Sales Performance

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Sales Performance

  1. 1. This supplement is an independent publication from Raconteur Media March 24 2010 SALES PERFORMANCE T here is nothing like a good re- otype, or a degree of neglect of the cession for focusing minds on subject at business schools and other the essential lifeblood of busi- academic institutions. ness: revenue and sales. With- Partly, it is confusion in the minds of out any sales, no matter how efficiently the general public. Selling, like the pro- the rest of the company is run, we might verbial football match, is a game of two as well all pack up and go home. halves: B2C (business- to-consumer) It is little wonder, then, that the au- and B2B (business-to-business). People tomotive industry – a sector of manu- who do not operate in the commercial facturing particularly hard hit by a per- world tend only to see the B2C side fect storm of high oil prices, the credit of sales, experienced on the doorstep, squeeze and fiscal measures designed to via intrusive telephone calls during promote environmental responsibility the evening or through poor service at – has, almost exclusively, been appoint- electrical retailers; everybody has their ing bosses who have come up through favourite sales horror story. At the same the sales and marketing side of business. time, the much more professional world Over the last 18 months, a steady stream of B2B sales tends to remain hidden. of sales leaders have been taking over the Whatever the reason, we have never top job at companies like BMW (Tim really taken the concept of selling Abbott), Kia (Paul Philpott), Mitsubi- to our hearts in the same way as the shi (Lance Bradley) and Mazda (Jeremy Americans. This is all the more sur- Thomson). At the European level, too, prising when we consider that success- Brits with a track-record in vehicle sales ful business people acknowledge that are taking top posts. And the same is true making a big sale is one of the most for other sectors of the economy. euphoria–inducing “drugs” known to man. Former CBI boss and one-time NUMEROUS government minister Lord Digby Jones People employed in sales or sales-relat- famously described winning a big deal ed activity are by far the most numer- as “up there with sex and skiing”. ous grouping in British business. The latest figures suggest that some 7 per SINK OR SWIM cent of the UK population is employed In an ideal world, salespeople would be in something to do with sales. But these recognised as key professionals, vital figures include the likes of sales assist- to the UK economy; sales should be a ants in shops, direct sales agents such business career young people aspire to. as “Avon ladies”, bank employees with Yet, we hear the same story time and a sales component to their pay packet again: salespeople almost invariably and office-based sales support staff, as fall into their career by accident, few well as the traditional sales representa- by choice. For many, their first – and tive driving around in a company car only – taste of sales is in a low-quality, or the business development manager commission-only job where they are hammering the telephone. left to sink or swim by observing how Time for sales to “That’s over two million salespeo- their colleagues survive. ple,” says the Chartered Institute of For a business community that dwarfs Marketing’s Chris Moriarty, who has every other commercial grouping, sales- been working with the United King- people are also relatively poorly served by dom Commission for Employment professional bodies. There are currently move up a gear... and Skills on a new strategy for sales only two organisations which focus on qualifications. the sales profession: the Luton-based And yet, despite its sheer size and Institute of Sales & Marketing Manage- vital importance to the British econ- ment (ISMM) and the Chartered Insti- omy, the world of sales and selling tute of Marketing, which began life in has consistently punched below its 1911 as the Sales Managers’ Association weight in terms of kudos and status in OVERVIEW In an economic downturn, revenue is the number-one concern for any and then went through various name the workplace. Perhaps it is our Brit- changes involving the words “sales” and ish reserve, our aversion to the pushy, company, but sales can no longer be taken for granted. So sales teams and their “won’t-take-no-for-an-answer” stere- leaders have never been more important or under such scrutiny, writes Nick de Cent continued on page three Understand your customers and shape the right solution Use MindGenius mind mapping software to gain consensus, clarity, and insights into your customers in a way no traditional software sales tool can. Download our 30-day free trial from www.mindgenius.com t: +44(0)1355 247766 f: +44(0)1355 200140 e: info@mindgenius.com w: www.mindgenius.com
