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    Measuring and Motivating Your Sales Force in 6 Steps
    The Vault

    Measuring and Motivating Your Sales Force in 6 Steps

    June 2011

    Today's post is all about measuring, motivating, and increasing company value in 6 steps, based both on a presentation that Keith Eades, Founder and CEO of Sales Performance International, gave to clients of our firm on June 15, 2011 (see the SlideShare presentation) and a real-world example from one of our clients.  I know, again you are asking "What does a CPA know about measuring and motivating a sales force?" (See my previous post – How To Motivate & Measure Your Sales Team Presented By Keith Eades).  And again the answer is "not much", but I do know about processes, and I do know about measurement.

    • Hire people motivated by money.  This may seem obvious, but it's not as easy in practice.  There's all sorts of research out there indicating that not all knowledge workers (and today's sales folks truly are solution oriented knowledge workers) are motivated by money – in fact many actually perform WORSE the more money is at stake.  See the study that was funded by Wall Street to determine motivating behavior: Drive: The surprising truth about what motivates us.  How do you hire for money?  Ask and probe.  Would the person truly be willing to put all compensation at risk for nearly unlimited upside?  If the answer is no (and you can pay a draw to cover living expenses), don't hire them or find a different use for them if they are any good.
    • Pay people handsomely for superior performance.  As the owner of a company, this person is building your wealth.  Do not trouble yourself over who has the bigger paycheck.  Let the sales person have a bigger paycheck if they are building your wealth.
    • Let the sales person set their own goals.  You have the right to approve the goals and the compensation system (it has to align with your income goal).  Most great salespeople exceed their goals – so likely what they are telling you is realistic.  If you force bigger goals that are unrealistic no one wins.
    • Work to set targets that deliver high value / high margin – in other words, work to increase the deal size / profitability.

    These first three steps, as implemented by one of our clients, increased sales 2X over a six year time span.  During the same time span company value increased 10X – as evidenced by the fact that our client only owned the company for six years – so there was a defined starting point and ending point.  Let's repeat this – Sales increased 2X, Value increased 10X.  The sales person got paid more than the owner in most of those six years.  Who made more at the end of the six years?

    Assuming that you now have a great sales person(s), now what?

    • Subscribe to the belief that sales is a science, not an art, and the scientific method requires a structured process.  This is the part where Sales Performance International shines.  They have qualitatively proven that when disciplined sales processes are installed there is an 88.2% chance of a positive impact, as based on the 2010 Sales Performance Optimization Report published by CSO Insights.  They have also proven that sales growth percentages double (e.g. if you were at 3% you will go to 6%) when you implement a process.
    • Measure.  Owners tend to measure dollars – which is good as the end result; we do have to keep our eye on that.  However, given that many of us have multi month sales cycles it is difficult to measure progress and probability of attaining dollars if you're only measuring dollars.  Therefore, measure progress at each stage and have verifiable proof that an opportunity is at a given stage (e.g. number of meetings, ask to see a commitment letter from the client).  Again, see the SlideShare presentation.

    Look – we can't control for the economy – but we can ensure that we're doing everything we can to get the sales we deserve.  Are you doing everything you can – or are you winging it?  If you're winging it, give this a try.

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