How to correctly build a sales system and make it effective, "Kommersant.uz"
September 10th, 2013 - Tashkent, Uzbekistan - For the last year Akmal Nasridinov, Country Manager for Uzbekistan at Pedersen & Partners, has been consulting a local, relatively young company, in order to help it build and improve the sales department. An important part of the job was creating a compensation system for the sales force. At the time, the existing system did not suit either the leadership or staff, as it did not bring the expected results.
Generally, the compensation system and particularly its variable part (commissions, bonuses) are factors that determine the commercial health of an organization. Many aspects depend on the compensation system: the effectiveness of the sales force, how and which clients are being processed, which products are preferably sold and which are not paid attention to. Moreover, the compensation system determines the competitive position of the company; attracting strong employees to the company, thus enticing them to leave to a competitor.
Therefore, it was necessary to develop and implement a system, which would encourage employees to fulfill their tasks and those of the company: attracting new clients, increasing sales, reducing discounts, etc. Akmal and his team developed a few simple rules, which aided in implementing an effective program.
These rules are not of a systemic nature, yet it is suggested to utilize them all for increased effectiveness.
1. Determine what exactly you want to stimulate. Your program must fully correspond with your business goals. If you want to lower the discount at the current stage, increase the sales of a certain product, attract new clients, then this is exactly what the compensation program must encourage.
2. Use multiple KPI’s. Such indicators may include the number of transactions, the number of new customers, the sale of goods in stock, a discount, etc. Put target plans on all KPI’s and reward the sales staff in accordance with the implementation of these plans.
3. Include in the program only those KPI’s, which are controllable and can be influenced by the sales team. There are various instruments to control profitability - the discount system, clearly defined payment terms, restrictions on selling to companies that are in debt and others.
4. Create a truly motivating program. Set ambitious but achievable plans that will lead to the desired volume of sales and will allow you to reward the sales team for their work.
5. Develop your program taking your financial possibilities into account. When developing programs, simulate different scenarios of how the situation may develop in order to estimate how much money you need and when. Everything can be modelled and calculated. Indicators that cannot be calculated must be replaced with quantifiable ones.
6. Explain and describe everything. The program must be described in detail, documented, distributed to the sales staff and, most importantly, it must be made clear to everyone what exactly is going to be evaluated, how it is going to be evaluated, how and when payments will be made and what are the mechanisms to address emerging issues in the course of the work.
7. Regularly provide information and feedback. Systematically update and circulate statistics in tables and graphs for clarity. This creates an atmosphere of healthy competition and encourages employees to take action in order to improve or retain their positions.
And last. In addition to achieving all of your company’s business goals, another indicator of the effectiveness of the compensation system you have designed is the departure of weak sales staff from your company and their replacement with stronger ones.
The program is successfully working for 6 months already and is contributing to a better productivity of the sales department employees.