  2. 2. SALES PERFORMANCE 3 INSIDE Up there Digby Jones: loving sales to sign up to a programme of contin- uing professional development. 4 Hi-tech sales with sex The new body will aim to set sales standards on a global basis. Ms Ka- Social networking is opening doors for selling. and skiing pur claims to have already received a good response from large corpo- rate businesses, academics and oth- 5 Boost for busted economy er professionals. “The reaction has been really positive,” she says. Sales education and training can All the signs are that it is now the drive UK recovery. time for sales to grow up, for the 0% profession to achieve a status com- 6 Bonuses mensurate with its primary role in How to get incentives right and driving business. New media are save money. also helping to spread best practice and bring a new professionalism to 8 Psychology of selling the sales world. At the same time, the The key to success? social media revolution and a whole new raft of software tools, which 9 Train to Gain can be loosely defined as Sales 2.0, is sparking a complete rethink of the Government help to train your way salespeople engage with buyers, sales force. continued from page one (UK), while the Chartered Institute hind the new organisation, which will and so is helping to make the sales of Marketing is returning to its roots focus on learning and development, process more “scientific”. Sales is at 12 Question time “marketing” before dropping the sales and backing the launch of a major particularly mentoring, thought- last transforming from something Answers and advice from element altogether. It became the In- new professional body next month. leadership, networking and peer-to- of a dark art into a real profession. sales gurus. stitute of Marketing in 1968, at a time Ren Kapur, a director at the Char- peer learning. Potential members will when marketing was on the crest of a tered Institute of Marketing and a be able to join based on their sales Nick de Cent is editor of 14 Taking the guesswork wave as the trendy business discipline. former executive at the ISMM, is be- and business experience but will have ModernSelling.com The upshot of all this has been that out of assessment the percentage of high-quality sales- How good – or bad – are your latest sales projections? Know your salespeople. people in business is relatively low. Olly Watson, a regional managing 15 Sales leadership director at recruitment giant Michael Anticipated sales performance from a survey of organisations for the current financial year What – and who – makes a good Page International, blames a dearth of excellent salespeople on their lack 20 sales director? of qualifications, with the sales de- partment often having been the part 15 16 Technical buzzwords of a company where people were 16% 17% 16% Customer relationship management. shoved if they were not from a tech- 10 14% 11% nical or professional background. 10% 18 Presenting the right However, he is quick to stress that the 5 8% way to sell situation is now improving. 6% 0 3% How to stand out from the crowd. COLLEGES below -10% -10% – -6% -5% – 0% 1% – 5% 6% – 10% 11% – 15% 16% – 20% more than 20% not applicable Selling and sales management has also been virtually ignored by Brit- Source: The Chartered Institute of Marketing ain’s colleges, universities and busi- ness schools, though there are some Editor: Peter Archer pioneers like the University of Port- smouth and Cranfield leading the Who makes the best salesperson… a man or a woman? way. Sales training has been largely Contributors: conducted in-house or by self-em- Identifying the attributes of a good salesper- women use more of the behaviours that coinci- Peter Archer ployed consultants, with the blue- son has become something of a holy grail in dentally also help you sell.” Nick de Cent chip, US-owned technology com- business, with much debate over whether sales- Women tend to be better at listening than men Ian Martin panies such as IBM having the best people are born or “made”. Good salespeople and are also more skilled at developing rapport; Rod Newing reputation. Microsoft, for instance, is undoubtedly have some raw character traits, primarily, the issue is one of trust. Equally, Profes- Beth Rogers shortly to introduce new sales train- representing who the person “is”, on which es- sor Rackham debunks the idea that salespeople Brian Tracy ing requirements for dealers and re- sential skills can be built. need to be persuasive: a better character trait is Jessica Twentyman sellers as part of their accreditation in But these essential character- to be curious and interested in finding out about its new partner programme. istics are not necessarily those the customer. Customers do not want to be per- Publisher: But everything may be about to which exist in the popular imagi- suaded, but they do want to be understood. Jamie Simon change. Regulation is getting tougher nation: the pushy salesman with Ex-IBM executive and sales management – notably in the financial services sec- the “gift of the gab” is not actu- commentator Paul Sloane high- Production manager: tor – and consumer protection legis- ally the type of person best suit- lights two of the Fabiana Abreu lation, driven by Europe, has been ed to selling in our modern, com- most critical qual- stepped up domestically, helping to plex business world. For a start, the ities in a salesper- Design: curb the worst excesses. Government best salespeople are more likely son as the ability Hervé Boinay is also taking more of an interest in to be women than to ask questions