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How to Manage and Motivate Your Sales Team
Any behavior which gets rewarded will tend to be repeated. So we advocate paying close attention to how employees are rewarded for performing (or not performing) the various aspects of their jobs.
Performance-based compensation is nothing new. Commission plans for salespeople are common because their productivity is so easy to measure. But small business tends to eschew these compensation plans thinking that “we’re just a mom & pop store. We’re different.” In the competitive environment you’re faced with today, you have no choice. You must use every management tool available to maximize your marketing firepower.
Guerrillas are not only intolerant of non-performers, they lavishly reward their stars, setting ever-higher standards for the whole organization. The problem is how to reward your people appropriately, particularly if they’re not directly responsible for easy-to-measure activities like sales revenue. Some simple guidelines can put this powerful management tool to work for you.
The foundation of an effective performance-based compensation plan is a set of clear and specific goals for your organization as a whole, for each functional department, and for each individual employee. These goals must be objective and quantifiable. For example, “Increase walk-in traffic by ten percent, or to 650 shoppers per month, by the end of the year” or “achieve an average rating of 4.5 of 5 on monthly customer satisfaction surveys.” Subjective factors, like attitude or good work habits might be included in review criteria, but if you can’t measure them statistically, you can’t use them as a standard for performance-based compensation. Then devise methods for gathering data to measure progress (or lack of it) toward these goals. What you measure is what you get, so inspect what you expect.
Salary
The advantage is that it’s easy to calculate: punch in, punch out, so much per hour. The disadvantage is that it doesn’t motivate.
Commission
Commissions can be computed on the gross sale price (good), or the gross profit margin (better). One important factor to consider when designing a compensation plan is that it must be simple. Paying commissions on straight gross sales is easy, and if you put the table below up on the wall in the break room, everyone can quickly estimate what they’re earning if they know the overall gross margin of the store.
Do not pay commission on any gross margins below 13%. If they’re selling at less than 13% margin, they’re giving away the stock and putting you out of business.
Generally, the lower the gross margin, the easier the product is to sell. So guerrillas recommend paying commissions based on gross margin, to reward your sales people for working harder to maintain higher profits, not just sales.
Commission Based on Gross Sales:
| Overall Gross Margin | % of Gross Sales |
| on Sales for the Month | Paid as Commission |
All above 27%…………………………………………… 2.8%
26.0 – 26.99……………………………………………… 2.6
25.0 – 25.99……………………………………………… 2.4
24.0 – 24.99……………………………………………… 2.2
23.0 – 23.99……………………………………………… 2.0
22.0 – 22.99……………………………………………… 1.9
21.0 – 21.99……………………………………………… 1.8
20.0 – 20.99……………………………………………… 1.7
19.0 – 19.99……………………………………………… 1.6
18.0 – 18.99……………………………………………… 1.5
17.0 – 17.99……………………………………………… 1.4
16.0 – 16.99……………………………………………… 1.3
15.0 – 15.99……………………………………………… 1.2
14.0 – 14.99……………………………………………… 1.1
13.0 – 13.99……………………………………………… 1.0
Less than 13.0%………………………………………… none
Basing commissions on gross margin rather than gross sales is harder to track, but it motivates salespeople to sell higher-priced and higher-profit items, accessories and extended service contracts, as well as to follow up with prospects and customers for referrals.
Commission based on gross profit discourages discounting. It can also produce competitive rivalries between salespeople, (which is not necessarily a bad thing).
Commission based on Gross Margin:
| Overall Gross Margin | % of Gross Profit |
| on Sales for the Month | Paid as Commission |
All above 27%…………………………………………… 15.5%
26.0 – 26.99……………………………………………… 15.0
25.0 – 25.99……………………………………………… 14.5
24.0 – 24.99……………………………………………… 14.0
23.0 – 23.99……………………………………………… 13.5
22.0 – 22.99……………………………………………… 13.0
21.0 – 21.99……………………………………………… 12.5
20.0 – 20.99……………………………………………… 12.0
19.0 – 19.99……………………………………………… 11.5
18.0 – 18.99……………………………………………… 11.0
17.0 – 17.99……………………………………………… 10.5
16.0 – 16.99……………………………………………… 10.0
Less than 16.0%…………………………………………… none
Of course, you have to adjust these percentages to your business and your market.
Bonus
Bonuses can be paid on a monthly sales quota, or on reaching a target profit margin. The whole sales team can qualify for a bonus for reaching a collective goal. Managers often receive a bonus for exceeding key performance targets. Some retailers offer year-end bonuses, but these are not really very motivating. Bonuses are more effective if they cover shorter cycles. People need to be able to envision their progress, either on a regular report, a reader board, or a United-Way-style thermometer.
Spiffs
An acronym for “sales promotional incentive funds,” spiffs are paid for specific sales events. Some spiffs are funded by manufacturers to move specific SKUs. Or they can be paid by the store for selling an unwanted, obsolete or damaged item.
