In my 20+ years of experience leading sales teams at Oracle and other tech companies, I have seen the most dedicated members of my team feel discouraged at times. Often, it’s not you. It’s not them either! Nonetheless, a motivated sales team is crucial for achieving targets and reaching larger business goals. And, it can be challenging to achieve and maintain motivation in your sales team throughout the year.
In this blog post, I will share what has worked for me and my team in the past and what has not. I will also talk about some of the common mistakes I have seen companies commonly make from anecdotal feedback that possibly ticks off their sales reps.
1. Set specific and achievable targets
Establishing clear and achievable targets is the first step in encouraging and motivating a sales team to reach their targets. It is rather better to start with lower targets and incentivize overachievement than ask your sales reps to work towards unrealistically high targets.
Unrealistic targets can be dangerous! Your sales reps can altogether stop taking targets seriously.
Unfortunately, unrealistic sales targets are not an uncommon sight in the tech industry. We recently heard about a company with such unrealistic targets for their sales reps that after three out of four quarters, most of their reps have achieved only between 20 to 45% of their target. This is dangerous as your sales team can altogether stop taking targets seriously, defeating any business target before you even set them up.
A typical way to figure out the right target amount would be by looking at the average historical achievement. (Bottom-up Approach)
For Example: If a group of five reps closed a total of 20 deals worth $1,000,000 in the same quarter last year. A realistic quarterly target for 1 rep could be $250,000 (i.e., 20-25% above the average achievement).
If the sales cycle is three months or less then smaller periods such as monthly/ quarterly targets could encourage better and more consistent performance than yearly targets.
2. Create a sense of competition
Friendly competition within a team can be a great way to encourage your team members to work harder and achieve more. Competitions can also help build team spirit in your sales team.
Here are some ways to achieve this with Visdum.
Create a sales leaderboard to track the performance of each team member and announce rewards for top performers. This can help create a sense of competition among team members, as they strive to be at the top of the leaderboard.
The good news is Visdum does this for you. Users can see the leaderboard and prize for top performers if any, right in their Visdum dashboard.
Contests can be a great way to kill recession blues, break monotonous routines, and re-energize your sales team. They come in many forms such as sales contests, trivia games, and even sports events.
Here is a little explainer on each of these.
1. Sales contests: Organize a sales contest in which team members compete against each other to sell the most products or services within a certain time frame. This can create a sense of competition among team members and also help achieve short-term sales goals.
In Visdum, you can do this by creating a SPIFF on top of an existing plan or by creating a contest in the Gamification module.
2. Trivia games: Organize trivia games related to the industry or product knowledge. This will encourage your team to keep updated with the latest product features and changes.
3. Sports events: In my experience, nothing builds team spirit and re-energizes a team like sports does.
It is crucial to keep in mind that when organizing competitions, the goal should be to foster teamwork and healthy competition among team members, rather than adding extra stress and pressure on them to reach the targets.
3. Reward with progressive commission rates
I believe this one could go without saying it. However, I would like to re-emphasize the importance of commission policies in sales as they are the biggest motivator in sales and you should use them wisely.
Too often than not, a company’s sales policy is either:
- Too simple and straightforward, as to fail to encourage reps to sell more, or
- Too complicated, as to confuse their sales reps.
So, how do you find the balance?
For starters, a sales commission policy should be progressive. That is, the policy should allow for higher commission rates upon reaching milestones such as a 1.5x base rate over 50% attainment and so on. This will encourage reps to quickly reach these milestones to earn greater commission on closed deals.
In addition to a progressive tier system, you can also add bonus and SPIFF components in the policy to further incentivize certain types of sales.
For Example- One of our clients pays a flat 5% commission on one-time service charges over the additional commission on the deal value.
At the same time, it is important to keep the policy simple so your sales reps are able to understand it. A handbook or a video that your reps can refer to at any time to understand the policy can be helpful too.
4. Reward consistent performance
The biggest challenge of leading a sales team is to keep up your team’s motivation throughout the year. It is unacceptable if your team overachieves in one quarter but underperforms in subsequent quarters. This is why it is important to encourage and reward consistent performance over and above one-time performances.
A global SaaS player recently revised its commission policy to encourage consistent performance. “This is how their new policy works”.
- Sales reps earn 1.1x their applicable commission rate for achieving their target two months in a row in the second month.
- Sales reps earn 1.2x their applicable commission rate upon achieving their target three months in a row in the third month.
As such, a sales rep who is consistently achieving his/ her targets will be earning greater commissions for each $ worth of deals closed with each passing month in the quarter. This will encourage performing reps to maintain their performance streak.
5. Reduce disputes and dissatisfaction with transparency
According to an XYZ survey, sales reps spend about two hours each week estimating their incentives. With modern complicated policies with tricky calculations, most reps end up miscalculating their incentives leading to unnecessary disputes and dissatisfaction. Likewise, your Finance team is tired of computations that are manual, error-prone, and full of hassle.
We built Visdum to automate incentive calculations and bring transparency to your sales team. With Visdum, all your sales reps can track their achievement and see the maths behind the computations without having to bother the Finance or the Sales Ops team, therefore bringing transparency to the entire process. Transparency naturally reduces disputes and increases satisfaction.
Furthermore, with our Visdum Estimator, sales reps can now easily estimate and plan their future earnings by calculating incentives on pipeline deals.
About the author:
Founder & CEO at Visdum
With 25+ years of experience in the field of SaaS sales, Sameer's someone who loves talking about how sales has transformed over the years. It's his passion for SaaS sales that led to him co-founding Visdum. Sameer leads the overall product strategy and vision for Visdum, a sales compensation management software that's designed specifically for solving commission management for SaaS companies.