Farewell Zig Ziglar

Motivational speaker Zig Ziglar died in Texas on Wednesday, aged 86. He had been suffering from pneumonia.

He wrote more than 30 books and and was well known for is corporate training and motivational speeches. 

"See you at the Top" was not only his catchphrase but also the title of his first book.

I have included here a copy of Seth Godin's blog that outlines the great inspiration Zig Ziglar was.

Thank you, Zig
My teacher Zig Ziglar died this morning. He was 86.
Thanks for teaching me how to sell and why it mattered.
Thanks for reminding me how much it mattered to care.
Thanks for telling us a fifteen-minute story about Johnny the Shoe Shine Genius, so compelling that I flew to the airport just to meet him.
Thanks for 72 hours of audiotapes, listened to so many times I wore out the cassettes twice.
Thanks for that one day we spent backstage together in Milwaukee.
Thanks for making goal setting so clear.
Thanks for elevating the art of public speaking, and making it personal, not something to be copied.
Thanks for believing in us, the people you almost never met in person, for supporting us with your voice and your stories and your enthusiasm.
Thanks for teaching so many people, people who will continue to remember you and to teach as well.
You'll be missed.

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My 7 Best Books for 2012

Here is my reading list for this year. These fine books inspired me, encouraged me and changed my thinking. What will you do with them in 2013?

Enjoy!

To Sell is Human by Daniel H. Pink - Explore the power of selling in our lives.

SPIN Selling by Neil Rackham - A book I revisit year in, year out. There is always something to pick up on to improve sales performance effectiveness.

Sales Cats V2 by Mike Boyle - Yes gratuitous self promotion I know, but version 2 has a significant change. Can you pick it out? It may make a difference in your salesmanship!

Good to Great by Jim Collins - Haven't got the time to spend investigating what you company needs to become a great one? This book has done all the research and discovered  the distinguishing characteristics that cause a company to go from good to great!

Outliers by Malcolm Gladwell - What makes high achievers different? Gladwell brilliantly explores why  your personal upbringing and where you are from play such an important part in your success.

Switch by Chip and Dan Heath - How to we balance the rational mind with the emotional mind to achieve change in our business and personal lives? In this book we learn why and how!

Tested Sentences that Sell by Elmer Wheeler - A classic read for any salesmaker. Learn how to uncover the most persuasive benefits in everything you sell. As Wheeler says, "learn to sell the bubbles not the wine"!

Let me know of any great reads you have discovered this year. I can add it to my holiday reading list!

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Storytelling for business - who would have thought!

You all know I like a good story. It's about the shared experience.

Amazingly in this tecnological age, storytelling is making a comeback. Technology is allowing us to share stories in so many ways: video, audio, mp3, pintrest, youtube, animoto etc etc etc.

In business, storytelling is keeping customers engaged. Interested in our company, our products, our services, our developments. The power of this connection lays in the customer seeking out more about us!

When it comes to brands and marketing, the application of story now needs to go beyond the traditional and ubiquitous tool of brand story; rather, it’s about engaging consumers in a brand’s stories and using the construct of stories and storytelling to create powerful connections. While the transition to digital media drove a focus toward content, today with ever more social tools and communication media, there’s a need for cohesive and meaningful connections in a marketing world that is now labeled “always on,” demanding more of brand communication. This is where story comes into play.

Kathy Oneto is vice president of brand strategy at Anthem Worldwide and has great insight on the subject.

"Why stories? It seems we’re all catching on to their effectiveness in connecting with people. When information is communicated in story form, we seem to remember it better and be affected by it more deeply. Brands are telling these stories across a number of different mediums--from packaging to video to visual and verbal content."

 Some tips on storytelling can be found from research consultancy Latitude, which recently released part one of its study, “The Future of Storytelling,” which identifies trends and audience attitudes about content. The tips Latitude provides on telling stories are the following:

1. IMMERSION  - Create an immersive experience through content that is delivered in multi-media and that is multi-sensory;
2. INTERACTIVITY  - Allow the consumer to become a part of it;
3. INTEGRATION  - Ensure there is coherence across the many touchpoints; and
4. IMPACT  - Make it lead to action

"Again, the difference today for marketers is twofold--storytelling is not an internal exercise alone; rather, it is an exercise that should engage the consumer. Brand stories need to now live day to day with the engagement of consumers to create strong, long-lasting bonds across all touchpoints, from packaging to video to visual and verbal content. Such a requirement transforms how marketers need to think about their role. It becomes less about directing and more about curating a brand and consumer journey."

