by Mark Elliott
I have helped to set and create sales compensation plans for companies that have hundreds of millions of dollars in revenue to ones that have a few thousand in revenue. Though the companies may be different in size and sell different solutions, the fundamentals of a good sales plan are the same.
Fixed and Variable Compensation
In my opinion, a good sales compensation plan has fixed and variable compensation. I don’t find 100% commission plans to be very good structure. Often it takes some time to make that first sale, which means you are guaranteeing some commission; otherwise the rep gets frustrated and leaves. Often with startups there is the need for the sales resource to help with some typical non-sales related items, for the benefit of the business. The fixed component can help. A recent blog by Steve Gruber highlights some of these examples.
Have a target on activities
Before there is revenue there are the activities that lead to revenue. Paying reps on activities focuses them on the things that need to get done before the revenue arrives. My favourite activities to have targets on are qualified meetings, demos, and proposals.
Pay on Revenue
I think revenue is the best target for a sales rep. It is often easier to determine and measure then margin or profit. The higher the revenue the more the rep will make. I also recommend not giving reps ultimate pricing authority. They should be given a range that they can offer. This will keep the margin manageable for the organization.
Make it simple
Having a less complex compensation plan that focuses on a few variable sales targets is best. This will make it easier to manage and help the sales rep focus on the right targets. The targets should be quantifiable and easy to measure. An example of a simple plan could be 50% salary and 50% variable compensation to a target salary. The variable could have 3 components with revenue as the largest, qualified meetings/demos, and qualified proposals.
Keep these main points in mind and you should have an effective and simple sales plan. If you have any questions on setting a sales plan for your team I would be happy to provide an answer. Contact me through firstname.lastname@example.org or @markeelliott.
By Mark Elliott
If you are a startup company in Canada you are probably aware of programs like SR&ED and IRAP . If you are not aware of these programs you might want to get a new accountant.
There are a few programs that can help organizations with sales and marketing initiatives that are less well known. Here is a list of the ones that we are aware of.
Small Business Intern Program
- Financial support towards the employment of post-secondary students who will work on e-business projects. The program will reimburse up to 75% of the eligible wages and related expenses such as statutory employee benefits, to a maximum of $10,000.
- Canadian organizations with less than 500 people, have been in business for a year, and are incorporated.
- It is to be used to support businesses on-line activities to improve their competitiveness with e-business practices and technologies.
- Venture Accelerator Partners used this program for some marketing, social media, and sales research initiatives.
Export Market Access Program
- Export Market Access is designed to help small and medium-sized enterprises increase their access to global markets. Generally the EMA program will cover 50% of the eligible costs in four specified areas. Non-repayable contributions generally range from a minimum of $5,000 to a maximum of $30,000 (with the exception of capital bidding projects which generally would not exceed $35,000).
- Ontario based organization targeting a new or emerging market, minimum of five employees to a maximum of 500 employees, annual sales of $500,000 or more, and registered federally or provincially for minimum of two years.
- Many possible activities including participation in international trade shows, marketing, market research, and Foreign Bidding Project.
- VA Partners knows of many organizations that have taken part in this program.
Youth Employment Program
- Up to a maximum contribution is $30,000 towards the salary costs of a post-secondary graduate.
- Canadian organizations with less than 500 people and are incorporated.
- Graduates work on innovative projects within the small and medium-sized enterprise environment and may participate in research, development and commercialization of technologies.
- I am not as familiar with this program, but we have a client that has an application in for this program.
These programs are excellent ways to add new sales and marketing capabilities. VA Partners part-time Sales and Marketing offerings could also help to provide additional cost effective support. If you are aware of any other Sales and Marketing programs please let us know.
By Steve Gruber
To be a good sales person requires a number of skill sets including organization, being self-motivated, being a competitor, emotional investment and drive. One of the most important facets of a good sales person is being able to focus on what is ultimately important. Your efforts should be moving you ever closer to achieving your goals and helping the company to drive revenue.
During a recent conversation with a senior executive at a start-up company, it was brought to my attention that a sales person they are using was always busy but had no results of any tangible or measurable kind. He mentioned that the sales person was trying to develop a partner network and negotiate these deals when what was needed was feet on the street sales efforts – selling direct to drive revenue and build up an installed base.
The situation outlined above happens all too often in sales. Effort and time is spent on work that will never really pay off but seems on the surface to be important – what I call ‘busy work’. This is a true lose: lose situation. The sales person will become frustrated that they are not seeing any tangible results. The company will feel the same way as they will have nothing to show for the sales persons’ efforts and their investment in him or her.
To help correct this all sales efforts should be based on a sales plan that is comprised of a set of activities that have been pre-determined by the sales person and sales manager. This will ensure everyone is on the same page, effort is being invested wisely and success can be measured based on quantitative results.
In summary, be careful not to get caught up in ‘busy work’. Stay focused and always ask yourself, is this really going to help me meet my goals? Is this activity moving the sale closer to being closed? Don’t be afraid to be your own harshest critic!
By Stephanie Goodman
On February 23rd I attended the Communitech Tech Leadership Conference 2011 in Waterloo. The conference included keynote speakers Geoffrey Moore and Watt Wacker, followed by a discussion panel in the afternoon moderated by Kevin Newman. During the afternoon breakout session I attended John Neeson’s lecture on “The Marketing Organization of the Future.” Working for the marketing and sales research company Sirius Decisions , John passed along great tips on how to set up your marketing department so your sales don’t fall behind. Below are some pointers that small businesses and start-ups will find useful:
- “58% of leads are coming from the internet.” What does this mean for small businesses? If you haven’t embraced social media, do it quickly. According to John, companies that use social media have 30% more inquiries than those who do not. This statistic also emphasizes the importance of a website. Keep in mind, a Facebook page is not a useful substitute for a website.
- It is important for your sales and marketing department to get to know each other. One of the main reasons for this is: a sales person and a marketing person have completely different takes on what counts as a “lead.” For start-ups and small businesses, many do not have the resources to hire someone for sales AND marketing. Solve this problem one of two ways: 1) Hire someone who excels at sales AND marketing, 2) Hire a consulting firm who specializes in sales AND marketing for start-ups. Bridge the gap between the two departments and you’ll increase your lead generation. By working with start-ups and small businesses with the goal of improving their sales and marketing efforts, the team at VA Partners is ready to help with this!
- “Marketing strategies are like your family, some are dysfunctional and they’re all different.” While at a conference, John was asked by a CFO to show him “the best marketing strategy.” After John questioned his statement, the CFO replied with: “I want to know which one is the best so I can get rid of the rest.” A mistake made by many: marketing isn’t linear, it is multidimensional so do not expect success by relying on one strategy alone.
- “72% of marketing analyzes a solution, not a product.” The reason why most of us hang up on the telemarketer (and not just because they call during dinner) is because no one wants to be “sold to.” People don’t believe in buying something they “need,” they believe in a solution. Before starting your business, ask yourself: what problem am I solving and why is it so important to solve?
If you’re big or small there will always be marketing and sales challenges. In order to minimize these challenges, bridge the gap between these two divisions.