Boosting Sales Performance to Drive Revenue Growth

Seven Powerful Tips From a Top Global Sales Management Pro

Feb 11, 2006 - 09:52
Early every year, companies worldwide will look at their 2005 sales figures and try to figure out what went wrong, and what can be done better going forward. Some will set unreasonably high sales targets, others will plan exciting sales contests, and still others will look to their top sales people and try to figure out how to infuse the same talent into the rest of their sales teams. But by understanding a handful of time-tested and universal sales management principles, any company can increase their chances of sales success.

"I started out selling IBM products to tire manufacturers in the midlands of Britain -- thousands of miles from headquarters. The company tried all sorts of different things to motivate the sales team, but checks always spoke far louder than any of my sales managers' words," said Robert Youngjohns, former head of global sales at Sun Microsystems and now president and CEO of Callidus Software (NASDAQ:CALD) , the world's leading provider of enterprise incentive management solutions. "In a nutshell, driving greater sales success is mostly about setting clear and simple goals, and delivering financial rewards quickly."

Youngjohns offers seven tips to help any company achieve and exceed its 2006 goals:

Tip # 1 - Avoid goal vacuum: set targets early

During the time when management is analyzing the past year and working out sales goals for the present one, there's a goal vacuum, and savvy sales people will often close deals less aggressively to keep from getting too far out in front of their target. Why? Because money is involved, and most serious salespeople want to do what will make them the most money. They will often wait until the company can tell them what the target is before they really get cracking.

So it's important to communicate sales targets as early as possible in the New Year. By simply getting the goals out there, even if they're still rough and will need to be adjusted, salespeople will have something solid to shoot for, and they'll start closing deals earlier.

Tip # 2 - Don't pad the sales target

There's a story of a CEO who attends a company function just days after the company has set its revenue targets for the year. He meets one of his salespeople there, and asks how it's going.

"Not that great, I've been asked to do 40% growth, and there's no way I'm going to make any money," responds the account executive.

"I thought our growth target was only 15%," says the CEO.

What's wrong with this picture? It turns out that in the average company, as quotas push down through the management ranks, each manager builds a buffer, to make sure that the person below delivers the revenue needed to make the up line manager's number. Eventually, what started out as reasonable targets are inflated into unrealistic goals, the sales team becomes de-motivated, and the company stagnates.

"Instead, keep target allocations as close as you dare to the actual goal," advises Youngjohns. "In the end, it's going to help everyone."

Tip # 3 - Keep goals simple

Equally important, sales targets, or goals, need to be simple for both executives and the sales team to understand, and easy to measure. If you can't properly measure sales performance, it's crazy to put sales force rewards in place, because that investment won't work toward your overall company goals, and neither will your sales people.

Tip # 4 Cash is king

"Cruises, vacations and other prizes are great," says Youngjohns, "but clear cash incentives are the reason we salespeople come to work every day." Good compensation plans lay it out -- "if you do this, you'll get that amount of money." Cash incentives are the only way to be this exact. The problem with non-cash forms of compensation is that they're often based on a bell curve of performance, or some other selection process where even if certain goals are accomplished, there's still only a chance that a sales person will get a particular reward. So think of contests and promotions as fun ways to add to a cash compensation plan, don't make them a substitute.

Tip # 5 Pay incentives as quickly as possible

Sales managers often make the mistake of outlining too long-term a sales compensation plan, and wait too long to pay their sales teams. It's better to set short term goals, and compensate your team regularly, as they reach them. For example, quarterly compensation plans tend to work well -- the longest workable time horizon is one year.

"While intellectually very attractive and much discussed, long term goals just don't work. There are too many variables at play for a person to believe that by slowly executing toward a particular long-term goal, they'll ever actually reach it," concludes Youngjohns.

Tip # 6- Everyone loves sales heroes, but they don't win the war

Sales heroes make great watercooler talk and give everyone something to shoot for -- as in, "Did you hear about Joe's $1 million commission check?" These success stories keep the sales team motivated, and give them something to aspire to. But the making of a sales star is as often about luck or timing as it is about hard cold personal performance. In many cases, territory, timing and customer factors outside any individual's control are as responsible for large orders and big commissions as are the talents of the salesperson.

Top sales managers know that in addition to the 10% of the sales stars who command the limelight, it's really the other 90% of the sales force who fight the good fight day in and day out who are actually responsible for winning the war. It can be easy to perceive that it's the heroes that save the day, but in almost all cases, it's the rest of the team that gets the job done. So don't ignore the rank and file.

"People are always quick to say that the quarterback won the game, but in most cases, it's probably not true -- in all likelihood, without his team, he would have gotten rolled over," concludes Youngjohns.

# 7 A bit of theater to get everyone on board with the plan

"There's an age-old -- and yearly -- battle between executives and sales teams when it's time to review sales targets and results, but it can be prevented with one theatrical, but powerful step," says Youngjohns. "When goals are missed, management says the sales force doesn't 'get it' or isn't motivated, and the sales team says the products aren't any good. To keep people from passing the buck, just circulate the compensation plan, and get each executive to personally sign it, and voila, no more excuses."