By Tom Castley, Managing Director in EMEA, Xactly
For small and medium sized businesses it can often be a daunting challenge to find, motivate and reward sales teams appropriately. However, particularly in the early stages of an organization’s life span, sales teams can make the difference between success and failure. So, how should a young company drive its sales programmes? Here are four steps to consider:
1. Early stages: Time for a land grab
It makes sense to focus on a ‘land grab’ to build a series of reference customers. Target the “winnable” companies first and work with them to build your case and, of course, create a strong customer page on your website.
A typical sales model at this stage is to offer reps a flat rate of commission on any new customer name, regardless of customer or deal size. This motivates them to stay focused on signing new customers rather than getting distracted working more complex deals.
2. First foothold stage: Time to specialise
Once a company’s profile is building it can move to a more considered compensation model, focusing on increasing the value of each deal and driving up revenue. This is also the time to create specialised sales roles. Too often start-ups expect each sales person to cover the full sales cycle – from prospecting to close. However, lumping together a mix of different responsibilities – such as raw web lead qualification, cold prospecting, closing and account management – in one generic ‘sales’ role can be one of the biggest productivity killers.
Often SMEs think they are ‘too small to specialise’, believing they require an entire sales team in place before roles can be specialised. In reality, SME’s sales teams are more effective if they first hire a sales person, then add dedicated lead generation support, followed by a resource to manage existing accounts, and so on. This is the model used at Xactly and explains why the company has grown predictably over the years.
Use the 80/20 rule to determine if specialised roles make sense for your organisation. When salespeople, as a group, are spending more than 20% of their time on a secondary function such as lead generation, then it makes sense to break out the function into its own new role.
3. Steady growth stage: Move to a thoughtful incentive plan
With a growing list of customers and a strong sales team in place, companies should focus on creating an incentive matrix that caters appropriately to each sales role. Managing this correctly can be the difference between engaged and disengaged employees, but getting it wrong could result in:
Lack of motivation: No clear objectives and no visibility over the rewards gained from obtaining these objectives.
Lack of focus: Without clear responsibilities sales people are likely to switch from one task to another and take on too much responsibility.
Lack of proper training and support: When a company doesn’t train salespeople on how to work effectively, provide them with the tools they need, or set reasonable goals then many will struggle to make progress. Often the guidance is usually ‘make more calls’, which often isn’t particularly helpful!
Unclear metrics: Without clear metrics, and clearly defined roles, it can be difficult to keep track of individual and company success. This in turn can effect profitability, sales and engagement.
No visibility: If plans can’t be measured, then it’s difficult to see where the failings lie and what can be done to improve processes with accountable follow through.
4. Sustained success stage: Keep the talent
Once a company has a plan, capable team and growing list of customers in place, then it’s critical to hold onto existing talent, and attract new star players. Xactly’s own empirical data shows that for start-ups to retain the best talent, they need to pay more than established companies. So this stage is the time for pay reviews, benefits and reward structures.
While the approaches might vary slightly dependent on industry – this framework should work for any SME wanting to see sustainable and successful growth.