One of the issues many of our clients have been facing the last several years is the challenge of influencing their salespeople to sell new things to new clients. For example, many companies want their salespeople to grow their managed services and to win new accounts. Unfortunately, most salespeople are doing neither. Most of them are surpassing their quota while selling the same stuff to the same people. At the end of the year, they’re making their number, paying the bills, and not worried about losing their job. Why would they change?
There are many layers of solving this problem: deeper training, accountability from the top, incentives and contests, etc. However, before any of this can happen, your salespeople need to know their goals. Here’s how it usually works:
“You’ve got a quota of $2 million dollars next year, and we need you to try to make 10% of that recurring revenue. Oh yeah, try to find some new logos this year, too – remember, we’ve got that 1% kicker for new accounts.”
What salespeople hear: “Hit $2 million and we’re cool.”
If you want to create change in the behavior of your salespeople, you must change their goals and the way you communicate them. Each goal should be delivered on its own merit and provide compensation equal to the sum of its importance and power of resistance. If a new goal is moderately important and won’t face much resistance from sales, then the compensation doesn’t need to be extreme. However, if it’s very important and receives heavy resistance – winning new targeted accounts jumps to the top of my mind – then the compensation should be extreme. Using the above scenario as an example, the layout might look like this:
Goals and On Target Earnings Breakdown:
- $250k sales from new accounts targeted list - 30% of variable compensation.
- $600k sales from all new accounts (including marketing leads) - 30% of variable compensation.
- $200k annual recurring revenue sales – 20% variable compensation.
- $2 million total sales – 20% variable compensation.
The above plan is vague and might invite many questions that would be answered along the way (feel free to ask me offline if you’d like). The point of sharing it with you in this format is to help you understand the layout. This list of goals illustrates to the sales team that new business and recurring revenue is extremely important to the company and that you’ll be compensating them appropriately to overcome their resistance.
Make sure they clearly understand their goals, and then make sure to work with them on their progress throughout the entire year. All the other stuff can follow, but nail this step first (you’ll be surprised how much they figure out on their own once they know the direction).
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