Performance Based Pay for Sales Staff

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In this simplified approach to implementing performance-based pay structures, appointment booking, product sales, and membership sales are discussed.

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Performance Based Pay for Sales Staff

  1. 1. Performance Pay Structures /jial14 jon@championsway.com
  2. 2. Goal: To provide simple performance based paystructures you can implement in a school notalready using them.
  3. 3. Key Takeaways from this discussion:1. The Primary Purpose of your staff’s pay structures2. Choosing how you will measure performance based on your current situation3. Matching up measurements with $$$.4. Introducing the pay structure to staff5. Making the compensation visible to staff at all times
  4. 4. 1) The Primary Purpose of your staff’s pay structures
  5. 5. What IS the primary purpose?Align the behaviour of your staff,with the goals of your business!
  6. 6. Think about this for a moment!Question - What does an hourly rate trulysuggest?Answer - For each hour you are here, you willget paid $X.XX for that hour.(There is no clear indication of what should be doneduring that hour though)
  7. 7. Paying staff based on specific measurementsprovides a consistent answer to the question: “What should I work on?” (One of the most expensive questions)
  8. 8. Time to change to Paying based on measurements. So, what do we measure? It will depend on your situation…
  9. 9. 2) Choosing how you will measure
  10. 10. Current situations: What to measure:You are the closer but have a Number of visits (“shows”) tostaff that can assist you. the school, and number that closed.You have a staff member you Number of memberships soldwould like to be the closer. (dollar value).You have two staff members, Both.where 1 can close and the othercan assist.
  11. 11. Before we can make any changes!• You need to compile a 6 month sample of those stats.• Next best sample is one low, one medium, and one high month.• If you don’t have either, it’s dangerous to estimate.
  12. 12. Once you have the stats for Appointment Booking We Choose between: Goal Based Pay or Per/Instance Pay
  13. 13. Goal Based Pay How it works How it PerformsThe staff member is given targets for Staff will shoot for the goals always in thenumber of “shows”, and number of beginning of the month.“closes” that occur from the “shows” theycreate. If numbers aren’t solid by the week 3, giving up can occur without coaching.You pay a bonus for each target they hit. (Back to going through the motions)You can pay a flat rate per goal, or do It’s really simple to manage.tiered goals. Without tiers, web leads in the final part of the month sometimes are not called for a few days.
  14. 14. Example of How Tiers Work for Goal Based Pay 3rd Target Very 2nd Target Meaningful Higher Bonus is bonus is paid 1st Target paid Initial Bonus is Paid
  15. 15. Per/Instance Pay How it works How it PerformsFor each “show” pay is added to the The Staff Member will be more engagedstaff’s monthly total. consistently. (They’re paid on each one)For each “show” that closes, pay can also Without Tiers, final portion of the monthbe added (optional). can be held hostage by those that are fine with an average month’s pay.You can apply tiers or leave it as a flat (“Why push it if it’s the same pay and Irate. can set the beginning of next month?”) A little harder to manage when you incorporate tiers.
  16. 16. How Tiers Work for Per/Instance Pay Rate 3 Begin at point Rate 2 Of Outstanding Begin at point of Month High MonthRate 1From Averageto point ofHigh Month
  17. 17. Sample Breakdowns for Tour Booking
  18. 18. Paying on Shows Below Average Average Shows +5 +10 +15Goal Based Reduce pay Same as Add $100 Add $250 to Add $450 toPay by 10% current To current current current -$20 for each Same as $20/show $25/show $30/showPer/Show under, stop current at -$100 A Little Extra for Shows that Close Below Average Average Closed from +5 +10 +15 ShowsGoal Based Same as Same as Add $50 Add $150 Add $300 Current CurrentPer/Close ^ ^ $10/close $15/close $20/close *Both examples utilize a forgiving approach to lower months
  19. 19. Once we have the stats For Closers We Choose between: Goal Based Pay or Commission Pay
