Why Sales Commission is More Than Money
There are few careers out there with as many huge highs and soul-numbing lows as that of a sales executive. When all is going well, those prospects want to talk, buy your products and the result is nailing that sales commission. When things are not so rosy, cold calls and emails are diverted or unanswered, you’re ghosted, and achieving sales targets seems like a distant hope. That’s usually the point where you’re asking yourself whether this is the right career for you or at the very least how you get back on track to that decent sales compensation.
You may well have asked yourself, ‘Is failure to further the deal down to shaky economic conditions or the bad decisions of the person you’re trying to convince?’ Nothing wrong with this response if you want to blame someone or something else, but now is the time to flip that mindset on its head while you inwardly reflect and you may find yourself getting further along – possibly securing a purchase. And where there’s a purchase, there’s a sales commission, and therefore a happier sales exec. The great news is that ensuring you and your team hit a higher sales commission isn’t due to magic, your good luck, or the misfortune of a competitor; it’s down to some basic instinct, brilliant hacks, and sales insight. We’re here to guide you toward a higher sales commission, it’s just a matter of following the hacks.
- Right products, right people, right timing
- Setting realistic quotas, territories, and objectives for your sales employees
- Presenting and sticking to a fair and straightforward commission scheme
- Motivating your team in ways other than bonuses
- Sharing reports, data, and information along the sales pipeline
Hit your sales commission targets every time
Let’s crack on.
1. Right Products, Right People, Right Timing
There’s no way you’d even consider opening a boat business in a landlocked desert town. Or a teen fashion outlet in a town where most of the local people were over 60. The same sensible thinking applies to the timing of a product’s release. Christmas decorations rarely sell well in May and pumpkin sales go through the barn roof through October, but not so much in July. These examples of potentially poor lead chasing are glaringly obvious, but without adequate market research, sales intel, and reporting, you could be entering a territory with a business proposition that may fail before it even starts. This first hack on the path to higher sales commissions is customer-focused rather than driving change from the inside. Think about:
Who is my target buyer? Whether that’s a distributor or a single customer – make sure that the product or product line meets a specific need. Use and apply customer personas, think about the lifestyle of a customer, and imagine walking in their shoes almost as much as you walk in your own.
Have I got an established relationship with the customer? If it’s a yes, look at past data and sales records to establish how well other products have sold. If it’s a no, establish whether the customer has been approached in the past before investing time and effort trying to convert this lead.
What are the USPs of your product? A good sales employee will be familiar and confident with the benefits, uses, and points of difference, and know how to convey this to any audience, regardless of size and demographic.
“92% of all customer interactions happen over the phone” ¹
Is there a competitor’s market or similar product already on offer? Don’t just rely on guesswork. Perform some solid analysis, make the most of the sales performance management (SPM) software that’s available, and depending on the results, you know whether to pursue this opportunity or look at a different area or customer.
Are you and your team pushing a reasonable price point? This again comes down to some advanced analysis and understanding of how much negotiation power a sales exec has. The success or failure of a deal is being aware of the stakes. Is there an opportunity to up-sell? Can you set a price to seal the deal without denting a profit, and just how will this impact a sales commission?
2. Set realistic quotas, territories, and objectives for your sales employees
The lure of a decent sales commission can feel tantalizingly and frustratingly beyond reach when the parameters of the campaign are unclear, unrealistic, or both. Make sure that you and your sales team stay on track by adhering to some robust yet manageable rules and targets.
“A salesman has got to dream, boy. It comes with the territory.” From the play Death of a Salesman, by Arthur Miller
Quota management and territory setting often go hand-in-hand, as they both involve determining the customer ratio, and so therefore how many potential prospects are to be approached. Enlisting the services of a good sales performance management (SPM) software system that shows detailed, yet clear dashboards mean that establishing these criteria is a straightforward job. If one team is overloaded with leads, this has the potential to do more harm than good. The unwieldy weight of prospects could lead to confusion and overlaps, so rather than more opportunities with a greater number of customers, this could cancel itself out. Over- or under-resourcing a territory is a common part of poor sales planning. And poor sales planning means less chance of a sales commission.
“It takes an average of eight cold call attempts to reach a prospect” ²
Patience and persistence pays dividends
In an ideal world, before the agreement of quotas and territories, should be company-wide or team-wide objectives or KPIs. These are essentially the building blocks for strategy and business direction and provide a holistic sense of clarity and direction for all employees, sales, and otherwise. These should also be aligned to the SMART way of working – specific, measurable, achievable, realistic, and time-based.
