Your sales team will make or break your company, so you need to make sure the drum beat they march to matches the financial goals of your company. Setting the wrong goals for the sales team can have disastrous consequences. For example, a CEO I know made his measurement system too simple, only measuring success by how many pending sales were on the board: Neither the value of the sale nor closing the sale were part of the definition for success. He truly thought his salesforce would make the logical leap that larger sales were better and closing was essential, but his own measurement system smacked those considerations out of their heads. Of course his system backfired, and the sales team left and bad-mouthed the company.
The right way to do this is to choose what is being measured by its importance to the company. For example, you determine that to reach your goal, each member of your three-person sales team should close two $25,000 sales each month. That means you must set the minimum acceptable sales rate at $50,000 per month. However, you want them to sell more, so after they make their sales quota, you want them to keep working. To do this, you need to ‘incentivize’ their sales efforts. If your salespeople get a base salary plus a commission of 2.5% of the sales realized (money in the door) by your company, you may want to have them receive an additional commission after they’ve fulfilled their 24 quota sales for the year, say 2.75% of each sale.
Yes, it is psychological game-playing, but it works, and ensuring your sales team operates at peak performance is essential to your business’s long-term success.
Marilyn J. Holt
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.