Key Elements of an Effective Sales Incentive

The purpose of any sales incentive, or what I like to call a "pay for performance" plan is to generate an increase in sales while also increasing profit and revenue for the company. There are many different ways you can try to motivate your sales staff to improve results, but there are a few key elements that should be a part of any incentive plan you put together.

One common mistake of sales incentive plans is making the goals too general. An example of a general goal would be, "if sales are up 5% this month you will earn $500." While this sounds simple and clear cut, in reality it is actually very vague, in that it does not set the parameters on how are we going to obtain this 5% increase. By creating specific goals, preferable on an individual basis, you then define what actions are needed to obtain your desired end result. An example of this may be, "you will receive $25 for every new account that buys product ABC this month." This is still simple and clear cut, but is also very specific and easy to track.

The second element of an effective incentive is setting a reasonable time frame. If you make it too short, there will not be enough time to achieve any substantial results. If it goes on to long, you run the risk of losing people's interest. From past experience, the shortest time frame should be a month, and the longest should be a quarter(three months). Every sales person is different and will tend to obtain results at their own pace. Citing the tortoise and the hair theory, your incentive has to be long enough to generate positive results from everyone on your team. My personal preference is a quarterly incentive that includes monthly rewards.

The third element is to make sure the reward equals the task. Too little an amount will fail to motivate your staff, while too much will end up costing you more than it is worth. Think of any incentive as a mini "profit sharing plan." Simply determine what amount of any increased profit you can afford to give back, and that becomes the budget for your incentive. This will provide a payout cap that ensures your employees receive a fair reward for their efforts, and the company still obtains additional revenue as a result.

There will always be a certain amount of trial and error in setting up an effective incentive, but by incorporating these elements you have a much better chance at creating a win-win situation for everyone involved.

Effective Time Management: Myth or Reality

Several years ago I was on a trip with several co-workers to Toronto. Without a map or GPS we were having trouble finding our way around. After an hour of randomly making right and left turns, we finally declared we were lost. Just then one member of the group who had remained quiet throughout the whole ordeal proclaimed, “How can you be lost if you don’t know where your going.” This simple statement sums up the problem many people face as they try to accomplish all the tasks at hand. On any given day we will tend to work on a number of issues, but never fully complete any particular one. At the end of the day it is hard to see what progress you actually made.

Most everybody will create a to-do list to set their agenda. How we set this agenda is the first key to its success. First you need to set realistic goals. These goals should be based on what you want to accomplish that day. By limiting your time frame you won’t get overwhelmed with the magnitude of everything on your plate. In the beginning of the week the first thing you should do write down your top five priorities for that day. When writing them down, leave a space in between them so if you had to you could add additional tasks. By limiting yourself to five, once again you fight off the sense of being overwhelmed. Now in a perfect world you could go about completing your list and at the end of the day go home stress free with a true feeling of accomplishment. We all know the realities of business life will never allow this to happen. In fact most days will not let you even address any of the items on your list. While you have your agenda as your guide, how you handle all the other distractions around you is your key to success.

Everything in business life is not a crisis. This is why we set priorities. This is why we leave room on our to-do list. When a true issue arises that must be addressed, add it on to your list, but be sure to properly place it in light of your original five issues. You should always be working on the most important issue at hand. Your ultimate goal is to complete this task before moving onto the next. Everyone wants to be an expert at multitasking. In most cases you’re back to working on a multitude of tasks but never taking any one fully off your plate. It is extremely important that you are able to finish those original tasks you set. There is nothing more liberating than crossing off an item on a list. This will give both a sense of relief as well as a sense of accomplishment. There is nothing more demoralizing than working all day only to feel you haven’t made a dent in your workload.

There will always be more work than time. This is what keeps us employed. How effectively we use our time is still under our control. With proper planning and keeping our expectations within our grasp, we exert this control. Everyone and everything around you will try and derail your efforts. It is up to you to not let this happen. It is up to you to finish one task before your knee deep in another. Remember it is your sanity you are trying to protect, not everyone else’s.