the positive aspects of selling and is men, according and having the fa- looking to build skills for the future. to academic and cility to listen. For more information about Raconteur Media The economic cycle will almost sales management Think like the publications in The Times and The Sunday certainly have a huge part to play as guru Professor Neil customer. Empathy Times, please contact Freddie Ossberg well. Downturns are notorious for Rackham. and understanding T: 020 7033 2100 E: info@raconteurmedia.co.uk upsetting the status quo; as weaker “Women quite of the customer’s W: www.raconteurmedia.co.uk organisations go to the wall, it is clearly make bet- business objec- only the stronger and more adapt- ter salespeople tives will be at The information contained in this publication able companies which survive. Op- than men,” he the heart of fu- has been obtained from sources the proprietors portunities are beginning to open says. “Culturally, ture selling. believe to be correct. However, no legal liability up for new thinking and a more can be accepted for any errors. No part of this professional approach to sales. publication may be reproduced without the At least two new sales associations prior consent of the Publisher. are emerging to join the ISMM: one is © RACONTEUR MEDIA the Association of Sales Professionals
  3. 3. 4 SALES PERFORMANCE Sales dream for a hi-tech team NETWORKS The social networking revolution is smoothing relationships with buyers and helping salespeople get back to basics. Welcome to the new world of Sales 2.0 technology. Nick de Cent investigates B ack in 1949, Pulitzer dred pounds, a telephone call from a Prize-winning playwright desk-based account manager only £20, Arthur Miller wrote while interaction with a prospect via Death of a Salesman. It the internet can be measured in pence. was the story of the downfall of The consequence is that less complex Willy Loman, an ageing company and expensive items – commodities – representative beginning to lose his are sold directly via the web or through grip on reality. Loman was typical relatively low-cost call-centre activ- of his time: an average “rep” on the ity, often based offshore in countries road, he worked long hours, carry- where labour is cheaper than the UK. ing a bag, knocking on doors and Times and Digital technology has largely “Sales 2.0”. The breakthrough has to basics approach”, allowing sales- pounding the streets, with only his REALITIES selling have replaced traditional direct market- been the phenomenal growth in people to do what they are best at, native wit and charm to close a sale. Professor Neil Rackham, a psycholo- changed ing as the communications medi- popularity of social networking according to Richard Nolan of the In many ways the modern sales gist turned business consultant, who um of choice for companies. How- sites, and particularly those with a web-based CRM system virtual- landscape would be completely un- is also a visiting professor at both ever, an avalanche of emails means business orientation like LinkedIn. CONTACT. To justify their exist- recognisable to Loman. Today, sales- Portsmouth and Cranfield Universi- that, for many recipients, this me- com. These are spaces on the web ence, salespeople eventually have to people can draw on a vast battery of ties, highlights the problem. He says dium has simply become the new where people feel confident about make direct contact with a buyer, tools to help drive the selling proc- salespeople, 15 years ago, could make junk mail: email open rates are de- conducting a conversation, while either over the phone or face-to- ess: technology has provided ad- a good living by acting as a “talking clining and expensively produced also sharing certain personal and face, and Sales 2.0 allows seller and vanced telecommunications (fixed- brochure”, but customers simply do newsletters are often consigned contact information. buyer to arrive at this stage in their line and mobile), automatic dialling not want this anymore. He claims to the executive’s desktop recycle And out of this trust has gown relationship together. machines, computer databases, so- that up to 40 per cent of salespeople bin. Spam, while not the recourse a sense of collaboration, in which Sales 2.0 is developing fast and called CRM (customer relationship in the US were failing in their roles of ethical salespeople, has further buyers and sellers – and those sim- there is plenty of scope for in- management systems), email and because they had not adapted to the ply seeking advice – and thus offer- tegration of further automated the web, to name but a few. new realities of the business world, ing a potential sales opportunity – tools such as business intelligence Internet technology has not only provided a low-cost channel to and suggested figures in the UK were likely to be comparable or worse. Sales 2.0 are more in step with one another. Sales 2.0 has been summed up as solutions from established giants like Dow Jones or lead-qualifica- market, but also come to the aid of consumers and corporate buyers, Rather than simply describing the products on offer, today’s suc- increases internal increased communication and collaboration between sellers and tion