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25. Motivating a Sales Team

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Coffee is for closers…

When I teach this in person, at this point I show the famous scene from Glengarry Glen Ross, where Alec Baldwin stops by the sales office to “motivate” the team.

Yelling and screaming is one way to motivate a sales team, but not the most pleasant, nor the most effective.

As mentioned before, great salespeople are motivated by the thrill of the hunt and by solving customers’ problems. However, neither of those motivations maximize your company’s revenues, nor do they optimize the use of your sales team’s time.

Your company has overall sales and revenue goals for each month, quarter, and year. To make sure you reach these goals, you can (and should) create sales “quotas.”

A sales quota is, in its most simple form, the number of sales the company expects a salesperson to make in a given time period. It is generally counted in dollars of revenue, but you may at times have other goals, like numbers of customers.

For each time period (generally monthly or quarterly), you assign each salesperson on your team a quota. Usually, each quota is unique to each salesperson, depending on the responsibilities of the salesperson (e.g., hunter or farmer), the assigned geography and segments, plus seniority, experience, and past performance.

Often a portion of each salesperson’s salary is tied to “making quota.” The simplest form of this is the sales “commission.”

A commission can be as simple as a fixed percentage of the revenues, e.g., ten percent of the total revenues “booked” by the salesperson (i.e., “booked” counting the total sales as they are made, rather than waiting until the customer actually pays, which can be months later). Or, commissions can include multiple tiers, e.g., the salesperson receives ten percent of the same for the first half of the quota, fifteen percent on the second half, and twenty percent for all sales above quota.

There can be bonuses for exceeding the quota, for meeting other metrics (e.g. numbers of customers), and for closing specific deals (e.g., big-name customers). A bonus is a specific amount of money, rather than a percentage of revenues.

To further motivate your sales team, you may run contests. Salespeople tend to be very competitive, and you may be surprised by how much a contest can add to your sales. Try starting with something simple like most sales by a specific date earns a fancy dinner. Then, first to meet quota gets a weekend at a resort. First salesperson to double quota gets a week in Hawaii.

With the right structure (and a product that customers like!), you can motivate your team to focus on your goals and, with a great sales team, exceed those goals.

Remember that you are running a startup. Commissions may be earned on a successful sale. You choose whether they are paid as soon as they are booked or only after your company receives payment from the customer. Waiting until your company has the money separates quota from commissions. Quota is attained upon signing the contract. Commissions are paid when your company is actually paid.

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