My friend Tom runs an inside team for a software company in Boston. He gave me a call the other day asking for my opinion on his compensation package for his inside sales reps. We both compensate our inside sales reps based on performance, but Tom sees performance very differently than I do. Tom pays his reps by the number of opportunities they pass on a monthly basis. The more appointments you set for the outside team, the more money you get. Every time a sales rep has a conversation with someone you passed, the little cash register noise goes off in your head. I hear this from a lot of people that run inside sales teams.
The main issue that I have with the compensation model is that it incents the wrong kind of behavior. Finding someone that will listen to a sales rep for 15 minutes is relatively easy. I know personally that I have been called enough times by certain inside teams that I will take an appointment with a sales rep just to keep the inside rep from calling me back, even though I have no intention of buying or even keeping the appointment.
So how do you keep your inside sales reps from setting your sales team up with fruitless appointments? The answer is simple: stop paying them to do so! I’ll admit if I were in their place I would do the same exact thing. They are being motivated to find meetings when they should be motivated to find actionable sales opportunities. In lieu of paying your inside sales rep for every appointment they set, try paying them based on the number of successful appointments that take place. You can judge this by using feedback surveys. The feedback survey is a great way to compensate your inside rep as well as keep track on the effectiveness of your outside team.
After a sales rep has a discovery call or introductory meeting that was set up by your inside sales team, send them a quick email. The email is going to gauge the quality of the opportunity sent. I list 3 questions that the sales rep has to reply to:
- Did the meeting happen?
- Was all the information given to you from the inside sales rep accurate and up the specifications agreed on?
- Is this call moving into a next step?
If the answers to the first 2 questions are “Yes”, the inside rep should get credit for passing a good opportunity. If your sales team is working well they should be able to convert 80% of those into a next step. If you find that you are getting answered “No” to a particular question consistently on the feedback surveys, then you have something to work on. Here is how I interpret the unfortunate “No” based responses.
1 – Did the meeting happen? If the calls aren’t happening, you have to look at how interested the prospects really were. No shows happen when inside reps don’t fully qualify and don’t pique the interest of the prospect. I find this happens more with inside sales reps that are compensated based on the number of leads they pass. As I said, If you tell a rep that every time they pass an opportunity, they will get (x) dollars, they will pass anyone that hits the bare minimum requirements in order to score the lead and get paid. It’s very pavlovian in nature: book a time, get some money, book a time, get some money, hit the red button, get a banana, little bell rings, time to eat…. Of course there is always going to be a drop off and some people won’t show for a meeting. If you have more than a 20% no show rate, you will want to look into the pitch and how it is being delivered to ensure the prospects are being qualified properly
2 – Was all the information given to you from the inside rep accurate and up the specifications agreed on? There should be questions that both the inside and outside sales reps agree need to be answered before they move to a sales call. I wouldn’t suggest getting too in depth with these. Contain them to questions such as, “Does the prospect have a problem we can solve, is there an active initiative for the prospect to solve this problem, does the prospect have the right characteristics to purchase from us? (number of users, revenue, locations, etc…)” IF the inside sales team is gathering this information on all opportunities, you should expect at least 70% of the opportunities to move forward into the next step of your sales process.
3 – Is this call moving into a next step? I talked about this in my last point, but if the first 2 questions are answered in the affirmative, the last one comes down to the sales team’s performance. If the prospects are showing up for meetings and they have all of the qualification they agreed they needed, then they are responsible for moving the opportunities to a next step. We currently have an average of 80% of our “leads” moving into a next step. That is across multiple product lines and industries. I would say anything under 70% should be alarming.
This is how I use feedback surveys to motivate my inside sales team to pass quality opportunities to sales and to ensure those quality opportunities are being followed up with a strong sales effort. It would be interesting to hear of any other tools that people are using to do the same.
If you are anything like my colleagues and I here at AG, figuring out the best way to effectively compensate a teleprospecting rep is a never ending struggle. Since 2002, we've done our best to refine the process and I think we may have achieved a keeper with our FY'10 plan.
I'd like to share the basic principles with which we go about developing our comp plans:
1. Imagine What Your Perfect Rep Looks Like (From a Performance Perspective)
Take time to sit back and imagine your perfect employee. Specifically, what kind of output do you want from them over the course of each day. Remember, there are four main areas that make for a successful teleprospector - activity, quality conversations (QC's), leads passed, and overall lead quality. Take each category listed above and determine how your "super rep" would perform in each one. There is your base line metrics for creating your comp plan.
2. Spread the Wealth
Take the total amount of your available per rep payout and divide it across the 4 areas above. Build the dollar amount earned to a crescendo. Start with a smaller amount devoted to incenting activity, a larger amount to be earned for number of QC's, an even larger amount for number of leads passed, and top it all off with the largest amount of comp devoted to the quality of those leads (as gathered from the sales people receiving them). Compensating your reps in each category ensures that you are covering all your bases. Having the largest dollar amount be tied to the overall quality of their opportunities ensures that you've got a staff that devotes the majority of their efforts on the quality of their product (their leads).
To Compete or Not to Compete?
Depending on your taste for competition in your organization, you can shake up the above format a bit to insent some healthy competition across your teleprospecting organization. At AG we have what we call the monthly leaderboard. We have cut out the activity, QC, and leads portion of the comp plan and made it a competition instead of an individual goal. The top "x" number of reps in each category receive a much larger amount of money than if we kept those goals individual. We left the quality goal as an individual so that every rep has the opportunity earn some money on a monthly basis.
Whether your want to foster some competition or not, we believe it's critical to know your super rep profile before you decide what kind of behavior you want to comp on. Once you've established that, it is our opionion that you spread the comp dollars across all of those areas. The idea here is that you've got a team of people who know that everything they do over the course of the day (whether it be making a cold dial, or following up with a sales rep do find out how a lead turned out) can earn them compensation. It makes everything important and creates a greater sense of focus and consistent drive both individually and for your whole organization.
These are some very high level details regarding how we compensate our reps. If you'd like some more detail regarding our metrics and goals please feel free to reach out to me directly at pgracey@agsalesworks.com.
How do you currently compensate your teleprospectors?