A sales person that used to work for me called me last week to get my opinion on a new position he was considering.  We chatted for a while about the position and the opportunity, and I was very excited for him.  Its a great company, a great product, a great team – and I think it will afford him quite a bit of opportunity to advance his career.

Then we started to figure out if the comp was right for him.

He explained to me the compensation plan that was presented to him.  As he spoke, I said, “wait… I have to get a pen and write this down so I understand.”  OK – the fact that I had to say this is 100% a clear indication that this is a bad compensation plan – but nonetheless I attempted to understand the plan.  The plan paid out upon a rolling average of monthly sales over a three month period and provided incentives on this and that.

After I thought about the plan for a while, I said, “OK.  I get it and from my calculations, its most likely a very generous plan – but its sort of hard to tell – and its going to be very hard to know what you will get until the end of each quarter.”

I certainly appreciate that the CEO of this company was trying to create a generous compensation plan, and I honestly think that he believes that he is encouraging the right behavior but the problem with the comp plan is two fold.

1)  It is so hard to calculate and know what you are getting paid on each deal – that the sales rep will spend too much time thinking about what he will or wont get paid instead of just focusing on closing.

2) By making the plan based on a rolling average, the “cha-ching” factor after a deal is closed is gone.  When a deal is closed, what does it mean to the rep?  Who knows until the end of the quarter so its not as exciting when a deal closes.

Here is my bottom line on comp plans.  Make them simple and easy to calculate.  Give me a cha-ching when I close that is very clear what I get and when I get it.  This will motivate me to close more and faster.  I see something I want to buy?  How do I do it?  Close a deal at this amount and I will get enough to buy it.  Want to make more money than that other salesperson.  How?  Close deals totalling X to get there.  This is how we think.

The more time I have to spend on math, the less time I spend on closing.  The more time I’m wondering about what I get paid, the less likely I am to close it.  When I don’t know what its worth to me personally – I have less drive to bring it home.

Perhaps these sound like strange concepts to non-sales types, but this is what motivates us.  The hunt.  Make it like a hunt and we will hunt it down.  Make it like a complex problem with too many goals and triggers and we will be less motivated and driven.

I think that my guy will do well in this role, and I actually think he will make quite a bit of money.  I also think he has the drive to succeed in this position regardless, but in general, I think that this comp plan should be tossed out and replaced with something simple that provides cash directly tied to an action.

Sales is hard.

Anyone who has done sales in a start-up can attest to that fact.  Great salespeople make it look easy – or at least hide the struggle well from non-salespeople.   Once a great salesperson builds their pipeline, gets down their pitch and starts rolling with it, they can easily bring companies on the pipeline, and move them through, and can often do it with, what looks like, ease and finesse – and often with amazing predictability.

For people and managers who have never been the person on the firing line, especially in a start-up, this predictability and finesse look like a hands down victory.   And in many ways it is a victory.  The ability to get your startup to this point means that you have a product that people want, that people will pay for.  You have identified a good sales team, and they have developed the pitch and the product offerings and pricing that allow sales to happen.  It seems as if sales will just happen now – regardless of who or what is in the sales role.  I’ve seen too many non-sales startup founders think that the product must be speaking for itself, and that the sales will happen regardless of  who or what is in front of them.  But in a start-up, it is often the case that these great salespeople are masking the actual difficulty that is going into this sales machine.  In many instances, the sales team is still pushing the truck up-hill, even though the truck appears to be coasting just fine.  These sales people deal with rejection all the time, and focus on the positive, so the message to the outside team is that everything is going well – even if it isn’t.  And if numbers are getting hit – or near to being hit – then it appears that it is time for a victory lap.

This is most often very, very far from the truth.  The predictability that you see is often completely dependent on the people making it happen, and when you take these people out of the equation, the bottom can fall out.  If you are a start-up manager, you need to resist the urge to change something that is working – even if it is costing you money – ESPECIALLY if its costing you money.  Since the process looks smooth and easy, the natural reaction will be, “OK, this is easy now, so I shouldn’t have to pay as much in commissions.”

WRONG…. WRONG… WRONG!!

Pay away and smile.  Why?  Because you’ve found a team that is bringing in revenue – and revenue is good.  The more you are paying in commissions, the more this process is working.

