Setting up a successful speciality sales team means getting the working infrastructure right. Creating territories is a matter of applying simple logic to a simple set of rules. Territories must be neither too big nor too small, not so big that the area can’t be fully covered in the year and not so small that sales initiative is destroyed. Territories need to the covered geographically and in terms of customer group, product range and decision cycle times. You need to know enough to get this mix right. Territory ‘shapes’ are likely to be determined by the direction of the motorways; and, ideally, you don’t want your sellers driving up and down the same roads. Salesmen sell through face-to-face contact so you don’t want them spending too much selling time sitting in their cars either. If the area is big, they should be encouraged to work it in segments, overnighting in the area to improve call rates
The commission structure must be right too. I don’t like commission only. Salesmen should not be asked to take on company risk. Neither is salary plus commission the best way forward. It averages down the better sellers and averages up the lesser. It is even worse when commission is paid on annual target set by management. This equates to management, who should seen to be supportive, punishing the successful seller for his success with higher targets next year.
Fast lane sales growth is about creating stars in your sales team who lead by example (and maybe in their new sports car) and show the path of success to their lesser colleagues. The way to do this is indeed to pay commission only but support it with guaranteed earnings. It is a matter of simple mathematics. If you think a good salesman could produce 1.0 million/pa for you at a stretch and he would be worth 100,000 to you if he did so, then pay him 10%. This is open ended. With luck and good fortune maybe he will find the way to sell 2.0 million/pa. Then you’ll all be wealthy. You want success, not a payment hierarchy where sellers can never earn more than their managers. Be a little careful though. Make sure the commission levels reflect your ambitions for sales for each different class of product. One thing you can be sure of: the seller will and should be led by the commission terms to head for the simplest ways to maximise his/her turnover. He/she might, for example, decide it is easier and more profitable to sell 10 small ones rather than 5 of the big ones.
Obviously people can’t live off commission paid every once in a while. Bills come in monthly; and there are Christmases, holidays and birthdays to be paid for. So put each seller on a guarantee to reflect worth. Let’s start, for simplicity, at with a guarantee of 48,000pa or 4,000pm. Maybe you decide, because you want sales participation until the customer has the product in his sticky fingers, to pay each order 50% on order and 50% on delivery. These commissions build up and, when they surmount 4,000pm, you could choose to pay 60% of the excess, in effect in advance, so the seller can taste success for the current effort. As territory sales grow, so individual guarantees can be increased; and, as they fall, they can be decreased. In the latter case, the seller will make up his/her own mind whether it is better to stay or go.
You think “Well how do I convert my current sales team over to the new system”. It’s simple. Give them the current (only) sellers the choice: the existing 50,000pa salary and 5% or 50,000 and 10%. I know which one I would choose. There is usually some reservation based on conversations with the wife but, inevitably, they all join in and sales begin to soar. And, by the way, send the excess commission as a cheque to land on the breakfast table. It won’t be long before the wife is kicking her seller husband out of the house earlier.