Give Our Sales Reps Treats on Halloween
Since it's Halloween, let's mimic the history of trick-or-treating from a sales perspective. As sales leaders head into 2023 planning, let's give these four treats to our reps.
Treat #1 – Simplified Comp Plans
Consider a simple commission rate for every revenue dollar based on revenue type, e.g., net new is typically 10-20% and 2-3x higher than renewal, cross-sell, and upsell. Pay reps monthly, accurately, and on time.
Beware of the Trick: Exotic calculations, complex accelerators, moving target commission rates, and capped commissions. If our reps are building their own “comp calculator,” we're guilty of tricking our reps.
Treat #2 – Fair Territories
Whether we build our patches by geo, industry, or revenue segment, ensure all reps have a fighting chance to sell as much as their peers.
Beware of the Trick: Assigning territories with “potential” or as a “smart experiment” carry heavy consequences if it doesn't work out – lower morale, missed quotas, and reps looking to leave.
Treat #3 – Reasonable Quotas
Look around sales leaders – “growth at all costs” is dead. Cash flow and profitability matter more. Coach our reps to sell sound deals with good margins, multi-year terms, and minimal discounts.
In exchange, set targets where every seller has a shot. Now is our time to reverse the trend of only 50% of reps hitting quota. Consider the reverse buffer.
Beware of the Trick: Any company with a year-over-year growth goal north of 30% is suspect (especially if there's no consistent track record). Certain high-growth companies notwithstanding, nowadays, smart growth translates to 10% to 25%. Quotas in 2023 should reflect that notion.
Treat #4 – Recognition and $$$
After many companies, especially those in tech, restructured costs in the form of layoffs in 2022, the silver lining is sales teams have a more excellent ratio of high performers.
Although account executives want simplified comp plans, that doesn't mean we should eliminate “President's Clubs,” SPIFFs, or bonus money outside of a rep's on-target earnings. All that still matters to driving high performance.
Beware of the Trick: If CEOs and CFOs hide the numbers. Most startups and companies bleeding cash over the last few years in our old world of “free money” are now taking their medicine and cutting costs appropriately. Financial performance, like free cash flow and profitability, should rebound quickly.
Sales leaders should fight to keep a pool of money reserved for recognizing and retaining our highest-performing reps. And executive leaders should transparently share how business is going. If not, it's a trick.