Feb 152016
 

Sometimes it is a wonder how easily a percentage of sales management professionals forget or never learnt the fundamentals of sales compensation and motivation.

This is not a knock against the vital and, if the job is being done correctly, difficult sales management position. However, for different reasons sales managers act counterproductively to the desired outcome when it comes time to set goals and define compensation plans.

money bag

 

 

 

 

 

 

 

 

Reasons may include:

  • Sales managers forget what being in a sales (individual contributor) position was like.
  • Sales manager was never in a direct sales position.
  • Sales manager is junior and has not found his or her rationale or voice. This person would go with flow and not make waves.
  • The sales compensation model is of course derived from the company’s strategic plan for the year and is handed down from the office of the Chief Financial Officer and, by extension, board of directors. The sales chain of command was unable to wholly or partly contribute to the puzzle.

chart

 

 

 

 

 

 

Here are examples of what I term counterproductive sales compensation modelling. Before doing that though let us remember that we are not dealing in absolutes. This is not a black and white edict. A compensation plan could very well lie on a spectrum between ‘good’ and the ‘bad.’

Sales professionals are often vocal, and correctly so, with sales compensations when:

  • The numbers are not what the company has in fact budgeted. By the time the sales manager has adds his 5%, the director had added her 10% and the vice-president has tacked on a discretionary 5% the number has ballooned by 20% and is demotivating the sales team. With the team finding the number out of reach sales people react in several ways. They check out when concluding that the target is not realistic. Worse, they become resentful believing the cards are stacked against them. Moreover, when facing a tough market and competitive landscape sales comes to fret a lack of friendly cover. You might be thinking how would the team know (that the numbers have been altered)? It is not the absolute number that poses a challenge, but the delta between numbers and the path to achieving it.
  • Sales numbers are based on one-offs or special circumstances. If a salesperson who happened to walk into a large sale or had a major sale based on a special circumstance that is not repeatable finds the new quota follow the (FY -1 Special Circumstance * FY0 Uplift%) formula he is likely to balk at the number calling it irrational along the way.
  • Similarly, salespersons with spectacular achievements are given congruently higher quota than counterparts based on last year’s success. The message is ‘Thou Shalt Be Punished For Thine Hard Work.’ Looked at conversely weaker salespeople were rewarded.
  • Under adverse circumstances, salespeople hold back – it even has its own term ‘sand bag’ – possible sales from one quarter to the next or worse from fiscal year to the next. Forget helping salespersons over-achieve; under such circumstances sales is actively not achieving.

It is important to not create sales compensation in isolation from the very salespeople who are tasked to execute it. It is also critical that salespersons do not be handed a disincentive and be demotivated by sales management and their compensation plans. Most importantly, managers must examine the compensation plan to eliminate any perceived or actual unfairness. Operating in an environment that is not a level playing field will have the opposite of the intended effect and lead to charges of favouritism or unprofessionalism.

Keep the numbers above board, uniformly applied and view the sales team as mature allies.

*Things That Need To Go Away: not soliciting the sales team’s feedback on the sales compensation model or, worse, soliciting and subsequently ignoring it.

bonus

Jan 252016
 


There have been predictions that gains in productivity, robotics and computerization will mean an increase in leisure hours, dangerous societal repercussions or alternately a dearth of jobs for human beings. As early as the 1960s both popular and scientific literature predicted that with the advent of automation and productivity future humans – they meant us – would be working minimal hours or be out of work.

The predictions turned out to be wrong. Firstly, advances in technology have been uneven. Secondly, change in technology has also translated into the need for more input, toil and income and thus requiring contemporary men and women to work more to be able to afford said technology. In plain English, we need to work even more to be able to buy all the things we want that we did not even know about fifty years ago. Sorry, Scientific American. Growth in productivity has been accompanied by a growth in technological Joneses.

Wrongly or rightly, predictions that human jobs will be replaced by technology and robotics has already partly happened. Telephone operators or typists are obvious examples. Now, let us assume for the moment that Replicants, Skynet or Cylons are either not going to come into being or, if they do, which is the likely scenario will not seek to usurp their short-sighted creators, but that did not stop Oxford University professors Carl Benedikt Frey and Michael A. Osborne from publishing a much-discussed paper on mankind’s employability resilience. They also hypothesized that advances in technology vis-a-vis human happiness and employment do not constitute a linear path from the 19th to 20th to the 21st century. Moreover, the composition of the employment market will change. They argue that employment will shift to industries where productivity is growing. Except, this time there is a caveat. The famous ‘knowledge worker’ will not be able to out-smart or out-knowledge computerisation.

cylonsskynet

What I find interesting is the discussion of ‘big data.’ This term could mean many things and refers to concepts as related, but diverse, as HADOOP, social media, IOT (Internet Of Things) or the digitization of all human knowledge. For once, computers or robots will not be asked to replace human activity in a specific environment or domain. They are being fashioned to do it all inclusive of tasks unforeseen. Think about it. This is not a robotic assembly line. This is a domain-less knowledge worker. The said ‘worker’ can do legal analysis, drive, conduct surgery or do something as mundane as find one a telephone number on the Internet.

