If you’ve done your homework as we’ve talked about the previous “Four Ps of Sales,” you likely have all the information you need to determine the what skills you need as you grow your sales staff. You should also have a good idea what a reasonable level of compensation will be for the right salesperson. What those skills and compensation requirements will be completely depend on your startup’s needs.
Let’s say you’ve gone through each step in the “Four Ps,” and as a result you’ve created a clear sketch of your company’s sales needs. You’ve already done the heavy lifting of figuring out your sales process, and you’ve worked out the optimizations that allow for great sales performance. You’ve looked at your logistical needs, such as inside versus outside sales. You’ve even determined how much you can afford to pay for sales. Continue reading
It’s no accident that the last “P” in my “Four Ps of Sales” is “People.” To see the right results from your sales, you need to have the right process in place first. From there, you need to figure out your optimal sales performance, and then use that information to establish what you can afford to pay for sales. Only after you have all that in place can you start finding the right people to plug into the process.
Salespeople don’t define your sales process. They’re a resource within the overall sales solution. They’re a critical resource, no doubt, but they need to be a part of a larger, highly organized and optimized system. Continue reading
Now that we’ve established how sales compensation works, it’s time to get specific on the dollar amounts. What does a great salesperson cost? How much will it cost you to attract them, pay them what they expect, and deliver the right level of incentive to them on board? More importantly, what does this dollar amount mean as a percentage of each sale?
Let’s take a look at some examples of real-world sales compensation. I’ll be focusing on active selling, where the sales team’s job is to get out there and find prospects, and to turn those prospects into completed sales. This can mean anything from a phone-based process of generating leads and making cold calls, or it can be a field-based approach where the salespeople are engaging prospects face to face. Continue reading
Sales is a tough job. It might not be as physically tiring as construction work, but there are few jobs more mentally and emotionally taxing. Salespeople have to start up conversations with complete strangers (most of whom don’t want to talk to them in the first place), then persuade those people to spend their money. Salespeople may not make the products or build the services, but without their contributions there would be no money coming into the business. If they don’t do their jobs well, everyone suffers.
Unlike typical employees, salespeople need to be given the strongest possible incentives to do their jobs to the best of their abilities, and at all times. As a result, their compensation models work differently from a standard 9-to-5 worker. They need a good reason to dive in headfirst to the potential rejection of a sales call, and they need to have something to show for their work even when they’ve had an off week.
Sales compensation can be a complex topic, but the basic building blocks are easy to understand. There are three basic elements of sales compensation: Guaranteed, variable, and bonuses and incentives. Continue reading
Compensation is always a hot topic in the business world. It’s something that both startups and established companies struggle with, and something that sales experts are in constant debate over. It’s a subject I’m asked about all the time in my role as a business coach, and it’s also a practical question I’ve had to take on more than a few times as an entrepreneur.
At the core of all this discussion and confusion is a surprisingly simple question: How much should I pay for sales? Continue reading
Even cats appreciate a high-quality cat-hair sweater. (Image: https://www.flickr.com/photos/thetopaz/)
You’ve figured out your average sale. You’ve nailed down your expenses. You’ve worked out your gross margin, operating expenses and net profit. But there’s one piece left to go before you have a clear picture of your sales performance: How long does it actually take to make an average sale?
This is called the “sales cycle,” and it measures the time span between making the first meaningful contact with a prospect to a finalized sale. The sales cycle provides you with that final piece of information you need to fully understand your sales performance, allowing you to create accurate sales predictions into the future. This is especially useful for companies that haven’t yet reached a profitable stage, allowing them to accurately estimate their capital needs as they approach profitability.
Let’s take a look at how this works by way of example. On the Success In Business Podcast, co-host Jason Pyles and I have created a purely fictional company called “Kickass Cat Sweaters.” Continue reading
The second “P” in my “Four Ps of Sales” is “Performance.” In a sales context, performance represents the number of sales you need to make in order to meet your goals. To accurately gauge your performance, you first need to know what those sales goals are.
This means getting a firm grip on your expenses and your revenue needs. A surprising number of people find this part of the sales process intimidating, as it involves a little number crunching. It’s not that this math is complex — it’s pretty basic stuff, actually — but any time you have to break out a calculator, a certain percentage of people’s eyes start to glaze over.
It’s not always easy to make financial projections seem lively. You might not be on the edge of your seat as you read this post, but I’ll do my best to keep this part as painless as possible. Continue reading
It’s no surprise that entrepreneurs and business owners are intimidated by sales. Few subjects have been more discussed, dissected, theorized about, and lectured upon than the most profitable process for selling things. Countless books, workshops, video series and training seminars are devoted to every aspect of the sales process, from the most broad generalizations of sales philosophy to the most obscure minutiae of process.
That’s always bugged me. Why does the business of sales have to seem so complicated? As entrepreneurs, why don’t we have something simple that explains the core concepts? Why isn’t there a “Four Ps of Marketing” for the sales process?
After some thought, I decided it was high time to create one. I call it the “Four Ps of Sales.” Sure, it’s a little on the derivative side, but it works. Continue reading
Cash is the lifeblood of your business. It’s how you keep the lights on, your employees coming in every day, and your mortgage paid. How does your business get cash? You sell your stuff — those products or services that constitute your business. No sales means no cash. No cash means no business.
If sales is so important, why is it that so many entrepreneurs shy away from the sales side of their business? If you don’t have a background in sales, it’s all too easy for sales to seem intimidating. Sales means facing rejection, and calling people who don’t want to talk to you. It involves asking people for money. It’s seems easier just to hire someone else to take care of it. Continue reading
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In this final installment of the “Four Ps of Sales” series, host and business coach Tom Ryan nails down the two remaining concepts in hiring a great sales team: Skill sets and compensation. Learn why hiring the right person with the right skills for the sales system is often the best long-term strategy, and why it makes sense to hire for your level of compensation, rather than adjust compensation to hire a specific person.
To catch up on the “Four Ps of Sales,” check out: Overview; “Process” (Part 1, Part 2, and Part 3); and “Performance”; “Pay” (Part 1 and Part 2); and “People” (Part 1). Continue reading