1. Goals – In terms of setting goals, we are talking about “raise the bar, stretch out of the comfort zone, more than the typical 15% increase in sales” type goals. You must raise expectations in order to celebrate superior performance. In addition, when setting goals, there are two things to remember: (1) a forecast and the plan that supports that forecast come from the goals; not the other way around; and (2) goals should be derived, not from the company, but from the individual’s income requirements, based on the bills that accompany life’s obligations and desires.
2. Incentives – This includes the compensation plan, sales contests, commissions, awards and prizes. Incentives bridge the gap between the corporate objectives and the personal goals we just discussed. If an individual has established personal goals but the company’s compensation plan isn’t designed to reward superior achievement, the incentive to perform cannot be maintained. If a company has a rock-solid compensation plan but the salesperson’s personal goals don’t excite them, the personal incentive to perform will be lost. Remember, most of us work for selfish motives. In other words, our personal motives take priority over a company’s objectives. The job of management is to help align a person’s personal goals with the company’s objectives.
3. Motivation – Motivation results from the combination of Goals and Incentives. In essence, it is the salesperson’s desire and commitment to do whatever it takes, every day, to reach their goals. When they don’t do whatever it takes to achieve their goals, it’s your job to motivate them by knowing what each salesperson’s goals are and reminding them what they need to do to achieve them. When talking about their goals in this context, I’m not talking about income requirements or gross sales volume. That doesn’t have the emotional impact to motivate someone. I’m talking planes, boats and cars, big houses, vacation homes, golf trips, world travel, home theaters, fantasy camps, exclusive events, etc.
4. Pipeline Management – The key to managing a sales pipeline effectively is working with critical ratios. The critical ratios you want to work with are: (1) Monthly sales goal, (2) Closing ratio, (3) Average sale and (4) Length of the selling cycle. Let’s say that a salesperson has a six month selling cycle, a $100,000 monthly goal, a $20,000 average sale and a 25% closing percentage. Effectively managing the pipeline requires that your salesperson places 20 new opportunities in his pipeline each month. How did I arrive at this? With an average sale of $20,000 it will take five $20,000 sales to achieve the monthly goal. With a 25% closing ratio, it will require four times of the number of opportunities worth of total of $400,000 (25% of $100,000) entering the pipeline 6 months in advance of the monthly goal to achieve that goal. If the goal is for July, then the opportunities must enter the pipeline in February. The number to focus on is the number of new opportunities entering the pipeline. Get that to work and the outcomes are all but guaranteed.
5. Accountability – This is huge factor in overachievement. You must hold each salesperson accountable to something measurable (like the number of conversations required to set the number of appointments needed to identify those 20 new opportunities) every day. Even more importantly, you must have consequences for failure to meet those requirements and consistently follow through whenever necessary. Develop the nerve for full accountability and you’re nearly there!
Next week, I’ll discuss factors six through ten.