Attracting and retaining talented sales reps requires a strategy for engaging and incentivizing them, but it must also make the most sense for your bottom line.
Defining sustainable growth for your organization, establishing KPIs and sales accelerators, and keeping accurate, detailed records are key to a solid sales compensation plan.
Good sales reps are hard to find. It can be especially challenging for entrepreneurs whose business has grown to the point where you need to turn sales over to someone else — and the success of your business may hang in the balance. Attracting and retaining talented sales reps requires a strategy for engaging and incentivizing them, but it must also make the most sense for your bottom line.
In his presentation at the 2019 Retail Solutions Providers Association’s (RSPA) annual tradeshow, RetailNOW, PJ Tierney, Vice President, ISV Sales for EVO Payments, Integrated Payments Division, shared three keys to establishing a solid sales compensation plan.
1. Determine What Sustainable Growth for Your Company Looks Like
Tierney says the first step is having an honest talk with yourself about what sustainable growth looks like for your company in today’s market. “Be realistic,” he advises. “Everyone wants to shoot for the moon. Everyone wants to go for 20 or 30 percent. But if 10 percent is good revenue growth for you, start to build on that.”
He points out that it’s also important to look at all revenue, including short-term revenue from licenses or project work, and long-term, recurring revenue such as Software as a Service (SaaS) or ongoing consulting fees. He says bundling services is a trend, but it’s vital to understand your costs and your margin. Thoroughly tracking your revenue stream will give you the basis for the best way to compensate and incentivize your sales team — and retain sales talent. “If you give them a stake in the company, higher residuals, or revenue share, they won’t want to leave,” Tierney says.
A clear picture of short-term and long-term revenues can also help you determine what you can invest into a new hire. Sales reps need time to train, learn and build capacity. Providing a signing bonus or other means to compensate them for the first few months could help you attract sales reps capable of helping your company grow.
2. Establish Indicators and Accelerators
The next step is to establish key performance indicators (KPIs) that benchmark productivity for your sales team and methods for encouraging your sales team to hit — or exceed — their goals. “Good salespeople think about the next sale,” Tierney says. “You need to keep them engaged month over month, quarter over quarter, so they can see the short term.” He adds that SaaS commissions and residuals will help them to see the long term.
Tierney says he advocates paying sales reps a base salary and using a tiered system for additional compensation. The best sales reps that are meeting minimum goals can expect is base, “But, as a sales rep, I want to do better than base,” he says.
He adds that it’s vital to keep your sales compensation plan simple. Some businesses base the plan on production; for example, if a rep needs to sell 10 to reach a goal, and sells five, then he or she needs to sell five more. Tierney says any plan should be simple enough to for one of your family members who isn’t familiar with your business or sales to understand.
Tierney comments that how your sales team performs against quotas is an important indicator. Not reaching goals may mean you need to train your reps more thoroughly, evaluate ways to improve your products, or examine what your competition is doing. Tracking individual sales reps’ performance may also reveal if an employee isn’t a good fit for the job.
3. Maintain Accurate and Detailed Reporting
Successfully tracking the most accurate data on costs and margin is necessary to understand sales ROI.
It’s also vital to track leads — and save those leads so they’re accessible. “Sales reps come in and out,” Tierney says. At a previous company, he found stacks of papers with handwritten notes. “The company had thousands of leads, but there was no way to track those leads.” A CRM or other tool can help you organize data and use it. “You should be taking advantages of those leads because you paid for them,” he says.
Tierney says it’s also essential to share information with payroll, finance, and production teams, so sales reps are paid and projects are completed on time.
An Investment in Your Entire Business
Employing talented, productive sales representatives isn’t an option. It’s a necessity. The right sales team will fill the sales funnel, increase short-term and long-term revenue growth, and keep work flowing to your operations and services teams. A well-thought-out sales compensation plan is key to finding and building long-term relationships with people who can make it happen.