Herd Salespeople Toward Success

Posted on Thursday, February 14, 2019

Does your business depend on salespeople? If the answer is yes, you probably rate and compensate them based on quotas.

While that method of determining compensation is obviously fundamental and hard to dismiss, it's also important to consider other measures of success.

To encourage sales efforts that get results and help grow your company, it's worth paying attention to three other factors:

1. Gross dollar value. How much money does the salesperson bring through the door?

2. Percentage of potential business captured. If there are 10 potential customers, how many has the salesperson contacted and signed up? 

3. Customer satisfaction. If there are no complaints, the salesperson is in the neutral zone. It's a red flag when customers are critical, particularly if there's a pattern of complaints. And if customers are effusive, the salesperson is doing something right.

Tracking these measurements is harder than setting quotas and adding or subtracting. If salespeople don't understand your measurement plan and it affects their pocketbooks, they'll either leave or do their best to thwart your system. Neither is good for business.

So if you're going to adopt a reward system that is anything but simple math, be prepared to devote time to make it work properly. Talk regularly with both customers and salespeople or the plan will fail.

Here are two verifiable measurements of sales success. Each can be reduced to a ratio based on company records. To do the most good, a salesperson has to achieve high marks in both areas.

Leads to sales. How many prospects did a salesperson approach in a given time period? And how many of them eventually turned into sales? Reward the highest ratio.

Leads to dollars. What was the value of each sale? High-dollar sales are worth more than low-dollar ones, although growing the business over time may require a balance. Still, rewarding the sales efficiency of those who bring in the most money from the fewest prospects is a possibility worth considering in some circumstances.

(In a future article: A simple rating system for prospects and a guide for rewarding your sales staff.)

Posted in Tax Topics For Individuals, Tax And Accounting Topics For Business

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.