True… it is possible that there are things you are paying more commission than you should – but until you know for SURE that this is the case, I would argue vehemently that you will lose more revenue than you will pay out in extra commissions.  I can name significantly more companies that overpaid salespeople and succeeded than ones that cheaped out and succeeded.  And, if you succeed and paid a little more to your salespeople no one will care.  And if you fail and overpaid your salespeople, its highly unlikely that the commissions were the reason (after all paying commissions implies some degree of success).

One start-up I worked with tried at every turn to figure out when sales were “working” and they could scale back on what and how things were paid out.   Sales were happening… but they were never automatic, and they were never easy.   I was always amazed at how they would look to save a few thousand dollars in commissions, when if the salesperson left…. it would have cost them potentially HUNDREDS of thousands of dollars.

Cheaping out on a working sales team – even if parts of it feel bad – is never a good strategy in startup mode.

So… given this, when CAN you scale back and change your compensation plan.   Well… if you built the plan so poorly in the beginning, that you are actually losing money – then I certainly would change the compensation package.  If the compensation package isn’t working to bring about the goals that you need to set for revenue – then I would certainly change the package.    Once you have a large sales team that consistently makes goals – even the weakest and newest of salespeople, and it is VERY obvious that there is no large effort, then perhaps it is time to scale it back (although again I might argue if you make your revenue and profit goals – keep it).

But unless any of that is true and if you are making money, then don’t change it!  This is the sign that your plan is working!  NOT that you are overpaying, and not that sales have suddenly gotten easy.

Too many start-up sales managers are quick to declare victory…”mission accomplished”, and to try to scale back what and how they pay on things in an effort to save precious cash – but I warn that this is very often penny-wise because a disgruntled or demotivated sales team will not take you where you want them to take you.  And very often the reason you are paying a lot – is because they are doing exactly what you motivated them to do.

Don’t punish them now that they are doing it.

Its worth repeating my post from last December about the December Sales Problem.

December is a hard sales month for companies for several reasons:  The month is really only 2.5 weeks long before your prospects shut down.  Budgets are often used up.  Vacations make it hard to get deals done.  Prospects are more focused on their Holiday party then they are on your solution, etc.  The list is long, and very intuitive why its hard to get sales done.  However, as I’ve posted before, December can actually be an amazing month for sales.

But very often the biggest December sales problem is inside your own company…  Its the sandbagging sales team.  Get into the mind of a salesperson for a minute…  Sales plans typically reset in January, and each salesperson is in one of two camps.

The first camp has already made quota, and wants to make quota next year – and even though they are probably in accelerated commissions right now – want to make sure they hit quota two years in a row – and set themselves up for accelerated commissions next year as well as any challenges and bonuses that may come along.  In other words, they’ve already impressed you this year and in the “what have you done for me lately” mentality – they are already thinking about next year.

The second camp hasn’t made quota, and probably doesn’t see a way TO make quota in this hard month.  So, they sandbag the deals until next year.  These sales will be recorded and then their quota will re-set in January.  Since they were below quota this year, they know that they have to crush next year or risk their jobs – so they too, will be thinking about next year.

What this means is that NOBODY is thinking about December.  None of your sales team really cares about December.  They have moved on to the next year.

So… what are you to do?  Take this thought process into consideration and be creative about how to solve it.  In last year’s post I offered some suggestions that I’m going to repeat:

• Sales challenge for December.  Put a big carrot out there for achieving a particular goal in December. Cash is best since you are combating the thought of cash for next year but a trip or other prize can work as well.
• Increased commission rate.  This is a simple but effective one.  Bump all commission rates up in December in order to negate the sandbagging.
• Quota Relief for the following year.  Another idea which can be successful is to offer quota relief for the following year based on sales in December.   So, perhaps you drop a person’s next year quota by $0.25 for every dollar they sell in December.  This makes it easier for them to hit their accelerators in the next year.
• Immediate payment.  Typically salespeople have to wait to get commissions.  I’ve heard of some companies offering to pay immediately on December sales as an incentive because in January they will wait on the payment scale.  (This can create issues for customers that don’t eventually pay – which is why I’ve never done it – but I figured it was worth a mention because it was mentioned to me)

The challenge of avoiding sandbagging salespeople in December is a very tough one.  As business leaders and entrepreneurs, we want the best numbers we can get in December, and for the year.  As salespeople, we want to bring in sales in a way that can maximize our personal income.  Marrying these two ideas is always the compensation challenge and in December this is a bigger problem.  I’m certainly curious to hear about how other people have solved the problem.

You can draw sales lessons from everywhere in life.  The reason for this is that most of sales is about the interaction of human beings with each other – about the acts of persuasion and communication.  I write constantly about how everyday life teaches me valuable lessons about how to become a better salesperson and sales manager.  First, I wrote about Sales Lessons in a chick flick.  Then I wrote about Sales Lessons from my 7 year old.  Then, sales lessons from my 2 year old.  I also wrote recently about sales lessons from my colorblind brother.

My latest sales lesson came from my 6 year  old son (which fantastically has provided me at least one post-worthy sales lesson from each of my children).  My son is playing flag football this year, and while he told me all spring and summer that he was really looking forward to playing flag football again this year, once it came time to play, he was less than interested.  He whined and complained for the first two weeks of practice, and not surprisingly gave a less than stellar performance on the field during the first game.  After the first game, I tried to remind him how great he did last year.  I made sure he got the proper rest, and the right breakfast before his second game.  Yet, he was a goofball on the field, and in many ways really provided an embarrassing display of antics on the field.  The fact that many of the moms were telling me how cute and funny he was did matter.  It was getting me very angry that he wasn’t trying his best and doing what I knew he could do well.

My reaction was to get angry at him and to punish him for his display on the field.  The next week?  He provided a similar display of antics.  I was infuriated.  But… by this point, I realized that there was a lesson here.  (Indeed – its coming back to a sales lesson).  I realized that I wasn’t providing the correct motivation to get the behavior that I wanted.

After his third game, I sat him down and explained to him about what would make me proud.  I explained to him that I always expected him to try his best at everything he did, and that I expected the same of myself.  If I wasn’t trying my best at QuotaCrush, then the company would not survive, and that would have repercussions on all of us in the family.  In the same way, he needed to always try his best.  I told him that I didn’t care if he got a flag or a touchdown, but that I wanted to see him do his best.  Then after the pep talk, I modified his “comp plan” and told him that he would receive $1 for each flag that he got, and $5 for every touchdown that he made.

The next football game cost me $20.

I’m not sure which part motivated him more, the pep talk or the comp plan, but it worked.  (Ok, he is my son.  I know it was all about the cash.)

So what’s the sales lesson here?  Proper motivation and the deploying the right compensation plan is the best way to get the results that you want from your sales team.

Just like my son, salespeople are wired to perform.  They want to succeed and close more deals:  just as much as management does and sometimes more.  However, since start-up sales is one of those jobs where the daily tasks are squishy, the proper compensation plan makes sure that the salesperson stays focused on what is important.  The salesperson’s drive for closing as many deals as possible in the shortest timespan, is directly related to the compensation that she/he expects to receive.  If your expectations are unrealistic – or comp plan too hard to calculate, you won’t get the results that you want.

When people ask me about building compensation plans, I typically recommend starting with a very simple plan so that it is easy for a salesperson to figure out what they will make with each sale.  I’ve got several half written posts on start-up compensation packages which I plan to finish, but the concept I’m talking about here is not about the mechanics of any particular compensation package, but about the fact that business owners need to understand what moves the salespeople in your organization.

When I needed my son to perform, I gave him two small goals:  Get flags and get touchdowns.  He went onto the field with those objectives in the forefront of his brain and his every move kept him on those two goals.  In your business, you should find those small goals that your salespeople can achieve and have them attack it, and they should feel the immediate results.  (cash in the bank).

As the weeks progress, I may add incentives for other goals like proper blocking, passing, fair play, etc. and likewise, you can start to add other incentives around the goals that you need to achieve, but make sure that the goals you seek aren’t too far out, and that they are achievable.  Recently, I spoke with a very early stage start-up that has an enterprise sale that will probably take several months before any sales are made, and the CEO was frustrated because he just couldn’t feel like he had anything big to motivate his salespeople.  It was clear that the salespeople would probably not make commission for 4-6 months because of the sales cycle plus when it would take to get paid.  I gave him the idea to start by setting aside $5,000 in commissions.  I told him to tell his two salespeople to go and get secured meetings with confirmed decision makers and have him pay $500 for each meeting to the salepeople and tell them that once the $5,000 was used up, it was used up.  The result was that he spent the $5,000 in a little over a month and successfully kick-started his sales effort.  And.. it only cost him $5,000.  He got motivated salespeople, and delivered a win-win.  The lesson here is that rather than just telling salespeople that they would make the money when they made the sale, he got into their head, and gave them an incentive that matched the incentive of the company.  Would the company have paid $5,000+ to get good leads elsewhere?  probably – so why not use it for sales motivation.

If it seems simple… it really is.  Salespeople want to make money – and they will deliver in the easiest and fastest way for them to make money.   So.. make sure your compensation plan allows salespeople to make money in the ways that grow your business in the way you want it to grow.

I gave my “Sales 101 for entrepreneurs” lecture to the entrepreneurs at DreamIT Ventures in Philadelphia last week.  If you aren’t familiar with them, its a TechStars / Y-Combinator style incubator that helps launch great companies on a shoe-string.  It does so by providing a great environment and access to top notch mentors and experienced VC’s and entrepreneurs.  I was honored to be one of their speakers this year.

During my presentation, one of the entreprenuers asked me a great question:  What should I look for when I’m hiring a sales candidate?

My immediate response was, “The first and most important quality that I look for in a salesperson is that they have expensive hobbies.”  Of course, this evoked quite a bit of laughter, but then I started to explain my rationale.

Most people will tell you that when you hire a salesperson, you should look for confidence, persuasiveness, an extensive rolodex, the persistence of a 2 year old , and intelligence.  I say, yes all of those things are great (although I am not a believer in the rolodex-theory), but you are talking to salespeople.  We are not normal.  By nature, we are trained at the core to manipulate conversations, control the direction of conversations, get you to feel good about what we are saying, and convince you that the things you are looking for are not what you are looking for – but you are instead looking for the things that are good in us.  Our job is to close you – to get the deal done.

OK – so how do you find a good person, knowing that every person you talk to is trained to make you think they are a good salesperson even if they really aren’t.

I look for two basic qualifiers if I’m going to be thinking about this person further:

First, I look for expensive LEGAL hobbies.  (Obviously, I do not mean an expensive cocaine or heronie habit.)   I mean skiing, scuba, spa, golf, biking, expensive watch collections, expensive purse collections, etc.  These are things you can usually find out in the banter that happens even before the interview starts.  Expensive hobbies speak to two things:

1. They have had some success before that allowed them to even partake in these hobbies
2. They have motivation to repeat that success in order to continue with those hobbies.

You need to sense a passion for that hobby.  I don’t mean just skiing, but someone that has decided that they need to ski every mountain around Lake Tahoe more than once, and at least once on every continent that has skiing.  I don’t mean someone that enjoys biking, I mean someone that describes the bike they own (or REALLY want to own)  as having automatic transmission, disc brakes and made of titanium.  Its that type of passion for the hobby, that typically tells me that this someone who is driven, focused, and squarely thinking about cash in their pocket at nearly every turn.  The more this salesperson wants to do that hobby, the more she/he going to be thinking about closing.  This is of course, good for you.  The more your sales person makes… the more your company makes... the higher your valuation is… the closer you are to a great exit or break-even.

Second, a great salesperson will start building his/her pitch in the interview.   They may not get your product or the product direction correctly, but as they hear you talk about the product, they should come back at you with suggestions on how to pitch the product, or “have you tried this approach” questions.  These suggestions may be WAY off your corporate mission but that’s OK.  What you should take from this is that you have someone that knows how to listen, and is willing to take what he/she hears and be creative to find a solution.  The salesperson that is building his/her pitch the minute he starts hearing about the product is already thinking about how he/she can close deals.  This is the key to the entire thought process.  A salesperson that is thinking about a solution that leads to a close is the salesperson you want on your sales force.

As simplistic and as unconventional as these suggestions are, they are typically methods that have worked for me in finding great salespeople.  Of course, you should continue to look deeper into their background, sales tactic, etc. to see if its a match for your company culture, etc. but I follow these two simple rules to at least do a first pass at them.

Now to go plan that Tahoe trip….

Its been too long since I’ve blogged.  Lots of good things going on with QuotaCrush, plus the holidays have kept me away, but I have several topics on which I want to write about and I am goign to be more diligent with sitting down to write. 

In the mean-time, an interesting question has come up recently with two different clients about what should be the basis for commission on which I thought I would write a mini-post.  Should you pay based on the amount of profit that the sales produces – or should you pay based on the amount of revenue that the project produces.

In general, I always advocate that the goals of the compensation plan must match the goals of the company.  When these two objectives are in alignment, then the salesteam can be very productive, and everyone wins.  When these items are mis-matched, frustrations on both parts are likely to happen.

So, the question that you need to ask youself in order to answer this main question is:  What is your objective for sales this year?  Is it revenue or is it profit?  While this seems like a silly question, in fact is isn’t.  Companies, particularly the start-ups that I work with, often have a need to generate marketshare and anchor clients.  Companies may be willing to take certain clients at any cost just to have them as a client – and often certain products are loss leaders needed to get companies started before they get the more expensive products.

Once you know what you as a company want to achieve, then you can set your goal appropriately.  When you set it incorrectly, your salesteam gets frustrated and de-motivated.  For example, in one of my sales jobs, I was in the process of landing P&G as a client.  P&G, for most companies, is such an amazing anchor account, that most would do whatever they could to get a deal with them.  Ultimately, this is what my management was telling me to do.  In fact, they had me present a proposal that included a gaggle of free services.  I was able to land the account, but got nearly no commission on the deal because my compensation was based on profit – not on revenue – and once you factored in the free services that we had to offer, the profit was squeezed out of the deal.  I managed a sell few follow on deals which did generate me some commissions – one a rather large deal – so wound up OK, but the bottom line was a disgrunted salesperson for quite a while because I was doing an awful lot of work for no commission.  Had the company really thought about what they were asking me to do, they could have re-worked the compensation so that I was whole on this deal because they wanted it so badly.

With both clients that I talked to about this recently, my advice was to pay on the revenue that was generated rather than profit, because both clients were in desparate need of marketshare in their regions.  My theory was that if they had the salesperson focused primarily on profit, yet the goals of the company were to gain a client base and some marketshare that the goals were mismatched.  The company position might be that they would be willing to take a client at any price above a loss (and perhaps even some special situations at a loss), yet a salesperson would see that deal as an unworthy effort. 

I asked the question, “What will you think if a salesperson walks away from a deal because there isn’t enough profit for them to make any commissions?”  If the answer is any angst over the salesperson’s decision, then they should be paying on revenue – because its obvious they want sales that even produce a small amount of profit.  If the answer is that they would be happy with the salesperson’s decision, then they can commission on profit alone.  That will ensure that the salesperson only goes after deals that generate a significant amount of profit.

In speaking to so many start-up entrepreneurs, I get the same question over and over again:  what type of sales person should I be hiring?

This is a very interesting dilemma for start-up companies as they begin to build their sales plan, and as they try their best to get to profitability.  You have a serious choice.  Do you hire someone who is experienced in sales or do you hire a junior, super-energetic salesperson.

Of course… you want both!  And – often you can find that person in the experienced salesperson.  But what we are really talking about here is not energy level – its COST.   When I say experienced sales person, its just a euphemism for EXPENSIVE sales person.  A proven sales person, someone who has closed lots of very large accounts, has earned the right to have more base salary – especially at a start-up where there is so much risk – knowing this person can go to a more established company and make a lot of money.

This means that the tendency of a start-up is to find a less expensive sales person who they think can pull it off.  And many will be able to.  After all, I started my career as an entrepreneur and I was selling my software.  I had no experience in sales.  I was a programmer.  Yet, I figured it out and was able to close some very large accounts.  However, I lost a lot of accounts along the way, and also had some experienced sales people involved with the company that gave me gobs of great advice along the way.   You are going to be paying for on-the-job experience with a more junior salesperson, so how best to mitigate this and get the sales you need.

The options, as I see them, for a start-up are:

• If you have a CEO or other management type who has hard-core sales experience, then hire the junior sales person and save yourself some money.  And I mean real quota carrying sales experience – not just an ability to sell.  That manager can guide and train the salesperson, help them avoid the obstacles, power through objections, and quickly get up to speed on how to close deals.  Without this, you are likely to get lots of activity – but not lots of money.  A new salesperson typically needs their energies channeled – especially near the end of a sale because that is when it gets hard – and the path of least resistance will take their activities to new prospects where all conversations are lovey-dovey.  Managing activities and the pipeline are going to take a portion of the CEO or other management person’s time, but having management oversight will be critical – or lots of cycles will be burned without sales.

• If you don’t have a management team member that has done hard-core sales, then hire yourself a true VP of Sales.  If he/she is all you can afford, then that VP of Sales can carry a quota until he/she makes enough sales to justify another team member.  While this person will cost you more money than a junior salesperson, you will actually be spending money wisely.  This person should more than make up for their expense.  They should be able to set in place the right sales structure, and get some anchor accounts will will cement your sales strategy moving forward.

• Third option:  Hire the young salesperson, and then have an external advisor that is a sales guru (board member, outsourced sales management firm, partner firm) work with the sales person and manage their activities.  Get that person involved early on and the experienced person can shape the strategy and guide the junior sales person.  This junior salesperson, if conditioned to rely on the advice of the expert, can be guided by the senior salesperson in terms of what steps to take next, when to call again, how to handle certain objections, which accounts to prioritize, how to get past a gatekeeper, how to break a log-jam, when to negotiate on price, when to know you are getting the brush-off, etc.  He/she can also be the grey hair to call in when they call in their senior management for either a webinar or a face-to-face.  If you have someone committed to the success of your company, this can be a great option for a start-up.  If you have angel funding, you may learn that some of your angel investors can be, and would be willing to be, this person to you.  (Disclaimer:  I try to keep this blog pure sales advice – but I feel the need to disclose that outsourced salea management and advice is what QuotaCrush is about)

Its certainly a tough decision for a start-up, and the costs surrounding sales (not just salary but travel, entertainment, etc) are one of those difficult pills to swallow.  But like in anything else, its not wise to go cheap on the sales side, unless you can back-up the junior sales people with some real sales management.  I honestly believe that companies with great sales typically have solid sales management and structure behind it.

The end of any quarter is deal-making time, but December is the best of them all.  I was talking to a salesperson the other day whose opinion was, “nothing happens in December”  Ah, how UNTRUE!  In fact, when other people slow down, its the chance to make a big deal.  But… there is a problem with December that puts sales people against sales managers and while both are aware of it, it certainly creates problems for all sides.

The problem is this: most sales plans re-set at the beginning of the year.  January is a fresh start.  Close a deal in December, and the impact of that sale typically gets wiped out in only a few weeks.  If you are already above quota, you get the sale at your accellerator, but if you push the deal until January, you have a running start towards next year’s accelerator.  If you are behind quota, you aren’t going to get it at the best commission rate anyway, so might as well wait until next year so you won’t miss quota two years in a row – and you will show good progress for next year.

The bottom line is… for a sales person, December is a not a good month to close anything.  Holding the sale until January is a much better option.  Unfortunately, with sales managers and companies trying to get the best financial picture for the year, this proves to be an interesting dilemma. 

The initial reaction of some companies is to put negative incentives in place for the salespeople, to encourage December sales.  Sales that are on the 1 yard line sometimes will get negative treatment in January, to punish salespeople that don’t get that sale in December that the company feel they should have (which may or may not be due to the above problem). 

I find, in building compensation plans, motivation always works better than punishment.  Regardless of what has happened in the past, if you want a salesperson to sell, put the carrot in front of them.  The better solution for companies that want significant numbers in December, is to reward extra.  Some ideas:

• Bring all salespeople to the top commission rate regardless of level
• Sales contest for December outside of quota
• Pay commissions on December sales – and provide 1/2 quota credit for next year (not a double commission – but for every dollar sold in December give $0.50 quota relief for next year so its easier to reach quota in the next year)

I always think that you can get amazing things from salespeople if you put the right incentive in front of them. 

Now, the other side of the coin is this:  If you are a salesperson who is behind, and you are looking for a chance to shine – and perhaps earn some silver bullets for the next year… get out there and close that December deal – there are dollars to grab.  It will show a real effort, and earn major points for putting the company above your own personal gain.

Anyone else have any interesting ways to solve the December sales problem?