Replicants

So, what do the researchers think about the chances of sales becoming automated and job losses in the occupation. We have all heard the adage that ‘people buy from people.’ Is it true or merely another in the long list of dated, or patently false, tidbits?

typewriter

Before answering it is useful to note that the researchers explain that there is a smaller chance that position which require “creative intelligence” (basically the ability to be clever and non-routine) and “social intelligence” (essentially the ability to understand others and react) will fall prey to obsolescence. In another cruel and Darwinian twist of fate, the model therefore predicts that lower paid jobs (included the dreaded McJobs) will be susceptible to automation more than higher paid jobs. Generally speaking, executive positions, business and healthcare jobs are at a lower risk of replacement. Construction, transportation and production jobs are in the higher risk category. More specifically for us, telemarketers (the single most endangered position in the Appendix), retail and insurance sales are highly likely to be replaced. Negotiators, which potentially might include, very experienced salespersons or management are not. Junior or mid-experience salespersons do not fare well in the modelling however.

In the meanwhile, whatever the pace of automation, it is important for salespersons to not be robotic, impersonal and uninformed.

*Things That Need To Go Away: low energy and boring ‘sales’ with no creativity, knowledge or appeal.

Jan 112016
 

Several years ago I wrote about Not Competing On Price. Sales organizations are in an unenviable state of affairs where competition is more fierce than ever, pressure on sales margins is unrelenting and, due to both information overload and borderline fantasy marketing by sellers, customers are either blind to what sets you apart or, more likely, do not want to pick up enough cues, which would set you apart from the competition.

I say “more likely” because customers are in fact more informed than ever. Partly as a result, Gartner believes that buyers see their interaction with sales as their least valuable part of their buying process.

How should organizations and sales departments respond? Put another way, the question is, how do organizations and sales departments differentiate themselves enough to hold a competitive edge? The answer should be simple. Have a better product and convey the strength to customers already suffering from cognitive dissonance. Easier said than done of course. Where it exists sales must know it and articulate it. Among other things a sales process must become

  • Better aligned to the contemporary buying process, which means not being strict about the pipeline and funnel milestones as defined in your CRM
  • Offer more domain knowledge,
  • A much better understanding of vertical KBRs is a must because you would want to align it to the customer’s purchase
  • Moreover, support and maintenance are tangible factors that remain dissimilar across companies.

Notice that, given our dilemma, these are still non-product differentiators. To keep our feet firmly planted in reality we are not going to see sales managers measuring their salespersons differently. Why? Wall Street, Bay Street, whatever quarterly measuring street.

Where a competitive edge does not exist the price pressure is even more acute.

What to do when a customer sees you as a commodity? What to do when a customer sees you as one of many? The answer is ‘disruption.’ A seller has to disrupt current customer thinking through one or more of the below:

  • Know yourself. If you cannot educate your customer to your differences then you are at a disadvantage. Do you have superior communication and articulation? Either way, you must get better. Do you have valid reasons, experience and stories? If so, maximize their utility. Importantly, be careful assuming that your customer’s knowledge of you is perfect. What they may know may not match what you know. Check and compare.
  • Know your competition. Educate your customer on the competition. Do you know their limitations? Do you know how they are processing their sales strategy?
  • Know your customer. This includes their hot buttons, preferred relationship parameters and interaction style preferences and big picture. The last item implies that the seller could go beyond the point solution and make truly constructive suggestions to customers. The triangulation of engineering, marketing and sales becomes more important than ever. Is this wishful thinking? Quite possibly. Selling organizations are as resource and time challenged as buyers. However, the extra effort and fastidiousness is worth it.

All products being roughly equal, or being perceived as such, something has to give. It will either be the price or your non-product differentiators.

*Things That Need To Go Away: companies and sellers who cannot articulate why they have a raison d’etre.

identical

Dec 102015
 

In the past I have often written about selling to customers and how to obtain new customers. It is a complex chain of interrelated actions and reactions, which even experienced salespersons and successful companies could benefit from reviewing often.

number one

What about obtaining your first client however? What is the approach and system to gain a first customer and to launch your company or product?

