Developing a Sales Culture to Retain Reps and Incent Excellence
In part one of this post, we discussed why a sales culture is so important, as well as some pitfalls that can lead to an unsuccessful one. Here, I will help you understand how to create a sales culture that thrives.
Understanding What Drives Your Sales Team
It’s always a red flag for me when I come into an organization and the executive team does not seem to understand what drives the sales team. As a VP of Sales, I have managed a wide range of selling personalities and selling styles, and I firmly believe that one of the most critical things you can do as a business owner is to have empathy for the needs of your sales team.
In one situation, I came into an organization where I was told blatantly by several C-level executives that a certain salesperson needed to be fired because she had a poor attitude, poor communication skills, and wasn’t a good team player.
After I met with her and evaluated her performance, I found that she was actually a super high performer, she was passionate about the company and loved her customers, and that through selling the company’s products and services she was making an impact in the lives of the customers she served.
She was producing great results year after year, in a high-integrity fashion. Yet she wasn’t “likable” in the way that these executives wanted her to be.
The executives didn’t understand that high-performing salespeople aren’t like other employees, and that trying to enforce a uniform company culture can actively undermine the sales culture.
One way I see this happening is when companies host numerous afternoon activities, beer parties, holiday parties, and other events where attendance becomes, in a way, a metric of how well the employee is doing. For your typical employee with a set salary, mandatory staff meetings and group lunches can be a fun break in the day. But remember, salespeople are monetarily rewarded or punished for their productivity, not their participation in company culture, or daily attendance.
For salespeople, the rewards for their productivity are direct, transparent, and immediate — as they should be if you want high performing sales representatives. When they have to reschedule meetings or lose prospecting time in order to attend company culture building events, they lose out — and so does the company. Now, I’m not saying don’t invite the sales department to your holiday party, but I am saying this is an instance where overemphasizing company culture as a whole can actually undermine your sales culture.
As a business owner, it is essential that you understand the psychology of the sales team and how they need to be treated. Salespeople have a high-level need for significance in recognition, and this is part of what makes them great. But, like the woman I was asked to fire, they do not want to get recognition and job security by being “just another team member” and putting up the twinkling lights at holiday time. They want to be respected and appreciated for the value that they deliver to the company financially and the benefits they delivered to the marketplace by virtue of serving customers.
Building Trust With Your Sales Reps
I have worked with organizations where the executives came from sales backgrounds, meaning they had direct accountability at some point in their career for growing business and generating revenue. Because of this, these executives have a high level of appreciation for (and place a high level of value on) the sales function.
I’ve worked with other organizations whose executive team has taken the opposite approach, downplaying sales and saying, “Anyone can do the job! Our product is so great and our marketing system is so dialed in that a monkey can sell our products.” What does that say about how much they value their sales teams?
When I’ve worked for these latter companies, I’ve found myself in the role of defending outstanding salespeople who are doing a fantastic job for the company, but who are undervalued in their role. At times, I’ve been asked by these executives, “Which team are you on, Bob? Are you an executive, or are you on the sales team?”
And the answer is, my goal is to represent the sales team’s needs to the executive team, and the executive team’s goals and mission to the sales team. It’s not an impossible goal, and there’s no reason there has to be animosity between the two teams.
The foundational building block of a good sales culture is trust and transparency between the executive team and the sales team. When the sales team feels undervalued, it creates a sales culture that includes a very high level of distrust of and contempt for management, a lack of communication, and becomes a situation in which you are working opposite the people who are generating revenue for your business. You don’t trust them, and they don’t trust you.
I already mentioned that a sales representative’s psychology is geared around producing results and being rewarded for them. As the business owner, it’s your job to incentivize the sales team in a way that rewards integrity, rather than encourages someone to overpromise and under deliver as a way to close deals and earn commissions.
How do you do that?
First, by acting honorably toward them. I recently worked with a company who asked me to do something I consider unethical when it comes to compensation: changing commission structures, goals, and targets midterm. When you do that, your sales team loses faith in the agreements that you have made with them, and the result is that they are less likely to adhere to the rules themselves. Additionally, you create apathy, which is a killer to the sales culture. These folks have a close bond between them, and they talk openly. If one rep is dishonored, they all are. They know they are next.