tools, designed to help sales teams decide whether or not a empowering them by offering un- precedented access to instant infor- cessful salesperson needs to be a “value-creator”, according to Pro- communication, and buyers and within the selling team, together with a proactive and vis- particular sales opportunity is worth pursuing, from fledgling mation, opinions and views about products and services. It has had a fessor Rackham. “They used to be ‘value-communicators’,” he says. collaboration between ible integration of knowledge and measurement of the buying cycle companies like Qmatrix. Throw into this heady mix a new genera- dramatic effect on the way compa- nies structure their sales organisa- But to communicate value, let alone create it, salespeople have to be sellers and buyers too into the sales cycle. tion of collaboration software, re- mote conferencing, presentation tions, as they replace expensive-to- able to hold a dialogue with the pros- CONNECTIONS technology and online multime- run field salespeople (each with a pect or buyer. Despite all the available muddied the water, so much so Microsoft has recently released a dia, and we are presented with a company car, mobile phone, expense technology – or perhaps because of that almost every company email beta version of a tool integrating powerful battery of new tools and account, and probably a laptop) with the knock-on effects of deploying system is now jealously guarded its well-known email and contact methodologies which is begin- more cost-effective alternatives. technology – this is getting harder by not-so-discriminating software management software Outlook with ning to change the way the best The cost of customer interaction is than ever for salespeople to do. Face- capable of re-routing even legiti- LinkedIn. Instantly, a user’s net- organisations sell. a widely used measure in the business to-face meetings are like gold dust, mate promotional material to the working connections appear in the There are challenges ahead for world: this metric varies dramatically while decision makers hide behind corporate cyber dustbin. Outlook database while there is also sales professionals thrown up by – by an order of magnitude – depend- voicemail; secretaries, PAs and re- In the consumer world, house- the opportunity to explore contact the Sales 2.0 approach, not least the ing on the chosen approach. Sen- ceptionists will not put a salesperson holders besieged by a blizzard of paths to more distantly connected need to communicate in writing, ior lecturer at Portsmouth Business through to a buyer unless they have junk mail and an onslaught of calls – prospects via intermediary connec- (the default medium for social net- School Beth Rogers, estimates that a an existing contact and they certainly some from offshore automated dial- tions. If contact information from working at the moment), the ability face-to-face meeting with a customer will not tell a salesperson the name of ling systems playing voice recordings across a sales team and a company’s to understand marketing commu- may cost a company a couple of hun- the person they need to speak to. – have, unsurprisingly, been signing management is then shared, this nications, and the absolute require- up to the mailing and telephone multiplies the number of established ment to adhere to online protocols preference services in their droves, contacts dramatically and makes the and etiquette. eager to opt out of largely uninvited system even more effective. Old Willy Loman would un- intrusions into their homes. Combine the social networking doubtedly feel like a fish out of Technology, along with cost, community with a more sophisticat- water in the 21st century Sales 2.0 fierce competition and improved ed tool, like a CRM system – allowing environment. Yet, once he had ac- market knowledge, has completely executives to drive the sales process, quired the necessary new skills, the reshaped the sales landscape. There for instance, by conducting their own job would probably seem just like is now a very real sense that sales micro-marketing campaigns – and selling in the old days. I fancy he methodologies are broken. Fortu- salespeople have something which would still have his finger on the nately, a new wave of technology allows them to reconnect with pros- pulse: “A salesman’s got to dream LinkedIn: is proving to be part of the solu- pects and buyers who had previously boy. It comes with the territory.” online tion. As mud-at-the-wall, mass- battened down the hatches. networking marketing techniques continue to In a way, this latest technology Join in the debate on the with business offer declining returns, the focus is has turned the clock back on the effectiveness of Sales 2.0 at in mind moving to what has been dubbed sales process, signalling a new “back www.ModernSelling.com