Consider these strategies:

  • Start small. Even the most successfully adopted product in human history Facebook started small and in a targeted fashion. The company did not launch as a forum for the world. It initially launched for Harvard University students in the USA, before becoming available to regional universities and going on to being a student-only site before opening itself up. Not only it had gained a core group of users in the process, but had also given itself the opportunity to develop itself. So, when I say start ‘small’ I mean ‘small and targeted.’

 

  • Implicit in the above is the need for identification of the ideal customer. What exactly is the target market? Without it the search is endless and unfocused. Finding the right customer is infinitely more difficult in the universe than it is on your own planet.

 

  • Give yourself away. To quote one Jeffrey Gitomer “give first and give freely.” The idea here and this case is more specific, namely every company needs a customer to be its proving ground, reference or bright spot and so the first ‘sale’ could often be given away. The give-away establishes the product and grabs itself a foothold. Moreover, a paying customer does not want to be the first buyer. Your non-paying or heavily discounted customer is your testimonial and reference.

 

  • I dislike this word, but there I will use it: ‘synergy.’ Where is your product or service complementary and adds in a small or large way to another? Join forces and form a more complete offer.

 

  • Once the above are done become aggressive with your Search Engine Optimization. It is critical that you be found and, as is often cited and you know by experience, most people do not go deep into any site’s search results. Know your industry’s keywords and leverage them on your website and back links. Do the same on the social media you utilize.

With the first customer under your belt it is worth remembering that it is always easier to sell more to an existing customer than to find a new one so do not compromise on customer service.

*Things That Need To Go Away: customers who rightfully feel they are guinea pigs.

start

Dec 092015
 

ITProPortal has a concise roundup of four Cloud Accounting Software services for small business, Xero, Sage, Freshbooks (which comes in a dozen languages) and Quickbooks.

Accounting Software Round-Up

Others that the article does not cover, but are options would be Wave and Kashoo. Wave is nifty because its invoicing, accounting and personal finance tools are free. It is given away in exchange for product placements and corporate offers. Its payroll and payment processing information editions are pay-per-use and associated with a monthly fee. Kashoo’s Invoicing edition is also free.

raining cash ghaemi

 

 

 

 

Oct 242015
 

A 2015 Gallup study called Employees Want A Lot More From Their Managers addresses the fundamental employer and employee question. It confirms what many have either already known or impulsively sensed. Employees do not leave companies. Employees leave people. In other words, for employees, the manager is the company.

employee manager

These pages have addressed the issue of the relationship between employee and employers before. The study adds more evidence to the assertion that employees leave due to bad managers.

What Matters To Employees

What Matters To Employees 2015

Keeping Your Employees Happy

Why Employees Stay

An Interview with Beverly Kaye Of Career Systems International Co-Author of Love ‘Em Or Lose ‘Em: Getting Good People To Stay

The Gallup study of 7,272 adults revealed that “one in two had left their job to get away from their manager to improve their overall life at some point in their career.”

Gallup found that employees want engagement, communication and responsiveness. According to the study, employees unhappy with their managers find annual reviews forced and superficial. Pertinently, employees who are unhappy do not plan or think about the future of the company simply because “they are not even sure what tomorrow will throw at them.”

Managers, are you reading and understanding this?

Are relevant personnel at different companies picking the correct managers and removing mistaken management persons and their respective choices?

Note: this is a US Study.

*Things That Need To Go Away: managers who make life difficult for their employees.

Oct 182015
 

Sage is a UK-based software firm with annual revenues of £1.3 billion or $2.5 billion CDN.

MYOB is an Australia-based software firm with annual revenues of A$246.6 million or $230 million CDN.

MYOB is now owned by US-based Bain Capital (of Mitt Romney fame), but when in late 2011 the owners of MYOB initiated an auction to sell the firm the early winner was the aforementioned Sage. Why a legacy software firm would wish to buy another is another story, which might explain Sage brass ending up forfeiting the opportunity, but for readers interested in technology firm manoeuvers, corporate negotiations and handling of shareholders’ money or law and litigation Lexology, a website for lawyers, has a fascinating article on the lawsuit and legal deliberations that followed the tender.

The MYOB Decision

At my first law course at University the instructor and text book insisted that a handshake implies a legal agreement… apparently not.

 

 

Aug 122015
 

It is not the first time that I write about What Matters To Employees.

See the older iterations here and here.

Here is an update from 2015, which depicts the top 3 priority ‘wants’ of the employees as

1- Pay

2- Location

3- Flexible hours.