Guerrillas never allow the manufacturer to pay spiffs directly to their salespeople because you want the credit for paying the reward. Also, you don’t want the manufacturers to control what products sell on your floor. You need to manage that mix based on your niche, your identity and your business model.
Sales Contests
It’s important to include all the support people, the back office, the warehouse, cashiers and delivery.
You can run a sales contest on any number of metrics. First Sale of the day, Biggest Ticket of the day, Most Line Items in an order, Most Orders written in a day, Order with Highest Gross Margin.
You can also run contests on product knowledge. Devise a simple test and give a certain sum for every question they get right.
The best sales contests combine performance with an element of chance. For example, every qualifying sale wins a ticket dropped into the hat, then a weekly drawing determines the winner of a cash prize, a merchandise prize, or the trip for two to Hawaii. The more you sell, the better your odds of winning.
An effective variation is every qualifying sale gets to draw a playing card from a deck. The best poker hand at the end of the contest wins all.
Wiltshire TV, in Thousand Oaks, California, has developed an unusual variant of Bingo. Each month, each square on the bingo is assigned a different product. Instead of letters and numbers, their Bingo card is laid out with brands across the top and model numbers down the side. Sell a qualifying product and you mark that square on the card. Sell any five qualifying items in a row, and BINGO!
LOTS more Guerrilla Retailing strategies in our book, Guerrilla Retailing – How to Make Big Profits from your Retail Business. Order it today on Amazon.
What About the Ethics?
In response to the last blog on Guerrilla Trade Show Selling, Holly Wilner, Founder at Trade-a-Date Singles Events, responded:
“Yes good stuff [on how to take advantage of a trade show opportunity] …although my boyfriend, a journalist for over 30 years got a little indignant about someone falsely posing as one, which may actually come back to bite the poser…but if he comes through with the article, then I guess hes met his obligation.”
The best description of a journalist that I’ve ever heard: “We observe. And take notes.”
Hey, don’t get me wrong. I never advocated “posing.” I assumed that my colleague, who is a fellow professional speaker, has the necessary command of language to write a great story (or at least the financial resources to have someone ghost it.) And I absolutely re-iterate, you must deliver the goods, or you won’t be asking the right questions or documenting the right answers. If you approach it with the wrong intent, it simply won’t work.
More powerful than any brochure you could send about your product, a tear sheet from the magazine featuring a quote from the CEO is the most powerful door opening weapon in the guerrilla arsenal.
If you have ANY qualms about the ethics of this approach, I recommend full-disclosure. “This is my first assignment. I’m brand new at this. In my day job I work for . . . ”
And by ALL means, ask your editor to coach you. Ask IN ADVANCE what they expect the word count to be, and if there is any special slant or angle on the story they’d like you to take. Editors always give me my best ideas for articles. Ask them to e-mail you their “editorial guidelines” which will serve as a cook-book for their book. Rustle up some past issues at the library or on line to get a feel for the form and format
This approach is based on the Guerrilla Selling principle of “Investment.” Give first. You are giving the magazine and its readers new information and insight; you are giving the companies you interview publicity for their products. You benefit by building relationships with potential customers. Everybody wins.
The expertise you gain in the process will very quickly make you an industry expert, as well as a legitimate journalist.
Don’t Get Caught Suitcasing
Paul Wesseling, owner of Aktivia BV, www.co2-meter.com, asked this question of the Guerrilla Marketing Tips for Small Business discussion group on LinkedIn:
“Does anyone have out-of-the-box suggestions to present a product on a child nursery trade fair without being one of the official participants or stand holders? The product regards indoor air quality. Was thinking of joining a participant in their stand, but am trying to be more creative “
OK, let’s get REALLY guerrilla
Call around to the editors of several child- or family-oriented magazines, and introduce yourself as a free-lance writer. Ask if you can submit a “roundup” article, “on-spec” (which means that you don’t expect to get paid for it, and they only publish it if it’s good) reviewing this particular show. Any editor in his right mind will say, “Sure. Knock yourself out.”
As soon as you have a “yes,” from an editor, contact the show management to obtain a PRESS badge. Explain that you are “covering the trade show for ________ magazine.” There may be a nominal fee, but it will be far LESS than an exhibitor badge or booth space. Most trade shows actually WELCOME the press. As a bonus, a PRESS badge will usually get you into all the general sessions, seminars, receptions and parties as well.
The only sales collateral you’ll need are some simple, elegant business cards that list JUST your name, phone and e-mail. You won’t need a lot of them, but they should be of the very highest quality. The sort of card you’d expect to get from an attorney.
Then, arrive at the show dressed in your most professional business attire, carrying a small MP3 recorder and a black leather legal-pad folio. Look for exhibitors who could potentially be a good match to carry your product, then DON’T SELL IT TO THEM. In fact, don’t mention it at all. Not to anyone.
Instead, go out on the floor early and late when traffic is slow, and approach each targeted exhibitor. Ask if you can interview them for your article. People who wouldn’t give you the time of day as a salesperson will GLADLY give you an hour as a journalist. Make appointments with the top officers if possible, but stay out of their way when the show floor is busy. You don’t want to take them away from their true mission.