  4. 4. SALES PERFORMANCE 5 Elixir of vital advantage in both B2B (business- eign-owned businesses, and helped to-business) and B2C (business-to- them access funding opportunities. consumer) markets. The Market- There are lots of excuses for not ing, Sales and Service Academy is a investing in the development of economic growth centre of excellence supporting all salespeople, from entrenched views business units in the group.” that selling harder is all that mat- ters, to fears about the poaching FORECASTS of high performers. If you take the It makes perfect sense to invest in “no-training” approach to its logical EDUCATION Education and training to enhance high-quality sales skills. Surely it is conclusion, you end up with high important that every salesperson staff turnover, high risks of mis- and develop sales skills can drive the UK’s understands how to forecast accu- representation and loss of potential recovery in the face of stiff competition from rately? It is very important, if you business. All of these are more ex- want efficient production and sup- pensive than training. Even compa- overseas, writes Beth Rogers ply forecasts. What value can you nies on limited budgets can make a add to business relationships start by using the freely available UK if the salesperson can plan National Occupational Standards as G rowth does not happen we are never going to be the cheapest UK economic from the customer’s point a benchmark for sales recruitment without someone selling at making or servicing anything and, growth could of view? How much easier and development. Professional in- something. UK Plc needs if we are to be an innovation econo- be rooted in can you sleep at night if eve- stitutes and colleges offer qualifica- a dynamic sales force to invigorate my, everything we invent needs to be sales ry salesperson knows how to tions linked to this skills framework. our economic recovery. But where sold. And tough international com- protect the company’s repu- To get the payback from training are these commercial heroes going petition is only likely to get tougher. tation when working in a va- and education, care needs to be tak- to come from? riety of business and national en to ensure the knowledge acquired More than half the employers PEAK PERFORMERS cultures? It is also is also applied. One of the advan- in a UK skills consultation in 2008 According to research in the United vital to ensure that tages of the education route – work- perceived a skills gap in sales. Ac- States, ongoing sales training results sales leaders have based “top-up” degrees, for example cording to the Marketing and Sales in companies being ten times more the opportu- – is that coursework can reinforce Standards Setting Board, employers likely to produce peak performers, nity to learn that link. If sales skills development also reported widespread difficulty adding to the professional sales-ac- about is well-planned and thorough, pay- in recruiting salespeople, and a count management elite described by transfor- backs are considerable. The compa- shortage of high-quality sales man- CNNMoney.com as “part diplomat, mational nies that invested early in making agement and account management part entrepreneur, part inventor”. lea dership the way they sell part of their differ- candidates from the UK. Can UK salespeople learn the value and can entiation have not looked back. At more junior levels, a combina- approach? There is some good news. coach their In the depths of economic tion of poor attitude, limited expe- Many large companies have developed teams to gloom, it is easy to forget that the rience and a lack of skills resulted in extensive sales academies incorporat- success. UK has enjoyed periods of trade- salespeople focused on discounting ing a wide portfolio of professional Investment in sales skills led growth throughout its history. rather than value. sales practice, including input from development not only helps Where were the great British sales- If, in the UK, we do not acceler- professional institutes and universities. companies which make that people? Everywhere: presenting ate our ability to develop world- commitment but also aids the ideas and meeting needs. Our sales class sales professionals at all levels, national economy. For example, force can lead us out of economic where will long-term economic recovery come from? Selling harder If sales skills The way a company sells is an important statement of brand val- in the last financial year, Yorkshire Forward’s Key Account Manage- uncertainty. As the saying goes: “Nothing happens until someone might produce some shallow re- sults in the short-term. Sustained development is well- ues. As Karen Dunn, retail opera- tional learning manager at E.ON, ment Programme supported and assisted 455 companies in Yorkshire sells something.” Beth Rogers leads the MA in growth needs sustainable skills. How fantastic it would be for the planned and thorough, explains: “E.ON has invested signif- icantly in developing salespeople as and Humberside to create 1,732 jobs and safeguard a further 3,855. Sales Management at University of Portsmouth Business School UK to be leading the world in creating and communicating value. After all, paybacks are considerable consistent customer experience is regarded as critical to competitive The programme has also attracted investment from domestic and for- and is the author of Rethinking Sales Management. PROMOTIONAL FEATURE Unlock sales success Understanding who is going to help you know that this is sadly not the case. The succeed – Many sales managers spend solution is to define good behaviour and time