Situation: A CEO has difficulty gaining realistic projections from sales – projections for which they will be accountable. For example, the VP of Sales promises X but delivers Y – a result substantially below X. What methods have you have used to get realistic assessments and commitments from sales executives? How do you establish accountability for results?
Advice from the CEOs:
- Shift the issue from their accountability to your own accountability to the company.
- In order to ship to the projected sales targets, we will need to scale up production to X level, hire Y personnel, and invest in Z inventory. If we miss the target by 20% here’s the impact on our financial performance for the next period. Are we comfortable, as a company, with this exposure, or should we adjust our plan to reduce the exposure.
- This makes it easier for the sales executive, for the good of the company, to reduce the projection if they are not confident that they will make it.
- Do you need to examine your commission structure as well as bonuses for sales executives? Consider scaling commissions to make sure that the sales team hits their targets. Make them hungry by offering lower commissions for lower targets, but increasing total commissions for meeting and exceeding targets.
- Have the sales team project their sales. If the projected level meets company objectives and they meet them they make X%. However, if they fall short they make successively smaller fractions of X% depending upon how much they fall short.
- Currently, the ratio between new and repeat sales is 20% / 80%.
- To focus the sales team on new sales, reduce commissions on repeat sales, and increase commissions on new or increased sales and/or accounts.
- Good sales people are competitive and often respond to pride. Give them in incentive – hit the sales target and get trip to Las Vegas with your spouse or guest.