Read Kathy's article and share your thoughts on how you might employ a story to ignite interest in your business, product or service.

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Is your team on your team?

Well if it isn't you're in big trouble!

I was reading a Zig Ziglar article the other day and this point jumped out at me. How true I thought.

More and more we are seeing managers and business owners pulling their hair out, frustrated at their staff going in different directions and missing their targets.

Good business starts on the inside. Your team must believe in you and what you are trying to achieve. 

“The belief in the value of what you do or sell has to be so strong that everyone who comes in contact with a customer exudes confidence in the company and the product”.

When this is the case everyone is prepared to pitch in.

If your team is not on your team – STOP!  Step back and take 5 minutes to reset for yourself the goals for your business. Detail it out in a One Page Plan: the Now – Where – How.

Share this with your team and work together to plan the route to get there. Then set them free on meeting the needs of your customers through your product or service.

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The End of Solution Sales

I have just been reading an article in the Harvard Business Review (July-August 2012) and was intrigued with the headline: ‘The End of Solution Selling’.

The article announces that “the old playbook no longer works” and that “star salespeople now seek to upend the customer’s current approach to doing business”.  Bold statement and interesting observation I thought.

For many years we have championed the cause of sales professionals solving the problems of their customers to win business, and ensure repeat business - solution selling. 

But in recent times it has become apparent that being the font of all knowledge to our clients and solving all their problems is not enough. For a start, customers make an approach or enquiry armed with more knowledge of our product or service than ever before. They have researched and compared all before walking through our door.

As the article outlines, “customers completed, on average, nearly 60% of a typical purchasing decision – researching solutions, ranking options, setting requirements, benchmarking pricing, and so on – before even having a conversation with a supplier”. With this in mind, the celebrated ”solution sales rep” can be more of an annoyance than an asset!

“Insight selling” is now the mantra of the best salespeople. It is a new strategy that demands a radically different approach across several areas of the purchasing process.

Solution Selling	Insight Selling
What kind of company to target
Organisations that have a clear vision and established demands	Agile organisations that have emerging demands or are in a state of flux
What sort of initial information to gather
What need is the customer seeking to address?	What unrecognised need does the customer have?
When to engage
After the customer has identified a problem the supplier can solve	Before the customer has pinpointed a problem
How to begin the conversation
Ask questions about the customer’s need and look for a “hook” for your solution	Offer provocative insights about what the customer should do
How to direct the flow of information
Ask questions so that the customer can steer you through its purchasing process	Coach the customer about how to buy, and support it through the process

Source: Harvard Business Review August-July 2012, p63.

Sales professionals need to be adaptive. Solution selling skills need to be complemented with strategies to challenge, insights to engage clients and the touch to coach how they should buy. Successful reps “may still be selling insights. And in this new world, that makes the difference between a pitch that goes nowhere and one that secures the customer’s business.”

The full articles is linked on our website, so take the time to have a read and see how Insight Selling might better suit the ‘new age’ customer in your market?

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Give someone a chance

I was reminded this week of a program I ran in Ballarat several years ago. With a Mindshop colleague we ran a Mindshop Excellence program with a group of senior high school students.   

What we experienced was nothing short of amazing and a reminder that anything is possible if you give someone a chance. Here are my colleagues recollections....

"…. I witnessed the most amazing person at our last program in Ballarat. Mike Boyle and I arrived on Monday to tackle 4 groups in the one training session. Nothing special here except one of the students was a 15 year old girl. She was profoundly deaf and unable to communicate verbally. I was terrified – how can you possibly train someone with this challenge in just a few hours, in a boisterous group, without setting her up to fail. I wanted to go home but being afraid of the Boiler did not. Well picture the scene. Here we are promising these kids that they have the talent to do anything, given the chance, and all they need is belief in themselves and a few tools.  The student had a signing translator who tried hard to keep up with the Boiler and me, always a challenge as we had a room full of evolving young adults.  