with their weakest sales people or make a plan of observation, feedback, dealing with the problems they create. coaching and development that puts the Think about the opportunity cost. emphasis where it needs to be – on those Imagine a £100-million Look beneath headline sales figures. that are going to make you a success. They are sometimes not a good guide This is really not difficult and it sales team of 100 people to performance and perhaps no guide shows immediate results. Let us show £80 million of sales comes at all to potential. There is no substi- you how. from just 20 people – tute to spending time in the field, of- Get your managers to coach and en- fice or call centre on a regular basis. courage individual sales reps to own that’s £4 million each This will yield immediate benefits their personal development. Remem- So £20 million is but is also the crucial first step in an ber success is not learning new things, delivered by 80 people approach to sales management that but applying them habitually. puts objective performance analysis, As we emerge from the recession, or £250,000 each coaching and development at the cen- opportunities will start to appear, How much of that tre of the role. don’t miss out on them. Accredit is al- business just happens? Maximising the effectiveness of eve- ready helping household names such How would you feel if you ry customer engagement – This is as BT and Lenovo to improve their no problem for those intuitive sales- sales performance and we could be could increase sales by people or those who have internalised helping you. 37 per cent by converting their approach through experience. ten of the low-performers For the majority, it’s hard work, which Contact Mark Savinson on requires regular observation, analysis, 0161 980 2818 to see how this to high performers? The best sales teams are feedback and coaching by well-sup- can work for you Do you realise that if five successful not because ported managers. Not just once, but as www.sales-accredit.com of your high-performers of the sales methodology part of the core management process. but because they have the Isn’t this what sales managers are leave, your sales could best sales managers meant to be doing? – why would they reduce by 20 per cent? need any help? Because in practice, we
  5. 5. 6 SALES PERFORMANCE an organisation travels and plays terms of cost-savings within six to havoc with staff motivation. nine months, a figure which is guar- No wonder, then, that with so anteed to bring a smile to the face of much at stake, companies are not any hard-bitten finance director. only nervous about discussing bonus The company says its clients payments to staff but are also putting typically see a rapid recovery of be- in place a relatively new breed of soft- tween two to eight per cent of the ware known as a sales performance total commission paid out, through management solution or SPM for elimination of overpayments when short. Big names like ING, npower, an SPM solution is deployed. So, Vodafone, O2, Standard Life, Hy- for a large organisation which Fair incentives are genuine undai and Kia have all implemented spends say £20 million on commis- systems; there are many others in the sion payments a year, just getting pharmaceutical and hi-tech arenas. the commission sums right poten- tially adds £1.6 million to the bot- bonus to sales HUGE SAVINGS tom line, a figure not to be sneezed OpenSymmetry is an independent at in these tough economic times. consultancy specialising in help- SPM pioneer, the US-based com- ing clients implement SPM systems pany Synygy specialises in offering BONUSES Commissions and bonuses On the other side of the coin, among their sales, customer service managed solutions to companies underpayment of commis- and indirect sales organisations. Ac- with larger sales forces and com- are guaranteed to trigger extreme sion and bonuses can cording to a survey conducted on its plex commission structures. Presi- reactions. Nick de Cent reports become an equally in- behalf by Vanson Bourne at the end dent Mark Stiffler confirms that cendiary issue. One of 2008, companies have been los- sales compensation management on how sales performance of the worst things ing large sums of money – some as offers a “very provable return on management (SPM) software that can happen much as £5 million a year – as a result investment”. He says: “SPM is all is helping companies get the is for companies of badly managed sales-commission about managing all of the processes to fail to pay bo- plans, so there is potential for huge a sales force needs to be successful.” payments right nuses due to staff savings to be made by organisations Human nature being what it A or business part- looking to tighten up the way they is, salespeople, dealers and other ll sorts of people are JOLLY ners even though pay their incentives. Almost a quarter incentivised staff are usually ex- paid bonuses: it is not JAUNT they have met of those surveyed said they regularly tremely vocal if they feel they have only bankers, City trad- H o w e v e r, their targets. It saw errors of more than ten per cent not been paid the full amount ers, top company bosses Mr Liddy affects motivation of the total commission