Lara Morgan on the importance of effective sales targets and rewards

The administration for recording sales profitability can be ridiculously onerous, at one stage I found reporting and checking sales commission claims against the sales actuals and then calculating the commissions owing back to sales became a huge time waster. Do not let this become a distraction and de-motivator for your sales-force or operators.

Rewards, I think have to come in all kinds of mixes and of course for some it is a much easier mathematical equation than for others. I think sales professionals – proven, high quality salespeople should take roles with exceptional commission and low basics – living and dying by their sword of expertise.

Less experienced sales beginners should have a reasonable salary but again should understand from the outset that the upsides of earnings come significantly from their ability to win the right kind of business in the right terms for the companies focused sales growth strategy. (Which by the way most companies have not even clarified to leadership let alone the company as a whole!)

When my original company was small it was simple to record orders, to report the profitability of business sold and to pay a hefty percentage of commission against goods delivered and paid for by individual properties. This simplistic system with a few salespeople was easy to manage and highly motivational for them.

As the company grew and areas for sales territories had to be re-clarified, and we broke into inside sales, outside sales and senior sales group attack hunters, the commission schemes had to change – more so as we internationalized the business growth. 

What is utterly never going to change, and this is whether sales or administration related, is the fact that you should set rewards for the things you want achieved. Actions are too often linked vaguely and without clarity and this muddy water without key performance indicators, and a clear role description off which someone is recruited can lead to massive heartache when there are career development reviews (not naff appraisals). Avoid these pains early by putting clear expectations for earning potential in place.

One of the best and simplest rewards mechanisms we had at Pacific, on top of individual reward standards for sales people, was the fact that in each month the company as a whole achieved the months targets for sales profitability, any sales profit made over and about the target was then shared at a percentage of the over equally amongst every member of the company. (I think we were about 6-14 people during this phase.) 

The joint effort of accounting getting invoices out, dispatch processing orders and the whole sales momentum in the last days of every month amounted to a massive team culture and effort which we always retained – hugely beneficial as we growth accelerated.

The “sales sum” reporting system that was emailed to all company members every day, reporting a salesperson’s performance % to target of that sales month and their cumulative percentage to target for the year was a completely transparent and motivational communication which kept everyone in the picture making an effort to support lagging sales – or frankly to separating the wheat from the chaff.  

  • Rewards with business objectives must be linked and transparent: a monthly company meeting showing progress towards targets was an imperative on he second Tuesday of every month and all company members were expected to attend these meetings. We all played our part.
  • Celebrating simple stuff still works surprisingly well – e.g. ‘television for best salesperson at the end of the quarter’. We even invested the annual Golden Soap Awards (not surprising given we sold toiletries). These highly sought after accolades from best new performer, top customer service person through to top sales person were very powerful. In those cases the plaque and the award credibility were the prizes.) The company also had an annual BHAG (Big Hairy-Arsed Goal) which they set, the first of which famously saw them all on a fully expenses paid trip to Barbados – which they earned. The effectiveness of making sure you understand what an individual wants, versus what you think they want is a must bother to ask question. We had a lady whom hated flowers, not clever to give her flowers.
  • The ‘personal touch’ (gin, jelly tots, a long stemmed rose on Valentines Day etc.) was a process that we planned and I kept a chat of making sure that I felt every person had been personally thanked, given small tokens, (I even paid for legal advice for a divorce as a perk once!) and I did keep a chart of these to keep a balanced perspective.
  • Another point to make here is how did we manage the operational people who assisted sales? My consideration is that anyone in sales earned their commission. My sales hunters shared an administrative supporter whom had to carefully support their salespeople equally. I know these salespeople sometimes shared bonuses and gifts with their sales support teams. The whole company all shared in the annual profit and in a 5% pot share of the bonus of their salary according to how well they delivered on their key performance indicators.
Lara Morgan is founder of Company Shortcuts, a consultancy dedicated to excellence in sales and leadership.

She is also a judge at this year’s Growing Business Awards. 

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