Mike and I watched this girl participate in the group dynamics and we both came to the same conclusion. She was a born leader. She just could not hear or speak.  This student neither needed, wanted nor would accept any special treatment. So with my usual stern face I announced to the group that everyone would be presenting on Friday, no notes, the usual drill.  This always gets their attention. That was it for me. I made a quick visit on Tuesday morning and then did not see the group again until Friday morning for presentation practice. An added challenge was that the group had been told by a much nicer person than me, that they could present with notes. I said no way to this and told them to get up and practice. I was really worried about how to include her – their problem of course, not mine. But what would I do if they had not included her?  I was hoping that she would be changing slides, holding up a chart, pointing to something.  Well they lined up and began. Looked good as each got up to present. Then she stood up and presented. Sign language in front of PowerPoint slides. I have never seen such passion, excitement and enthusiasm in a presentation. She got her message across better than any of the speaking speakers.  She knew the tools, presented insightful comments and passionately made forceful points, all with her hands and body language. 

She was the best presenter of the group. Mindshop Excellence had given this girl the chance to show the world, in this case a room full of senior executives, what she could do given a chance.  There was only one problem. Her signing translator was repeating what she was signing “saying” in a monotone. The practice round was stopped and the translator charged with expressing the passion and the excitement, not just the words. I found coaching the translator was a lot more difficult than the young presenters. Signers “don’t do the passion”.  However after a little persuasion she came good and at the final presentation I was not the only person who had a tear in their eye. The student was magnificent. Her mother came to me crying and begged me to thank Mindshop for giving her daughter the chance to be what she can be. 

I wonder how many other 'overlooked stars' there are in your part of the world, young adults full of talent that may never be realised unless someone gives them a chance. Life is short. There really is more to life than the next dollar. Your VTO could change someone’s life forever. Maybe even yours."

http://www.mindshopexcellence.com/

Stop talking

Hope all is well in your sales land. Are you becoming a sales cat yet?

Why do we often talk more than we should? When other people talk too much, we notice immediately. When we talk too much, everyone else notices—except us. 

Here are a few possible explanations why it happens: 

1.      Anxiety. People who are anxious use an avalanche of words to avoid dealing with potential conflict (like a prospect saying "no"). Instead of balancing talking with listening, they believe that their wall of words will protect them from what they imagine as a threat. They often refuse to give up control of the conversation by adding a trail of words that echo the ones that they've expressed previously. 

2.      Lack of preparation. The less clear we are on any given subject, the more words it will take us to talk about it. Here is an eye-opening exercise. Ask a salesperson to make a presentation about your company as if you were a new prospect. Time the presentation. Next, ask the salesperson to write a brief, but concise description of your product or service in 180 words. Now, read the copy at normal speed. How much time did it take? About one minute. It should not take more time to engage a prospect.

3.      Stress. When we are tired we tend to ramble and our ability to concentrate begins to decrease. Our brain responds to mental fatigue by producing more words and less meaning. The cure: Get enough sleep, eat healthy and exercise regularly.

4.      Lack of a roadmap. Do you know where your conversation will lead before you start talking? If not, write down the answers to three questions: What is my call objective? What information do I need to get? What information do I plan to give? Stay on track, stay on message and don’t skip vital steps.

5.      Lack of a time budget. Decide to invest a specific amount of time for each call and stick to it. If you are a manager and you want to save time, conduct your meetings standing up. This forces people to be brief and to the point. If you meet with longwinded people, ask the moment they get on your nerves: "We have another five minutes, what else do we need to cover?

6.      Lack of humility. Some people think that everything they say is profound and important. When they talk, they experience a rush of good feelings and they often fall in love with their own words. They may use catch phrases and complex language to impress their customers. Being expressive is nice, however good relationships require us to be receptive to others.

7.      Ineffective thinking. While some salespeople continue to hopscotch from problem to problem, others quickly get to the core of a customer's problem, solve it and close the sale. Decide which thinking style would be most helpful to achieve your objective: convergent thinking or divergent thinking? Convergent thinking leads to a focal point in the middle of a circle, divergent thinking radiates - like the sun - away from the centre in every direction. Divergent thinking opens people's minds; it leads to new ideas, thoughts and possibilities. As a result, the conversation goes on and on. Convergent thinking leads to conclusions, and concrete results, like a closed sale.

