In 2010, American companies reportedly devoted $200 billion to large, short-term incentives (LSTIs), which almost equaled the total amount spent on media advertising for the same year ($241 billion).  Business owners like Michael Brunet, partner and director at Harry and Company, a financial planning firm, think of LSTIs as “the oxygen to your business.”

In spring 2012, a group of researchers from Carnegie Mellon, UMass, and Northwestern published a paper in the Journal of Personal Selling and Sales Management entitled “Breaking the Sales Force Incentive Addiction: A Balanced Approach to Sales Force Effectiveness.” It reported that LSTIs often created undesired organizational consequences that hurt overall performance, including myopic focus on short-term accomplishment, cultural damage, and a lack of adaptability to increasingly complex sales cycles.

The researchers included Dr. Andris Zoltners, Dr. Prabhakant Sinha, and Sally Lorimer; their conclusions were drawn from surveying over 1,000 sales leaders from companies around the country as well as an assessment of academic sales research over the last decade.

“We see sales leaders jumping to incentives as a primary solution for many sales management challenges,” the authors wrote, “from improving attraction and retention of the best salespeople to energizing and motivating complacent sales teams, to improving customer satisfaction.”  Sales managers are so focused on incentives, the authors note, that about 80% of American companies make major changes to their LSTI programs every two years or less.

Yet all this focus on LSTIs can compromise long-term company results: such a short-term focus on sales wins can mean there is too little time spent building longer term relationships with clients or prospects or improving sales skills.

While Mr. Brunet of Harry and Company can’t validate the researchers’ results, stating, “I don’t know why you would not offer bonuses or commissions to your sales employees…it just makes everybody happier when you get a bonus check.”

Deborah Sweeney, CEO of MyCorporation.com, can: “Sometimes, when traditional incentives are out of reach, our sales team members give up, which hurts customer service.” This is why MyCorporation.com, an online document filing service, blends traditional and creative incentive approaches. Over the years, Ms. Sweeney has found she gets the best balance of sales results and customer service through both traditional LSTIs and more creative incentives, or what Zoltners, Sinha, and Lorimer refer to as sales force effectiveness (SFE) drivers. She states, “We find that traditional methods give our sales team a predictable reachable goal.  But creative incentives can supplement traditional ones by adding a layer of excitement to the day-to-day sales goals.”

MyCorporation.com offers include trips, afternoon excursions for teams, group contents, and little luxuries like a free coffee for the individual with the highest numbers before noon.  The challenge about this strategy, Ms. Sweeney notes, is making sure “we’re not spending more on creative incentives than we are making. We don’t want to impact profitability.”

Incentivizing Sales Collaboration

As the complexity of the sales process increases across industries, so does the need for collaboration among salespeople; according to Zoltners, Sinha, and Lorimer, collaboration should be incentivized. