In competitive sports, success occurs when every player knows how to contribute to the team's success.
In sales, when performance aligns with company strategy and is compensated accordingly, the person and the business triumph.
Let's review the hat trick of winning strategies for existing markets, new markets, and profitability, and then view the whole rink.
Grow Existing Markets
You may pull the goalie and add an attacker to push for an extra goal in hockey. In business, try temporary rewards for immediate impact.
For instance, offer a monthly bonus for the first deal, most wins, or most demos. These incentives motivate assertive behavior.
Higher costs in the short term will be offset by the increased value in the long term as case studies, referrals, and upsells drive growth.
Pro Tip: I encourage founders to create compensation plans that emphasize the upside without ceilings. Commissions are a percentage of revenues and typically time limited, so to help the company grow, offer massive commissions. New customers offer long-term value, referrals, and signaling. Excited salespeople are a game-changer.
Reach New Markets
To engage different verticals, regions, or types of customers, you want the sales team to break away.
Since getting traction in a new market will be tough initially, set a higher commission in the first quarter to encourage initiative.
Also, consider team bonuses to reward partnering around ideas. These ideas will spark new opportunities.
“Great moments are born
from great opportunities.”
– Herb Brooks
To support the sales players, recognize people outside the team for their contributions. This plan benefits everyone in the long run.
Finally, evaluate a higher commission for specific, targeted accounts that will heavily influence other companies.
To optimize margins, you could increase base compensation and lower commissions.
This approach works well with a clear sales strategy and pricing structure where the team follows a proven process.
You may be adding people quickly to the team. Reward effective trainers and mentors since they are helping score the hat trick.
To motivate long-term customer retention, consider multi-year commissions encouraging salespeople to stay in touch.
View the Whole Rink
Revenues at most companies are based on signing new business, retaining customers, and cross-selling and upselling opportunities.
However, these areas are often siloed and considered differently in small businesses.
To push on all three areas cooperatively, have separate functional owners share systems and metrics.*
Rewarding shared metrics prompts new ideas and strategies to be shared and applied collaboratively. For more about this approach, check the RevOps post linked below.**
Key Takeaway: To win the game, construct sales compensation based on company goals, team initiatives, and individual behaviors.
Photo by Logan Weaver who can be found here
* See the article Myths No More! The Key to Installing the Right Metrics
** See the article RevOps: Gear Up for Growth
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