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How to Learn to Love Your Mistakes

I am blogging this article in its entirety as I could not possibly write this better than Bernard. This message is so important in today’s selling environment. Enjoy.

How to Learn to Love Your Mistakes

By H. Bernard Wechsler December 23 2010

Why do executives suffer emotionally when the world discovers they are not perfect and make mistakes? Making mistakes, errors or failing makes them feel stupid,embarrassed and worse – incompetent.

These emotions lead to chronic stress, a weak immune system and even heart attacks. The negative feelings about making future mistakes make them gun-shy about decision-making, that leads to the Unemployment line. 

Stop

Mistakes force our brain to concentrate on discovering solutions. Mistakes and learning are like ham-and-eggs. Mistakes, errors and failure force us to focus on new learning. Mistakes linger in long-term memory because they excite the fear of failure.

Get this: real learning does not come from reading, listening to lectures, watching educational videos or demonstrations. Learning new ideas or skills comes from doing, making mistakes, and remembering both our errors and our solutions.

The Most Important Knowledge for 2011

If you remember only 5-10% of something you finished learning – is that the same as never learning it in the first place? Retention of what we learn is everything, right? 

If you read an article for information and retain 5 or 10% or even 20 or 30% - did you really get it? Comprehension in school is at least 65%, right?

The Learning Pyramid: Adapted from National Training Laboratories, Bethel, Maine

The following is as real as a heart attack, so remember it.

Average Retention Rates

1. Listening to a lecture by a teacher, specialist or professor: after 8-hours we retain just FIVE-PERCENT of it. After 24-hours - we remember just One-Percent of her brilliant research. No good.

2. Reading a textbook for knowledge and motivated by future testing: we retain just Ten-Percent of the key points after 8-hours. After 24-hours - we keep only Five-Percent of it. Reading alone does not cut it, right?

3. Watching and listening to an Audio-Visual presentation: after 8-hours, all we retain of the material is Twenty-Percent. After 24-hours - it drops to Ten-Percent.

4. Seeing a Demonstration of an idea or new skill: after 8-hours, we retain Thirty-Percent of what we saw. After 24-hours – we get to keep Fifteen-Percent of it. 

5. Participating in a Group-Discussion to learn new ideas or skills: retention is Fifty-Percent - after 8-hours. After 24-hours, we get to keep up to Forty-Percent in long-term memory.

6. If you become involved in PRACTICING what you are learning (ideas or skills): after 8-hours - we retain Seventy-Five Percent of the new knowledge. After 24-hours, we still own up to Seventy-Five Percent of the information.

7. If you take the new knowledge and TEACH it to others: after 8-hours, you retain 90% of the information. After 24-hours you still retain up to Ninety-Percent of the knowledge. Wait – after one-month – you still retain up to Ninety-Percent of this learned knowledge.

Conclusion: Participating Teaching Methods like group-discussions, practice and teaching others - is way superior to Passive teaching methods like Lectures, Reading, Audio-Visual, and Demonstrations.

Emotions of Mistakes

To destroy the power of mistakes over your mood, mindset and self-confidence, do this: 

a) identify the emotion you are feeling – embarrassment – frustration – shame – (not being perfect, and feeling incompetent).

b) say it out loud, it gives you control over your negative feelings.

c) affirmation: repeat three-times. “I release my negative emotions about how other people see me. I learn from my mistakes and get better and better.”

d) Add emotion to this affirmation: raise your arms vertically like a Touch-Down in Football and give yourself a cheer. 

e) Type this affirmation on a card or sheet of paper and tape it to your computer. 

Trial-And-Error

Real learning comes from analyzing our mistakes (choices) – errors and failures. Why? It triggers our emotions, which activates our long-term memory for the correct answers. Trial-And-Error is a powerful tool.

The Secret is Implementing 

Listening, reading and watching a demo are not real learning. When we implement what we learned in the real world, it gets sticky and useful. Mistakes come from implementing new knowledge or skills. Define: implement. It is to start, put into action, and to use it. Synonyms are execute and perform. 

Antonyms are to cancel and stop. Implement means to follow-through, apply and enforce. 

When you implement the new ideas or skills – mistakes are natural. Now you have choices to make, and that is when learning occurs. Implement is from Latin, meaning to fill-up. 

Making mistakes is never negative because it is necessary for real learning. In physics, power flows from Negative to Positive. All you require is to extend your Comfort-Zone and learn from your mistakes.

Afterwords

Choose to remember that listening – reading – an audio-visual - and seeing a demonstration – do not cut it as learning. You need to get your hands dirty with implementing the new knowledge or skills. Got it? I knew you would.

copyright © 2010 H. Bernard Wechsler www.speedlearning.org

Sack fast and hire slow!

An Ogilvy and Mather study of over 1,000 sales people has discovered that 87% of sales come from less than 23% of sales people.

What this means is that in many sales teams, most reps are less than effective. It is a small few, the sales cats, that are producing the bulk of the results.

So what should you do? 

Check! Check the results from your pipelines. Check your sales data. Work out who is getting the sales. These are the sales cats who build value based on relationships. The ones who bring good margins, strong revenue and don't rely on discounting behaviours. Asses and identify your stars, your mid-stars, the under performers and the slackers.

Sack the slackers fast. Tough but fair. They will thank you one day as it opens the opportunity for them to find the one thing that they can get passionate about and do well.

Re check the under performers and test them well. Challenge them to perform or leave.

Coach the mid-stars and inspire them to realize their full sales potential. Train them well and coach them on good sales behaviors.

Really coach your stars. Being stars does not mean they should be left alone. We often leave them alone because they are better at sales than the coach or sales manager. It may be time to get a better coach or learn better coaching skills. Your stars will continue to deliver great results.

When there are gaps to fill in your sales team, hire slow! Hire firstly for sales behaviors, then fit, and finally product knowledge. Hire great attitude because it's impossible to train. Hire based on the role models you already have – your stars.

Remember sack fast and hire slow.

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Sales Shift - Stop the Patter

Sales is shifting again. We have moved on from the order taker – the GFC fixed that. The GFC gobbled up natural demand and forced the real sales people to thrive; and thrive they have. The order taker sales person is finished.

Sales people who have survived the order taker cull have decided to tell faster. These people don't get the rules of the sales cat. They figure the more they know and the faster they can tell people about it the more sales they will make. Right? Wrong.

This behaviour of course allows the cream to rise to the top. Enter the transformers.

These are the sales people that live in the third circle of selling. 

The first circle is all about product knowledge, throwing it at the marketplace and hoping for sales.

The second circle sees the sales person pitch the product at the customer, adding some value and describing how it may help them.

The  third circle is where the knowledge of the customers environment, combined with the problem the product solves for the customer, integrates a mature approach to business dynamics.

Transformers get how their 'stuff' solves business problems.

Transformers can link product, problems and solutions very well.

Transformers are masters at getting customers to see the value.

Transformers sell outcomes not more 'stuff!'

Transformers deliver 87% of sales results.

In this new world of selling it will be the transformers who thrive. Do you have one? Do you know who the others are and what they are costing your business?

Transformers – the sales cat of today.

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When is it TIME to innovate?

I've just returned from the Albury BMI week where I ran a workshop on Innovation.

On the morning of the workshop, I drove down Dean Street and noticed the town clock, in the iconic building on the corner of Kiewa Street, was stuck on 3pm. You know a regional centre has stopped thinking about its future when the clock has stopped and the battery not changed! 

I challenged my group on this point and an innovative concept.

With a population of around 60,000 there is a massive opportunity to build something better when it comes to retail and the regional experience.

I boldly suggested that they put a roof over Albury and rebrand it 'Albury One dot com.' There were looks of dismay. Their brains were thinking one way, and mine, another.

Not corrugated iron roofing I suggested, which was the conclusion they all clearly jumped to. A brand, a destination, an experience, a performance I explained. 

See, I believe their shopping precinct has lost it's mojo. It has turned into rows of shops with stuff on shelves with nice flower pots and speed humps as the attraction.

Shopping should be a performance, an experience of the senses. It should be like poisonous gas! It should make you clammy, cry, laugh, sweat, run, stop and drop. Albury needs to rethink it's retail purpose. 

Create an environment like Disneyland where everything they do in the magic kingdom is a performance. As 'Albury One dot com' the hundreds of retailers in Albury/Wodonga could leverage their marketing spend, logistics expense, website presence, training and supply chain. They could align themselves into categories like a Chadstone or Highpoint West shopping centre. Once that was done they could then entertain attracting customers to the value, not just the product. They need to  develop innovative ways to attract people to experience their shops again. Create clever events, entertain, engage customers and bring back the pizazz so sorely missed in retail today.

Think about it. Why do you really go to a restaurant? For the food? Be honest, you go for the experience. To catch up with friends, to laugh, to share and to engage the senses. Food is a given. The problem is most owners of restaurants charge for food only which demonstrates they think they are in the food business when they really should be in the entertainment business. There is no competitive advantage in selling just stuff.

It's time to change the clock Albury.

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Business People Who Sell

There is a common myth in sales circles that sales people are born not trained. Of course this is nonsense. Send me the details of any midwife that recognised an up and coming sales person like Zig Zigler at birth!

The facts are that selling and the science of selling, like any science, is a learnt skill. The basic foundations of this learning are effective communication, planning, goal orientation and problem solving. These elements combined form the foundations of what we call "Sales Swagger” or the “Sales Essence” of an individual.

For many years now I have said consultants are in a privileged position when it comes to selling. They generally have a fantastic ability to solve problems. They have become good listeners by being forced to understand their clients issues in order to offer solutions. They also, if involved in accounting and professional services, come from a ‘trusted’ position via existing relationships and the perception of accounting in the wider community.

So what is the issue with selling if all these factors are stacked in your favour?

Why is it so hard to become “A Business Person who Sells” when the customers prime driver is to go forward, achieve their goals, be successful and achieve growth and profit?

Through observations, training and my own business experience, here are the top key blockages:

• Confidence in your own selling ability 
• Inadequate time allocated to proper sales cycles, from start to finish 
• A poorly thought out (SCA) or Unique Selling Proposition (USP) 
• Lack of sales process or model to find suspects, convert to prospects and then convert to customers 
• Fear 

Fear is not even worth talking about. I have never seen a salesperson shot by a customer! The worst thing that can happen is the customer says “No”! If you have a robust pipeline this will never be a problem.

Selling is not something you can do once a month at the Club Golf Tournament. You need to allocate time to the process of selling. Time for pipeline development, relationship building, sales calls and follow up conversions. Everyone in your organization need to be involved in the process of customer development — not just the ‘rainmakers’.

You need to be able to anchor your sales process with a point of difference to make sure your USP is in fact unique. Understand your SCA. Build a sales process and then consistently use it leaving nothing out. Don’t skip steps.

Lastly, begin to build goals, targets and milestones. Set yourself a meeting target, proposals out for consideration target, conversion goal and win/loss ratio.

Lets be clear. Customers want future goals and success. They are not interested in your products and services, sorry to burst the bubble. I challenge you to ring 20 customers now and ask if you can come over and show them product X, Y and Z. I bet none take you up on your offer. Instead ask them if you can meet to discuss their top 5 blockages to success you can help them fix, and you may even find they offer to pay for coffee!

Here is a model or approach you may have heard of. Sit down with a customer and ask them “Where are you now?” (Listen) Then ask them, “What are your top 5 issues for the next 3 months? You know, the burning ones.” (Listen) Then ask them “Where do you want to be in 12 months time?” (Listen) Then with them, discuss and agree on actions and strategies to get them there. Abracadabra! Looks like a plan!

If you want to be “A Business Person who Sells”, become a person that helps everyone you meet grow in some way. As these people slowly make sense of the value they are getting from the relationship chances are you will become very popular, very successful and well paid.

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Recognition and Reward for your Sales Team

There is a great array of commission and incentive packages to boost sales team performance but choosing the right one for your business is not always easy. Ideally it should fairly compensate and adequately motivate the team members while supporting and advancing your company's vision and goals.

Ground Rules

There are some specific ground rules that span all industries and can help provide a framework to develop your package. The most important rules include:

• Start with the outcomes
• Prioritize behaviours
• Keep incentives flexible so that they can evolve along with your company's goals
• Make it easy for everyone to understand
• Benchmark your competition to stay competitive
• Review regularly for relevance

Start with Results

It is fundamentally important to determine what results you want to encourage and design your plan from there.

The sales teams goals should reflect the company's larger goals. Consider including the corporate goals in your sales agreement to promote a unity of purpose. For additional clarity, you may want to include work objectives, even if they are not tied to commissions.

Some Carrots are Larger than Others

Every incentive in a commission plan is a carrot, but some carrots can be larger than others depending on the behavior they reward. Prioritize the behaviors you want from your sales force. You then can set up a system of rewards that encourages top-priority behavior, as well as motivates salespeople for situations that are clearly distinguishable.

For example, you may want to commission third-party products at a different rate. You also might consider commissioning services differently than products.

You can implement an accelerator plan, which provides flexibility in the commission percentage earned and paid. In this case salespeople are paid at a lower rate until they meet their target.

After that, they are compensated at a more accelerated rate for every dollar they generate in excess of the target.

Keep It Simple

A commission plan needs to be easy for your sales team to understand. Not only do sales people need to see clearly what is motivating them, but you don't want to spend your time haggling over commission payments.

Clearly identify how commissions are earned and keep the calculation formulas straightforward.

You can check your plan's simplicity by creating a few sales scenarios and asking the sales team to derive the compensation. If the plan is easily understood, everyone should come up with the same numbers. If different figures are calculated, consider reworking the plan.

Know Your Competition

If you want to retain a top-level sales force, your plan needs to be competitive. Gather intelligence on how your competitors compensate their sales professionals. You can figure out what commission levels are reasonable and competitive for your industry or profession through an Internet search at a source such as www.salary.com.

Human resource specialists can often  help you locate surveys with compensation information; or sales professionals always know what their industry pays and can share documentation. You also can tap in to your industry's professional association or ask your peers how they structure their commission contracts.

Commission Structures

At the core of any incentive plan is determining what role commissions play in the overall sales compensation package. Four of the most common commission structures are:

• Commission only;
• Commission plus salary;
• Commission plus bonus; or
• Commission plus salary, plus bonus.

Although industry standards carry significant weight when creating a commission structure, ultimately your budget and priorities will determine how you pay sales professionals.

Again, when you hire sales professionals, they should immediately understand their earnings potential. For example, if you are paying commission only, you can specify that the commission will be X percent of the net sale, less any discounts. Or, you can define a base salary along with a target commission amount--the amount the salesperson would earn at 100 percent of quota. You might pay 50 percent base and 50 percent commission, or 80 percent salary and 20 percent commission.

If you pay bonuses, you'll need to determine not only the percentage, but if they are based on company-wide goals, individual goals or both.

Different Pay for Different People?

If multiple salespeople do the same job, their commission compensation should be equal. On the other hand, if job responsibilities really are different, these expectations should be spelled out and compensated for appropriately.

You might want to reward salespeople through higher base salaries for length of service, experience or stellar performance. Most importantly, be clear with your sales staff and apply any differences consistently.

First-time vs. Recurring Sales

You will need to address what commission is applicable to first-time sales as opposed to sales to repeat customers. By establishing higher commission percentages for new accounts, you encourage your sales team to bring in new customers.

But, you don't want to discourage sales to existing customers, as this is a strong sign of customer satisfaction with the product. It may be better to pay equally, but to award a bonus to each salesperson who brings in X new customers in a given period.

Timing of Commission Payment

Your plan will need to specify when commissions are earned. Some options include payment at the time of invoicing or product shipment, when the customer payment is received or a combination thereof.

Paying full commission when a sale is invoiced or when a product ships has the inherent risk of paying out the salesperson on what may be a slow or nonpaying customer. To alleviate this risk, some companies pay commissions only after customer payment is received.

Conditions-based Payment 

Another strategy is to pay 50 percent of the commission at the time of invoicing as long as certain conditions are met, with the remainder payable at cash collection.

You can put in the plan that anything uncollected for more than X-number of days past due will be removed from commissions, motivating salespeople to assist with collection follow up.

The "certain conditions" part of the commission agreement are for behaviors you want to encourage. For example, you might specify 50 percent commission payment for sales containing net 30-day payment terms. For sales with net 45-day terms, commission might be paid only when the cash comes in.

Another condition might be pricing in accordance with the internal discount guidelines. If salespeople get any additional discount approved beyond the guidelines, then you pay a proportionately penalized commission percentage, or pay only when the cash is received, or both.

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