Start the interview with general questions, “Your name? Your title? How did you get into this business? Tell me about your product lines? What sort of customers do you sell to? What does your distribution channel look like. Which are your most successful products? What TRENDS do you see affecting your business in the future?” Your questions, of course, are going to indirectly QUALIFY or DIS-qualify them as a prospective customer for your product.
Now, NOBODY can accuse you of “suitcasing” (the less-than-polite term for reverse selling on a trade show floor that would get you thrown out on the street). But you WILL be able to identify several PRIME prospects. Your mission is to collect high-quality leads and build high-level relationships.
IMMEDIATELY after the show, send them a THANK YOU note. And within 48 hours of THAT, follow up with a sales call. “You know, based on what you told me during our conversation at the show, you may have an interest in my _________ product.”
Finally, write the article, summarizing trends that you saw at the show, and submit it for publication. You MUST follow through on this step to maintain your personal integrity. If the publication actually PRINTS your piece, that’s icing on the cake. Send a copy to every vendor you interviewed.
For many, many more no-cost ideas for effective selling at trade shows, read Guerrilla Trade Show Selling (he says, inserting a shameless plug for his book).
How to Lose a Loyal Customer in 12 Seconds
This weekend I traveled with Denise to New Orleans to speak at the City & Regional Magazine Association conference. I was doing break-out sessions on Guerrilla Selling and Guerrilla Marketing with Social Media.
We were nearly next in line to check our bag when a burly ticket agent turned on the crowd and barked, “WHO’S BAG IS THIS?!”
“Mine,” I said, sheepishly raising my hand. I had scooted it under the queuing strap so as not have to carry it an extra 20 feet, and was standing less than 6 feet away.
“YOU HAVE TO ATTEND YOUR BAGGAGE AT ALL TIMES!” he shouted. I was like, SO busted.
“I AM attending it,” I pleaded. “I’m standing RIGHT HERE!” demonstrating that I could almost touch it.
He shouted like a marine drill sergeant, “YOU HAVE TO BE WITHIN ARM’S LENGTH OF YOUR BAG AT ALL TIMES!”
“OK, Ok, ok . . . “ I muttered as I slinked forward in line, cutting ahead of four other people to hover, humiliated, over my bag for the next 12 seconds.
Keep in mind that I have enough frequent flier miles on United Airlines to qualify for the next Space Shuttle. They have always been gracious, accommodating and helpful. That’s why they’ve been my favorite airline for two decades. And I concede that I was breaking the rule, but a little courtesy would have gone a long way. Anyway, I love this airline so much that I can over-look one rules-happy power-crazed ticket agent who’s having a bad day.
The topper came when we arrived in New Orleans. We were waiting by the baggage carousel when Denise realized she had left her purse on board. She dashed back to retrieve it, and was stopped at the concourse security desk (of course). A call was made and within minutes a friendly United representative returned with her purse. So far, they’re 1 and 1.
In the cab she discovered that her cash was gone. We called. We got transferred. We got a lecture about how, “We’re not responsible for lost items.” Of course, that wasn’t the point. We assumed SOMEONE would share our concern that one of their employees was stealing. Seems no one at United was even interested. So we shrugged it off and didn’t let it ruin our day. It was only a hundred bucks.
But it DID ruin a twenty-year relationship. United has just joined Northwest and Air France on my “Do not fly” list. How can you trust them with your life if you can’t trust them with a purse?
Guerrilla marketers spend years and years and millions of dollars building customer loyalty. Everyone in your organization can do everything exactly right in thousands of transactions spanning decades. Even so, a single moment of carelessness, impatience, or greed can destroy it all. And you know what? It didn’t surprise me that someone took the money. People are desperate. The disappointment was that we cared more about United Airlines’ security problem than they did.
Never make your customers feel wrong or stupid, even when they are. Good manners are simply good business. Make certain that your commitment to your customers is demonstrated at EVERY touchpoint, EVERY time, and that EVEY customer experience is CONSISTENT across the board. And when there is a problem, give it your undivided attention, whether you mean to fix it or not.
–Orvel Ray
Training Doesn’t Cost – It Pays
We have this argument with our clients all the time:
“Oh, we can’t afford to spend money on training.”
“Why is that?”
“Well, what if we train them and they leave?”
“What if you DON’T train them and they STAY?”
Savvy Guerrillas know that marketing is an investment, not an expense. Skills training, and particularly sales training, is one of the most conservative guerrilla marketing investments you can make.
At a “Guerrilla Selling” seminar I was conducting recently, we were discussing creative ways to get through to reluctant prospects, especially C-level executives. One of the participants got up and walked out. He returned a few minutes later to announce, “I didn’t think it would work, so I stepped out in the hall to prove you wrong. Not only did I get through; I got the order!”
Later I learned that the profit from that single transaction was more than enough to cover my fee for the day. We can only guess that the return on investment for this client was hundreds of times their investment in guerilla training.
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