Second, by encouraging — rather than punishing — honesty when it comes to discussing the sales pipeline. I have worked with executives who only want to see good numbers, and therefore create a sales culture that discourages representatives from sharing bad news. Then they get blindsided when actual revenue fails to match up with overly sunny forecasts.
Instead, you want to be able to have an honest conversation with your sales representatives. Not only about their performance, but also about what’s truly happening in their sales pipeline. If your sales reps trust you not to punish them when they’re honest with you, your sales reps will raise their hands when they are in trouble, and they will accurately reflect the deals that are coming down the pipeline. If they raise their hands early enough, you may be able to engage and help them move an important opportunity forward.
Incenting For Successful Sales Behaviors and Retention
An intelligent reward system is key to incenting the types of behaviors that lead to sales success. I want to look at two specific areas that businesses commonly struggle with: creating a seamless sales experience for customers, and retaining their highest performers.
First, let’s talk about incentivizing co-selling in order to create a seamless experience for your customers.
Every organization has hunters and farmers — salespeople who are responsible for account acquisition and account management, respectively. In large organizations, these are separate teams. In small organizations, the same sales reps may do both. Either way, they’re still separate functions, and the compensation and success metrics need to be structured in such a way as to incentivize both in order to serve the customer, within the financial parameters of the company budget.
For example, a sales rep may get a big commission for bringing in a new account, but a smaller commission for retaining. If you have one person who’s in account management (a farmer) and one person who’s in sales (a hunter), yet both of them spoke to the account before they became a customer, there may be dispute over who owns the sale and who should benefit most from the transaction. All that needs to be spelled out in the rules of engagement.
In the case where reps are both hunting for new accounts and farming them, you need to develop a compensation plan that doesn’t cause them to prioritize prospecting over servicing existing accounts, or vice versa. A sway too much in one direction or the other can create an unpleasant experience for customers, and discourage reps from fully engaging in these “border” deals. These deals fall through the cracks, and everybody loses.
The other common area businesses struggle with when it comes to compensation is in retaining their highest performers.
Churn in your sales department is expensive. Not only do you have to train new sales reps and get them up to speed on your product, your market, and your processes, you also risk losing accounts during the transition.
I mentioned earlier that Coca-Cola had a compensation plan that incentivized sales reps for the exact behavior they hoped to see. The other part about the compensation plan was that it didn’t place limits on how successful a sales rep could be. All too often I see organizations place limits on commission for new sales — but why would you limit your reps’ ability and desire to bring in new business?
All too often executives are more highly focused on the cost of sales, rather than taking an investment-oriented approach to setting quotas and developing compensation plans. Here’s what I’m talking about. Let’s say you have eight sales reps. And let’s say the quota goal is $350,000 per year for each rep. Of course, you will have high-performing reps that will blow through that number. You will have on-target reps that will hover around that number. And you will have new or underperforming reps who won’t hit the quota. Your compensation plan needs to consider a weighted cost averaging for all of these reps, and you should consider increasing commission percentages past the normal quota targets.
Let me give you an example. You’ve structured your compensation plan to reward all of the reps with increasing percentage of commissions to incent them to achieve the $350,000 quota, but you have a representative that hits $500,000 in a calendar year. If you haven’t considered accelerators beyond the $350,000 number, the rep who is your high producer is not being fairly rewarded for his or her compensation and contribution to the team; nor is your compensation plan encouraging reps to push beyond the $350,000 number. The same holds true for the underperformers. The commission percentage should be less if they don’t reach their quota, and escalate as they achieve the desired success. This protects both the company’s bottom line and fairly rewards performance.
By structuring your compensation plan to reward your highest performers with the ability to generate personal income and achieve their own personal goals, you also have a higher likelihood of retaining that prized talent. They know they will be treated fairly at your organization and they know they can pursue their own financial goals. So why would they leave only to start over again with a new customer base and a new market?
No matter how big or small a business is, you can use these insights to create a sales culture that encourages your sales representatives to perform their best with integrity, teamwork, and respect for the customer.
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