Sales professionals live and die by their network.  Becoming a very successful salesperson typically means that you can use your network to its fullest to get and GIVE introductions, referrals, and more.  There are dozens of posts on ways to build and maintain your network (and I’ll likely have several posts here on this), but what do you do when you want to ask someone in your network for assistance in making contact?

Early on in a professional sales career, the mistake that salespeople often make is to badger the people in their network – or ask unreasonable things of the people in their network.  Think of the typical pyramid scheme salesperson.  They typically continually hawk their products to their friends, family, neighbors, etc. until those people cringe when they hear their call or see them face-to-face.  They are actually taught by the people at the top of the pyramid to rely on their closest relationships for sales.  This is completely the wrong way for professional sales people to behave.  You should rely on your network to help get you closer to your sales – but never to get the sale for you.   You always need to remember that it is YOU that needs to get the sale.  Your network is but one tool in your bag.

If you rely on sales to live, the last thing you want is for people to avoid your calls, avoid you at networking events, and delete your emails.  You want them to embrace you.  In order to do this, you need to get into their shoes.  What would make YOU do something for them if they were calling you?

Here are my three basic rules for making contact and requests of your network:

1. Ask for something EASY:  Ask them if they would forward your email onto the decicion maker, ask them for the decision makers assistant’s name, ask for some (publicly available) information on corporate goals that might help you build a better pitch
2. DON’T ask them to get you a meeting.  (rookie mistake):  Never ask this person to get you a meeting with a decision maker.  This is putting the task of getting in the door on them.  Asking them to forward your email with a short introduction is easy and puts the ultimate closing pressure on you.  When you ask them to get you a meeting, it puts the closing of getting the meeting on them.You are asking them to do your job – not to help you out.  If you put yourself in their shoes, imagine if someone in your network asked you to get them a meeting with your CEO as opposed to just forwarding an email onto them and then letting them take care of getting the meeting.  The email is a great “in” and you haven’t potentially affected your relationship with the person in the network.
3. ALWAYS offer something in return: A referral into your network, posting on your blog, information that will help them with a project they are working on, etc.  If this person is unwilling, or un-able to help you out this time, providing them some assistance in their job

If the person you contact is inclined to go further in their assistance, they will.  Perhaps they will get you that meeting.  But because you asked for something that is easy for them to do – they will not feel put out.  You never can know the internal politics that may be going on.  Its possible they are saving that silver bullet for another time, maybe they recently had a bad performance review, maybe they don’t think your product is right for their company (but still like you and want you as part of their network)..

As the credit crisis holds, many start-ups are going to start looking to make sure that they hold onto cash as long as they can.

That may include the decision to eliminate and/or outsource a portion of your sales staff.  And, this can often be a very wise business decision.  Of course, the cartoon to the right takes it to the extreme, but as start-ups and other companies decide to eliminate sales staff, the challenge becomes on how do you continue (and accelerate) your trajectory in sales with less sales staff and potentially less resources (minimized travel budget, etc).

The key, as I’ve blogged on before is designing the right compensation package.  You can get amazing things from salespeople, if you give them a path to make a lot of money and it is OK to expect BIG things from them to get that money.  The compensation package should be reasonable and achievable, but should also be challenging.

It is certainly time now for ALL companies and especially start-ups to re-evaluate the staffing levels, the compensation packages, and start expecting more from their sales team – and rewarding them appropriately for achieving large goals.  The best compensation plans have lots of milestones along the way that reward performance, and also have a sense of competition in them.  And… this is critical… they must NOT be unrealistic.  If no-one is making any money on the sales team, then you actually will see sales decrease.

A compensation plan should never be designed in a way that ensures the company does not pay anything out.  It should be designed to motivate and drive sales.  And you should make sure that when you design your plan, you are not designing it in such a way that you are focused on how not to pay out commissions – but that you are focused on how to motivate people to sell what you want.  And when those salespeople do so, rejoice.

I’ve started to work with several start-ups on their sales strategy and on designing compensation packages for the 2009 reality, so I know it is not easy to design one that motivates people correctly – especially if you haven’t created one before.  However, I think that there are also a lot of opportunities for getting a lot of performance out of hard-working sales staff when it is done correctly.

Outside monthly prizes, contests, and other SPIFs, I’d be interested in hearing about clever compensation ideas that companies have used to motivate sales people.  Anyone have anything interesting that they have used?