbone with both hands, tears flowing freely. It was six weeks before he went anywhere near that scooter again…

This same thing happens in sales. The new guys receive training, sometimes for even a couple of weeks. There’s excitement about the product and about the commission to be made. They get sent out into the field, they knock on someone’s door, eager to press forward. The door subsequently gets slammed in their face and they think “this job sucks! I quit!”

The best way to avoid this disaster is to predict it. Do your sales training and then say something like:

“Listen, I’m glad you’re feeling comfortable with the training. You should also know, the job can be tough. You’ll pick up the phone, call someone and they might be angry. They won’t talk to you or listen to what you have to say. It’s likely they’ll slam down the phone on you. It’s not personal, it’s just the way it is. But, as soon as that’s done, you need to pick up the phone, feeling rejected, and make another call with a positive outlook. Will that be okay with you?”

Let it sit with them for a while. Let them think about what that’ll feel like. As if by magic, when the inevitable happens, they’ll feel a whole lot better about falling flat on their butt.

3. Explain Why You Said “No!”

I’m sure it’s not only my kids who want to go to Disneyland. The truth is, sometimes it’s just not practical. Holiday time is limited, and there are other places I’d rather be (even if I’d never tell them that)… Sometimes I have to say that fateful two-letter word. No… There’s pouting. Playing stops. Shoulders droop, bottom lip comes out and head goes down. They all add up to a posture resembling one that’s mighty counter-productive for a salesperson.

If one of your guys comes up to you with an idea or request and you say NO, make sure you explain the reasons why. Explain you’ve tried the idea before. Let them know it’s a great idea, too… It’s just that you know it doesn’t work or is otherwise not possible. Once you’ve explained it, ask them if they understood why you had to say no. Ask if they have any questions. See if there’s an objection there that could cause the kind of pouting that will negatively impact their performance.

4. Look Out for Those Lessons

At the end of the day, our kids are like miniature adults. Human beings with needs and desires of their own. And the workplace is really not so different from a family. I learn a lot about sales management from the time I spend with my kids. It’s amazing how they’re never too young to teach me a few lessons.