Are You Linked In?

What does it mean to Linked In? As described on their website: "LinkedIn is an interconnected network of experienced professionals from around the world, representing 170 industries and 200 countries. You can find, be introduced to, and collaborate with qualified professionals that you need to work with to accomplish your goals."

Just as Facebook and Twitter are popular online social networks, LinkedIn is designed to be the ultimate online business network. By adding your experience, skills, and the services/products that you or your company can offer to an online profile, you create the opportunity to network with other people in business through the powers of the Internet.

The big question is how can I make this work for me? I myself joined LinkedIn about six months ago after dragging my feet on exploring the whole concept of online networking. My experience with LinkedIn since then has taught me only one thing; I should have joined the day I started my company.

Like anything else in the world, the more you put into something, the more you will get out of it. Linked In is no different. In order for it to work for you, you have to take advantage of what it has to offer. By no means do I consider myself a Linked In expert, not even close. What I do know is that it can offer something for everyone, no matter what you do. If you need to develop connections across a wide array of industries, then LinkedIn can connect you with thousands of connections in over 170 industries. If you are looking for particular groups that share your common interests, you can find them here. If you do not find one, LinkedIn will help you start one. If you are just trying to get back in touch with past classmates or business associates, LinkedIn can help you reconnect. I'm probably missing some other key networking opportunities they can provide, but hopefully you get my point.

The best aspect of LinkedIn is that it is painfully easy to get started. Simply go to www.linkedin.com ,register for an account and start adding your information. You can build your profile over time and begin to add connections at your own pace. My advice would be to find someone who is already established on LinkedIn to help you with all the finer details. The main thing is to get started and go from there. There is no cost to join so your return on investment will be incredible.

The Online Information Explosion

Have you ever sat back and thought about exactly how much information is now located on the Internet? I recently read that according to a study conducted by the University of California-Berkeley the volume of information online has tripled since 2003. While everything and anything is now located on the web, it is beginning to cause major headaches in terms of a company's ability to organize and effectively use this information on a day to day basis.

This issue has led to the start up a several companies whose main objective is designing tools that enable companies to harvest all the relevant information they require. One such company, www.mozenda.com located in Salt Lake City, Utah has developed Mozenda Web Agent Builder 3.0 software that makes this task extremely manageable. The software is designed to extract precise parts of a website's content and then sort and organize this information into useable formats.

According to information from www.mozenda.com , Web Builder 3.0 allows users to automatically schedule and run these harvesting tasks. It also provides notifications when the job is complete. Other features include the ability to organize and store large quantities of data directly through Mozenda's Web Management Console.

With the amount of online content that is constantly being generated, software such as Web Builder 3.0 will become a necessity for companies to keep pace with this information explosion. For more details on this and some of their other innovations please visit www.mozenda.com

You are always Networking(whether you know it or not)

No matter what you or your company does, connecting with other people is a vital part of running and growing your business. Whether they are customers, potential customers, suppliers, business associates, or personal friends engaging them in any type of social interaction helps build relationships that is basis of your network.

In its most basic form, anytime you communicate with someone else you are in actuality networking with that individual. On the surface you may not see this as networking, but it is often these subtle interactions that can yield the most benefit. When most people hear the word "networking" they envision group meetings, organization functions, and planned social events. Simply meeting some associates for lunch to catch up with each other can be as powerful a networking tool as attending the local Chamber of Commerce mixer.

The key is to understand that anyone you interact with has the potential to help your business. You must also understand that this interaction is a two way street, as should be aware of how you may potentially be able to help theirs as well.This "mutually beneficial" exchange is the true essence of networking.

Networking is really about creating a working relationship with someone, as opposed to trying to find out "what can this person do for me?" Another key aspect is keeping your ears and eyes open whenever you are talking and more importantly, listening to others. It is amazing the information you can obtain when you make an effort to "actively listen" to others.

