Pillar 1: The Right People
If you don’t have the right sales people, you won’t acquire the right customers. If your sales teams don’t have the right mindset, it can be costly to train them, and they will likely not perform up to your expectations.
It should be evident that being a salesperson requires a set of personalities and traits in order to perform. Working under a volatile income scenario with little fixed wages can be very stressful for many. Now, every person has different strengths and weaknesses, and some are better off working in a stable, albeit boring, environment, while others may want the adrenaline-filled life that rides like a rollercoaster. Therefore, matching the right person to the right job is paramount.
That is why finding the right Character, Attitude, and Behaviour of a person is key to developing a successful sales team that has staying power and the ability to adapt to the fast-changing market environment. For example, if a person is smart but not open to learning to be a better salesman, then giving them training will have little impact on their performance.
Character: A person’s innate ability and qualities.
Attitude: A person’s thoughts and motivation in reacting to a situation.
Behaviour: A person’s manner of expression in a situation.
While it is possible to recruit and train a salesperson to become better, a good salesperson must be able to adapt to new and ever-changing markets in order to survive and thrive. If the person is unwilling to learn or be open minded, it is difficult to seize new opportunity trends, risking the possibility of being left behind by your competitors.
Profiling all of your agents is a practical way to filter out the poor quality of the workforce. By understanding which traits and backgrounds discriminate between the top and bottom sales people, the recruitment process can be augmented to improve the quality of the incoming manpower by avoiding those who are likely to be low performers, and accepting only those who are likely to perform. For example, if many of your top agents have starting experiences as door-to-door salesman, then you might want to focus your recruitment strategy on that group of people.
Sales profile analytics can also be used to accurately predict a person’s sales potential, by understanding his or her way of thinking and motivations (attitude). For example, you can use sales profile analytics to classify a sales person as a hunter or a farmer. Hunters are known to be good in acquiring many new customers, while Farmers are known to be good in making customers more loyal, and making them profitable in the long run.
Pillar 2: The Right Support
In order to sustain a large sales team, there needs to be a robust foundation that supports and motivates the workforce. Having the ‘right people’ but without the robust foundation would not be sufficient to sustain performance in the longer run.
Sales incentive is a critical component of this robust foundation. Pay the sales person too much, and the company may grow, but be unable to sustain profits. Pay them too little, the company might save money but is not able to grow at all.
These are the three key considerations to a good sales incentive scheme:
Drivers are the main KPIs that determines a salesperson’s (variable) commissions. A good incentive driver should be simple and easy to measure, differentially reward (i.e. bonus) for over-achievers, and have a balanced payout frequency.
Qualifiers should be used to guide a salesperson to sell the products in ‘the right way’. This is to avoid problems in misselling and thus exposing the company to customer complaints and legal actions. Just because a salesperson is great at selling lots of products, it doesn’t necessarily mean they're giving good customer service and providing the right product advice, and can result in the company having a bad reputation in the longer run.
A good qualifier in an incentive scheme, which rewards and motivates those who can achieve their revenue targets without creating a negative situation for the company.
A retention bonus plan must be incorporated, in order to sustain the performance and loyalty of your sales team. Without it, you may face problems from your team, such as rising attritions and performance declines which can lead to the company having erratic growth and revenue.
A good retention scheme must reward agents for their persistence in their production. This is to promote agents to be productive, and feel rewarded for it. A billionaire club should also be considered in order to recognise and retain those who are over-achievers, so as to reduce the risk of poaching by your competitors.
All these three factors (drivers, qualifiers, retention) must then be considered in order to have a sustainable, effective sales incentive scheme that promotes high levels of productivity. Calibration is essential to ensure we achieve our desired cost and revenue outcomes, balancing the needs of the sales force and the needs of the company.
Cost-of-incentive-to-revenue ratio is a critical measure. When making a change in the incentive, this ratio should remain the same or lower, so as to have a better outcome for the company.
Pillar 3: The Right Place
The right place to sell can depend on many different variables. Different areas in one particular country have different behaviours when it comes to consumption, and have different levels of economic value. For example, two cities may have different performance outcomes even if both of them apply the same sales strategy.
Different areas exhibit different levels of sales potential, and this should be taken into consideration when planning your sales strategy, launching a new product, or expanding your distribution into new areas. This is to optimize the commitment of resources to the right areas and achieve better alignment of cost with expected revenue.
In the chart above, the areas that are highlighted in green are those with low sales potential, and the areas that are highlighted in red have high sales potential. This type of information can be used to predict the expected levels of sales and revenue from the sales force for each area. One can develop an action plan to re-direct sales resources in the green-coloured areas to the red-coloured-areas to maximise the revenue-to-cost ratio for the company.