Strong and consistent sales results are the driving force behind a successful business. It’s the revenue figures that determine a company’s value at the end of the day. And in order for you, as an SMB owner, to get those numbers up to the point at which you and your entire team can sleep well at night, you must have the right sales strategy in place.

There are two common models in the sales business: Revenue (the typical ship-and-invoice model), and Monthly Recurring Revenue (which is unique to SaaS and some services businesses). With each model there is a core metric to which the bulk of sales rep commissions are generally tied, such as gross profit dollars and revenue. I have already talked about compensation in my last two blogs, When Should You Make Your First Sales Hire? and Sales Compensation for Cloud-Based Service Companies. Here I would like to introduce a few other tools that sales managers can use to reward the behavior that they want in their team and end up with the best results.

The MBO Strategy

One of those alternative compensation/sales elements is Management by Objectives (MBOs). MBO is really an ideal strategy for either a new business, a branch of an existing business that is expanding into a new territory, or a business starting a new line. Why? Because when your business is in start-up phase, you don’t have run rate numbers on which to base sales rep quota, but you still have to measure their performance and base their compensation on something concrete.

One simple approach to this method is to set up a 90-day plan full of key milestones your sales reps can hit in order to earn a bonus. It is important that each stage is measured in a very distinct “milestone achieved” or “milestone not achieved” way so that goals are extremely clear from the beginning. For example, the sales rep is paid a $1,000 bonus for signing up a minimum of 30 reseller partners. Or, you can define a list of high-value target prospects and then pay the sales rep $200 for each account where the rep is able to set up and conduct a meeting with the owner/CEO.

Take some time to come up with the right milestones, as these are unique to each business and will evolve as that business grows and matures. The key for an SMB to run a successful MBO strategy is to reward the right behaviors and goals from the very beginning. If you establish sales rep goals that best fall in line with your company’s overall goals, the business benefits are three-fold, from day one:

  1. You will have employees that clearly understand what is expected of them.
  2. You will have ensured that your employees are working toward your overall company goals.
  3. You will have established a foundation that your sales team can use to make their quotas later on.

Keep in mind that you are not stuck in the MBO model forever if you choose to implement it during the beginning stages of your company. I am offering the MBO model as a starting point from which you can transition to a more traditional compensation plan once your business matures and you have at least a few months or quarters with measurable sales results.

Other Sales Incentive Strategies

You can also spice things up by adding an accelerated credit element to the sales compensation mix. If you have a particularly high-margin product or service in your portfolio, offer your sales reps double credit or a bonus for selling that item.  Another great program to use when you have a natural add-on or premium up-sell item that can be tacked on to a typical sale is to offer your sales reps double credit or a bonus for selling that item. Smart reps will adapt quickly and start trying to sell that add-on in every deal, which is exactly the behavior you are looking for.

Another element you can throw in is sales contests. The winner could be the overall Top Dog in total sales in a given quarter, or the one who sells the most of a particular product or service, or whoever brings in the most new customers.

Finally, there’s the classic incentive program known as President’s Club. You run a year-long sales contest during which employees compete to meet whatever milestones you have in place. The year’s top winners go on a company planned and paid trip together with their spouses.

Whether you already have a traditional sales strategy or are using the MBO model in that initial startup phase, you can add one, or some, or all of these additional components to your strategy along the way. In fact, it is probably a good idea not to use them all at once. First off, you will likely overwhelm your sales reps. Secondly, you can save them in your back pocket and occasionally throw out a new incentive to refocus the group.

There are many different ways an SMB can drive its sales figures to its desired results, and beyond. Take advantage of all the sales compensation tools available to make sure you run your sales team at its highest performance levels and achieve your business’ goals in 2012.


This website stores cookies on your computer to improve the website experience and improve our personalized services to you. To find out more about these cookies and our privacy processes please see our privacy policy. By clicking Accept you are granting permission for us to store this cookie. If you do not want us to install this cookie please close your browser window now.