When a workforce knows what they are supposed to be doing and why, the actual process naturally becomes easier as does reaching the end goal – making a sales quota and earning sales commission. Another way of looking at this; if there’s a sudden and unexplained diversion from objectives and targets, the employee has grounds for challenging this behaviour.
3. Presenting and sticking to a fair and straightforward commission scheme
This leads us nicely onto the main thrust of our hacks – the actual commission plan. It’s unlikely that any business – even the newest start-up – would just grab a Sharpie and scribble a wish list of numbers on a whiteboard. But there are a surprisingly high number of companies that do have an unstable, flimsy, or overly complicated structure when it comes to sales commission plans. And that’s not acceptable. You might be recruiting someone straight out of college to a sales role, or addressing a team of seasoned professionals, but there must be a solid plan, and no room for error around qualification and what can be earned on top of base salary and when. It’s also strongly advised to ensure complete and constant access is available to those that may qualify, so they can check progress and post queries.
With compensation software, everyone can see where they sit at any given time and most importantly have full confidence that calculations are equitable and fair. Learn more about why software is the perfect sales associate by reading our helpful think tank article here.
Sales execs are natural-born talkers, so if they’re not using their spoken abilities to secure a deal, there’s a good chance that they’ll be engaging with colleagues to find out if all is honest on the commission front. Avoid rebellion, dummy throwing, and walkouts and reinforce the fact that there is no favouritism or after-hours conversations by getting the whole squad on-board with one compensation scheme and one software platform.
Honest teams are happy teams
“Nearly 13% of all the jobs in the U.S. (1 in 8) are full-time sales positions” ³
The bottom line is your sales force just wants to get on with selling so they can hit targets and earn a sales commission. Spending too much time trying to interpret overly intricate rules and irrelevant text is not their activity of choice. By providing the tools they really need and easy viewing of the reports that matter, such as weekly, monthly, or quarterly leader-boards, keeps them focused and on-track.
4. Motivating your team in ways other than sales commission
Remember that strange expression, “there’s more than one way to skin a cat”? Well, that’s entirely apt for this next sales commission hack. At this stage, let’s confirm that the sales team knows who they’re selling to and why, and what needs to be done before they can grab the cash prize. But is it all about dollar signs and nothing else? Of course not. The following factors contribute to a sales employee’s workplace well-being and satisfaction and are likely to incentivize, therefore earning more.
“55% of the people making their living in sales don’t have the right skills to be successful.”4
Training and development: The importance of this cannot be overstated. Baking in the opportunity to acquire new skills during the working week, or improve on existing ones is not just about ticking a box on a job description sheet – it’s about making your team better and more confident at their role and in turn, more effective at sales and negotiation. It also is a demonstration that as a business, you’re genuinely invested in the people that work for you. Coaching your team to excellence cannot be stressed enough in terms of quick hacks to sales commission gold. Giving a rookie the knowledge to be more confident or explaining the long game to impatient sellers may just be the development required to secure those sales.
“The average company spends $10K - $15K hiring an individual and only $2K a year in sales training”5
On top of this is ensuring your sales crew have a broader sense of the company culture and values. Knowing what these are and applying them to a role with enthusiasm and understanding is what turns a nine-to-five job into a rewarding job at a business you’re proud to be a part of.
5. Sharing reports, data, and information along the sales pipeline
That hack may sound familiar, even a little like old news for some. If your sales team is already using sales software you’ll understand at least some of the benefits of reporting. This concluding piece of advice is more about the “what” than the “how” and brings together all the other tips sales commission we’ve outlined. The SPM platform you choose to implement or upgrade is not just for monitoring sales performance or providing the figures for how and where a product is selling. With the right custom fields and with decent user training, it’s the soldering glue that makes your sales individuals a high performing team. From logging prospects and outbound calls to knowing where in the world a colleague is, your sales team should regard the SPM as an additional and highly treasured part of the team. It’s also the foundation of trust as everyone buys into the idea of sharing and disclosing information and reports.
By embedding these principles into work psyches, we’re not suggesting a total change to a mindset (working in sales will always equate with trying to earn the most sales commission), but these are tried and tested methodologies for being better and more thoughtful as your team climbs ever upwards on the commission structure journey.
And when you’re not sure if you’re in the sales game for any other reason than the commission, find inspiration in these words.
“Don’t find customers for your products, find products for your customers.” – Seth Godin, author, entrepreneur, and motivational speaker
Allow Varicent to guide your sales team to achieve a higher sales commission right now by visiting our related article here. You can also find out more about our products and service at www.varicent.com or speak to your Varicent rep today.