paid, with owed to them, but tend to keep and civil servants, but also traffic also attracted and morale – for more than one in four spending more quiet when over-payments are wardens and footballers. For sales- national head- ordinary employees than £50 million on commission an- made. So much so, that so-called people, dealers and many retail as- lines when, at the a commission pay- nually. Another 20 per cent said they “shadow accounting” is a major sistants, bonuses and commission height of the finan- ment can be the differ- did not know what errors occurred problem among groups of staff payments are part of the routine. cial crisis in October ence between scraping by when paying out sales commissions. reliant on commission payments Fairness is the key to any successful 2008 and shortly after and making a comfortable The figures make a compelling to top up their salaries. Analysts bonus or commission scheme. In- the rescue, he defended wage – and can even land a case for adopting SPM, with one confirm that sales forces typi- deed, so emotive is the issue of bonus a controversial £290,000 company in court. This is exactly supplier claiming systems can more cally spend 20 per cent of payments, particularly if they are seen (US$440,000) jaunt for top- what happened to US telecoms gi- than pay for themselves within a their time recalculating to be undeserved, that it can provoke performing insurance salespeo- ant Sprint, which was on the receiv- year. Callidus, which has its global their pay and que- violence and even death threats. Con- ple at the luxury St Regis Resort, ing end of a class-action lawsuit on headquarters in San Jose, California, rying payments, troversial ex-Royal Bank of Scotland Monarch Beach, California. In testi- behalf of thousands of retail store but is also the largest specialist SPM which means boss Sir Fred Goodwin was the sub- mony before the US House of Rep- employees, who accused the com- player in Europe, says that a typi- less sales ject of a menacing email campaign resentatives Committee on Over- pany of failing to pay them proper cal SPM investment is paid back in time and criticising his lavish lifestyle, while sight and Government Reform, commission amounting to more the windows of his luxury Edinburgh he described the jolly as “stand- than £3.3 million ($5 million). One SPM can increase home and £100,000 Mercedes were ard practice in our industry”. disgruntled employee alleged the revenue vandalised, following the bank’s en- amount claimed was just the tip of forced rescue by the British taxpayer. the iceberg, with the real figure be- Across the pond, the situation at in- surance giant AIG, which was bailed So emotive is the issue ing ten times higher. Because bonuses are so impor- out with government loans, pro- voked even more extreme emotions. of bonus payments, tant to people, commission schemes and their proper management and When former chief executive Edward Liddy, who had been brought in to particularly if they are seen administration represents an area of the business which organi- help rescue the group, gave evidence to Congress, he revealed that com- to be undeserved, that it sations cannot afford to get wrong. An effective commis- pany executives had received death threats. One read: “All the executives can provoke violence and sion and bonus policy drives the right kind of revenue and conse- and their families should be executed with piano wire around their necks.” even death threats quent profitability; a poorly set up scheme skews the direction in which Ringing up bonuses to boost staff morale and sales productivity When BT Business needed to create bo- pensation Management (ICM) because In addition, the implementation offered nus plans across a range of 40,000 prod- the system addressed these requirements, BT an opportunity to solve its maintenance ucts and 2,000 employees, it called on could be rapidly deployed and promised issues, including the annual cost overhead sales and service performance manage- a quick return on investment. associated with the old sales bonus sys- ment specialist Merced Systems. Before implementation, BT had little vis- tem, decreasing overpayments and bonus The aim was to create a bonus environ- ibility into pre-pay plans. Now, it is able to inaccuracies, and freed up valuable bonus ment conducive to boosting sales produc- respond rapidly through a scalable solution administration team time. It integrated tivity and staff morale. capable of flexing to meet changes in plans easily with BT’s legacy software and Siebel BT Business wanted to cut operating and increases in the number of employees CRM application. costs without compromising its business and business volume. The solution tracks A division of BT Retail, BT Business pro- strategy and was also looking for improved individual, team and departmental sales vides small and medium-sized businesses bonus modelling together with compre- performance, as well as forecasted com- with traditional telephone services and hensive sales reporting capabilities. It pensation costs, while offering staff access mobile technology, as well as internet ac- chose Merced System’s Incentive Com- to automatic compensation statements. cess and web-based services.