  20. 20. Goal Based for Closers How it works How it PerformsA planned dollar payout Staff will start to see the month the samefor reaching a predetermined way you do. (“It’s the 8th, and we’ve soldlevels of sales. this much so far…”)Ex. $400 bonus if we break $28,000 in If numbers are not solid by half-way in thecontracts sold, and another $400 for month, motivation can drop.every additional $6,000 we are over (“There’s no way we’ll hit that now…”)$30,000. It’s really simple to manage.You can keep it flat, or add tiers. Without tiers, “sand bagging” can occur. (“We’re good for this month, I’ll save this so starting next month isn’t so hard”)
  21. 21. Example of How Tiers Work for Goal Based Pay 3rd Target Very 2nd Target Meaningful Higher Bonus is bonus is paid 1st Target paid Initial Bonus is Paid
  22. 22. Commission Pay How it works How it PerformsYou pay the staff a % of every dollar sold, You will need to think long and hardor a % of every dollar sold after a certain about your approach.amount. This kind of structure will be familiar to%’s range based on how aggressive you outside hires you get with sales in mind.want to be. Staff will treat every lead more like youYou can add tiers. would now. ($ on the line at all times). Tiers add engagement but also add complexity and risk. It requires more energy to manage.
  23. 23. How Tiers Work for Commission Pay Rate 3 Begin at point Rate 2 Of Outstanding Begin at point of Month High MonthRate 1From Averageto point ofHigh Month
  24. 24. Sample Breakdowns for Membership Sale
  25. 25. Sample Membership Sales Pay Below Average +$6,000 +$12,000 +$18,000 AverageGoal Based Reduce Pay Same as +$400 +$1000 +$2000 by 10% CurrentCommission -6% of $ Same as 6% of $ over 8% of $ over 11% of $ over under, stop Current at -$180 *Both examples utilize a forgiving approach to lower months *The Commission example assumes we are paying for only for $ sold above the current average vs. on every dollar, where a larger reduction in current pay would be required, and the structure is harder to implement.
  26. 26. Equipment Sales- 5% of profit of the pro-shop (1 person)- 5% of sales made by them (group)- Don’t bother with tiers (distracts from core sales)
  27. 27. #4) Introducing it to your staff
  28. 28. Existing Staff New StaffInform them of the upcoming Explain training pay andchange in pay. performance pay during hiring process.Give them 1 month of“whichever more is paid” Give them 1-2 months on(increase to 2 if needed) training pay.Complete Transition Implement performance pay
  29. 29. 5) Making the compensation visible to staff at all times
  30. 30. In Your Face Board Add to the top: -Total Shows MTD - Shows the Closed MTD -Total CV MTD -Total Pro-Shop MTD
  31. 31. Digital Reporting• Use combination of billing service or software and Spreadsheet on Google Docs (or use PerfectMind)
  32. 32. Questions?Jon@championsway.com /jial14
  33. 33. PerfectMind Reporting (Live Product)
  34. 34. Appointment Booking(MAsimple):- Report = attendances with “create date” equals “this month”, and “status” equals “attended”,group it by the class “organizer” to know who should be credited for each booking.*requirement:- Must enter classes for each intro booked, and put “intro” or a keyword in the class name each time you enter one. - You then book the person for the class - If they come, you change them to “attended”(PM version 1)- Report = attendances with “create date” equals “this month”, and “status” equals “attended”,“class subject” contains “intro” or keyword, then group it by the intro “owner” to know whoshould be credited for each booking, and then group by intro status to know how many of each.- Columns would include “lead full name”, intro start time, intro status, intro owner*Requirement- - Must enter an event with type = intro each time an intro is booked - book the person for the intro - if they come, change them to attended
  35. 35. Closers• Sales Report MAsimple: - Report = purchased items “create date” equals “this month”, group by “created by”, then group by purchased item “type”, make sure to have price in columns and check off sum before saving report. * requirement: sell everything through the shopping cartSales Report (PM version 1):- Monthly Contracts by Salesperson report under “SalesPerformance” folder- Products sold by Staff report under “Sales Performance” - seecriteria and replicate*requirement: use contracts, use store.

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