Once you embrace the concept that all social interaction is a networking opportunity, the more you put yourself in the position to benefit from your activities. Remember, networking is more about listening, learning, and sharing than trying to sell yourself or your company.

How Fast can you Turn Your Boat?

Several years ago, the company I worked for at the time went through a series of seminars designed to institute a system of continuous process improvement. Various areas that were covered included leadership, facilitation of teams, empowering employees, and impacting sales. This variation of TQM (Total Quality Management) was specifically designed for our industry, beverage wholesaling but could easily be applied to any type of business. One of the fundamental concepts was change. Old paradigms had to be eliminated and people needed to begin to think "outside the box" to keep up with the fast paced changes in the market that every industry was facing.

One of the first analogies the presenting consultant used to explain the way we would be able to change was to compare the size of the company to the size of a boat. He compared large corporations to the Queen Mary in that because of the ship's size, it takes a fair amount of time to actually turn around. Corporations can not change overnight as new concepts need time to work their way into their culture. Small business on the other hand (for the sake of discussion a small business was described as having 200 employees or less) was compared to a speed boat that should be able to make turns rather quickly.

The greatest influence on change comes from the top down. Just like the Captain decides which direction the boat should go, a company's Senior Management needs to be the driving force behind any meaningful attempt at improving their company's performance. If all they do is talk about the need for change, but do not completely buy into the concept that it is a vital part of growing a business, all they will be doing is paying lip service to the idea and nothing will improve.

As an owner you have the ability to commit yourself, and thus your company to continuous improvement. This involves being willing to change what is not working and explore better ways to try and achieve your objectives. Too many companies fail to recognize this need out of fear, complacency, and/or not having the proper tools.

Once you make this commitment, you need to get the rest of your employees involved. In order to quickly institute the necessary changes to take advantage of a changing market you need complete buy in from those whom can make it happen. Think of your company as a sail boat that has a number of deck hands, all working together to quickly turn the boat in the proper direction to take advantage of the changing wind. Remember, no matter what the size of the boat, it takes someones decision to turn it. The timing of these decisions often mean the difference between sailing into calm waters or stormy seas.

Effectively Tracking and Measuring Your Efforts

Every business has goals and objectives they are trying to accomplish. The most important ones will be based on growing revenue and increasing profits, and other ones will be based on certain aspects of the business that contribute to these first two. When you put everything together, you will end up with a short list of issues that are critical to a company's future growth and success. The question you have to ask yourself as an owner or manager is, what systems do I have in place that can determine if we are on track to address these issues and achieve our goals. Sales and revenue can easily be measured, but you need to examine how are you measuring the actions that can positively, or negatively influence these two primary areas.

As a sales manager, one of my responsibilities was to access the performance of my team on a regular basis. Since sales numbers alone can be a complex issue with any number of factors contributing to gains and losses, there had to be a more complex system in place to properly track actions and measure results. We wanted to be able to measure effort, effectiveness,and consistency in each persons performance to develop a true picture of their work. Often times there would be someone who was doing everything right, yet their efforts did not result in increased sales. We also had people who, quite frankly got lucky and were in the right place at the right time and their sales gains were not reflective of their efforts. To address these issues, we developed a score card that tracked actions and measured results. These "point sheets", as we called them gave credit for positive actions and consistent effort. The theory is that if you keep doing the right things over and over again, you will eventually achieve positive results.

While every business is different, the general concept of a score card can be applied to every department in the company and every person no matter what their job. Everyone has work tasks assigned to them from the owner down to the person emptying the trash. In my personal opinion, every one's actions are equally important in relation to the role they play, therefore every one's actions should be tracked and measured. The only way you will instill accountability is to monitor performance. It is much harder for someone to make an excuse for poor results when there is an actual record of their efforts. By drilling this concept down to an individual basis, you will effectively guide performance of your company as a whole.