  6. 6. SALES PERFORMANCE 7 potentially lost revenue. An SPM profitable items, new product or solution, on the other hand, en- sures salespeople are paid accu- pushing old stock as required. SPM helps sales leaders drive Payback time with SPM brings a smile to bosses’ faces rately and on-time; it also brings behaviour in line with company transparency to the situation with objectives rather than letting the Imagine a computer system that not only An SPM system can reduce overpayments by 80 an audit trail to follow in the case sales force dictate what they want keeps the finance director happy by saving to 90 per cent, meaning a typical implementation of any disputes. to sell; these systems can also mo- millions of pounds a year in overpaid com- should pay back, in terms of cost savings, in six to The Vanson Bourne research tivate customer service staff and AIG former mission and administration overheads but can nine months, offering a return on investment (ROI) supported these findings, conclud- employees like bank tellers to chief also bring a smile to the sales director’s face by of more than 100 per cent in the first year. Benefits ing that more than half of UK sales cross-sell and up-sell. executive helping to drive revenue. Sales Performance on the sales side include the facility for a company directors admitted they regularly Edward Management (SPM) systems promise to prune to modify compensation plans to motivate people had to deal with queries and com- Liddy: “Jolly commission costs, and help manage and moti- to sell different products, while individual sales- plaints from the sales force, while standard vate the sales force, among others. people receive more accurate and timely commis- 63 per cent said they worried “occa- practice?” Estimates suggest companies overpay by 5 sion statements. A key factor is more time spent sionally” or “frequently” about the to 12 per cent on annual compensation budg- selling and less spent on administration. accuracy of their sales commission ets. Some large organisations have been los- A report from the Aberdeen Group, Optimis- payments. Callidus says its clients ing as much as £5 million a year through badly ing Sales Performance Management Through typically see up to an 80 per cent managed commission plans, according to a sur- Data Integration and Analytics, looked at 150 reduction in commission disputes vey of UK sales directors by Vanson Bourne. Al- sales organisations. It found the best calculated after SPM has been implemented. most a quarter said they regularly saw commis- bonuses were paid through a combination of sion errors top 10 per cent with over a quarter goal-related operational and financial results; BENEFITS spending more than £50 million on commission 82 per cent had the ability to store and retrieve SPM brings with it a number of annually. A separate study by technology ana- historical commission payouts, while 78 per motivational and business benefits, lyst Gartner Group found that companies tend cent followed a structured approach to provid- says Callidus vice-president Barry to overpay commission by 3 to 8 per cent. ing regular feedback to their salespeople. Carson. “The sales team is able to see all commission earned in real- time so they can monitor their tar- There are a number of specialist tivate people to sell different prod- ment tools. It numbers BT, O2 and get throughout the month and push vendors offering SPM in Europe, of ucts, while the individual sales- Orange among its customers. Xact- themselves to hit target and over- which Callidus is the leader. Cana- people also benefit if commission ly offers a software-as-a-service achieve. Not only is this motivation- dian-based Varicent is also a major statements are out in “four days (cloud-based) solution; customers al but it builds trust in the company player with a solution based on Mi- rather than eight”. A key benefit include Salesforce.com. Positioned when pay is accurate and on time.” crosoft architecture; an advantage is of SPM solutions, according to Mr more at the medium- end of the Most importantly for a busi- that the system is reputedly slightly Hartlen, is “more selling time”. market, it has seen exponential ness, SPM allows new incentive faster to adopt than Callidus. Merced Systems is based in San growth in the UK and Europe. Ex- plans to be deployed quickly. This Varicent’s marketing vice-presi- Francisco and Reading, and is par- centive is a French Microsoft part- is particularly effective at focus- dent Brian Hartlen says that there ticularly strong in the call-centre ner and a significant player in its ing the sales force and indirect- is real value if a company can easily arena, offering what it calls sales home country but has yet to break sales channels on selling the most change its commission plan to mo- and service performance manage- into markets outside France. OpenSymmetry, boosting sales performance Sales incentive design and administration are the cornerstones of an e ective Sales Force Automation strategy. OpenSymmetry o er a unique combination of expert incentive design and best-of-breed technology to deliver Incentive Compensation Management platforms scaled to t companies of any size. Our customers bene t from our global team of consultants and practitioners, relying on us for e ective advice or depending on us for a fully outsourced solution to their Sales Performance Management needs. Call us today for some simple advice. 0800 756 6736 OpenSymmetry, experts in Sales Performance Management and incentive design. www.opensymmetry.co.uk

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