TOP 3 Employees

 

 

 

 

To speculate, the ‘top 3’ are likely not as cut and dry as it seems upon first glance. For example, ‘pay’ could mean base pay or variable or signing bonus, etc. ‘Flexible hours’ could mean number of hours worked or vacation days. Moreover, as always, negotiations and wants and needs are not win-lose. For example, a person might mean ‘signing bonus’ and not just ‘salary’ when discussing ‘pay.’ Similarly, an employee might mean ‘office hours’ when discussing ‘flexible hours,’ which may even be in sync with employer needs as they need people in different shifts.

For another perspective, which is different from the results of this survey, read my interview with author Beverly Kaye.

*Things That Need To Go Away: employers pretending the above are not priorities.

 

Jul 132015
 

I wish I could say this graphic is mine. Alas, it is not, but I like it a lot.

54c605b0-71ef-46ff-8f97-b3cd9bd73d04-medium

 

 

 

 

 

 

In fact, since it was sent in, if anyone knows where the source is please tell me for appropriate credit.

The point is what these pages have talked about before herehere and here. Employees are precious and finding good ones is difficult. Keeping good ones is as difficult. More pertinently, however, is the question on how to keep employees.

Many theories float out there, but the notion is that one solution does not fit all. While managers and human resource teams talk and practice team meetings, casual Friday days, commission structures so on and so forth any of these schemes is probably missing the mark the majority of the time.

Employees are humans. Humans are a diverse group. It remains the job of the manager, executive and human resources to understand each individual and work with (motivate) that person (employee) individually.

*Things That Need To Go Away: making employees happy through actions and activities that make managers pleased. 

May 042015
 

Is Salesforce.com on the auction block?
That was the report last week when Bloomberg reported that the venerable Cloud Computing Sales and Marketing application vendor has been approached by a suitor to be taken over.

The approach and the need for Salesforce.com to be sold are not surprising. The company has been a leader in CRM and platform computing the cloud. Its desirability is not in doubt, although its leadership might have peaked. Moreover, despite its surging revenues (by another 33% in the last year) the company has always suffered from low margins. There are two reasons for this. For one, the company spends heavily on operations and marketing. For another, the company has been an acquirer of companies and technology wading into marketing to bolster its sales-side offerings.

Last Wednesday the 29th of April the company’s stock took on 9% more value to give the California-based firm a valuation of $49 billion (US). That already is above the $44 billion (US) a suitor was ostensibly offering. By this week the value had fallen to $46 billion. Nonetheless, any buyer would have to look at book value plus premium to grab the company. This might mean a $60 billion (US) price tag. This is a truly mighty sum. Moreover, the company has $908.12 million (US) in cash on hand and twice that in receivables.

So, who is the potential acquirer? The company’s heft makes for very few suitors. Oracle is a serial acquirer and king of the nominations. Oracle is in the CRM and Cloud business already selling its own software built in-house or originally developed by Siebel. Oracle has approximately $44 billion (US) in cash and receivables. Safra Catz, Oracle’s CFO, was characteristic in responding dismissively. Nonetheless there is always some fun and games between those two CEOs who have since patched things up again. Larry Ellison is a founding investor in Salesforce.com. There is SAP whose spokesperson indirectly refuted interest. The companies have talked in the past, but not in regards to an acquisition should they be believed. There is Microsoft, whose Dynamics software has been the sole serious roadblock in Salesforce.com’s domination. As mentioned here Microsoft has an agreement in place with Salesforce.com. More importantly, Microsoft’s CEO since 2014 Satya Nadella is completely focused on the Cloud and the mobile experience. The Redmond-based giant is sitting on $95 billion (US) in cash and short-term investments. Microsoft’s Dynamics CRM is reportedly holding onto a 6% market share versus Salesforce.com’s 17%. Microsoft and Adobe announced an agreement last week as well. See the below link for reference to Adobe’s marketing play. A few observers have also pointed to Google. A dark horse is IBM. The last name officially exited the ‘applications’ domain years ago, but in actuality plays in the field through its financial/business intelligence/analytics offerings. Regardless, IBM may be interested in Salesforce.com’s Cloud technology. Could IBM be interested in taking Salesforce’s CRM off Oracle database and unto its own DB2?

Reality might be the Salesforce founder himself is ready for a sale. He has tried various strategic initiatives and agreements – including an attempt to build in-house financial software and tie up with Intuit in 2011, which was quietly discontinued in 2014 – to little avail. Subsequently Salesforce invested in Financial Force .

One last point for you readers: Salesforce’s annual revenue is in the $5 billion (US) range. taken purely from a revenue standpoint a $60 billion (US) deal would take 12 years to pay off.