How to Effectively Compensate Sales Reps
CharTech Academy sales training expert Alex Rogers offer tips to help electronic security company executives find the right incentive ranges for their sales teams.
Roles and Responsibilities
To keep business running smoothly, it’s important to define each role clearly and to give them shared goals. Look at the various activities that tie your team together, and use these common areas to create intertwining goals.
5 Commission Recommendations:
- Pay commission every single month
- Pay commission on the past month (e.g. September sales get paid in October)
- Print out all supporting documentation
- Job cost the projects
- Beware of changing it up
Below are some of the typical roles you’ll find in a sales organizations-and recommendations around how to compensate them.
Sales Admin: This role is the heartbeat of the sales team. It takes all the administrative burdens off your farmers and closers, so they can identify and capture more business. This is typically a salary-only role, but everything this role does can be tied to deals won. As such, we recommend adding a small incentive attached to won opportunities. This ensures everyone is motivated and focused on achieving the same goal.
Farmers: Finding and nurturing leads, farmers qualify, follow up with, and help nurture prospects into customers. Their performance should be measured against call volume and sales-qualified leads. The key is volume. Track the volume they produce without micromanaging them. A business management tool can help you do this. This role should receive a mid-level salary. More than admin, but less than closer.
Closers: Once leads near readiness to buy, they’re transferred from the farmer to the closer, to seal the deal. This role is highly persuasive and responsible for winning business. It should receive a medium/high salary.
Sales Managers: This role is fully dedicated to removing sales barriers. They’re compensated on the overall success of their sales team, and they typically receive high salaries.
Account Managers: This role sells into and acts as the primary point of contact for existing customers. Their salaries will vary based on experience, but usually fall somewhere between farmer and closer. They should be incentivized on customer retention rates, upselling, add-ons, and upgrades.
Quotas
Quotas are your primary measure of sales success. Without these, your sales team can easily lose focus of company goals. To make sure your team is on track, you need a smart business tool that empowers you to track sales goal progress, activities, as well as call volume via real-time dashboards. All these key pieces of data can be early indicators of failure or success. And you can use them to coach and manage your team.
Consider Having Quotas for (and Measuring):
1. Hardware profits
You need to make sure these traditionally low-margin products aren’t being given away for free.
2. Labor profits
Product installation and maint
enance comes at a cost. By creating quotas around this, you’ll ensure your sales reps aren’t recklessly discounting labor.
3. Contract amounts/agreements
Net new business is a must if you want to keep growing. As such, reps need to be goaled on capturing a certain amount of new business each month.
4. Retention/Annuities
Anyone can sell something once, but keeping customers happy and coming back for more is another story. Reward reps with annuities for clients who renew service contracts with your company.
5. Proactive sales activities
This is the one quota that should be met every quarter. It includes follow-up calls, appointments, client or prospect visits, thank you letters, quotes, emails, or any other activities that have been demonstrated to move the needle in your sales organization.
By putting these incentivizing best practices into place in your sales organization, you’ll position yourself to fairly compensate and motivate your team to succeed.
In part 3, we’ll talk about how to generate and hold accountability to sales practices that not only help your sales reps be more successful overall, but also give you dashboard visibility to sales tracking.
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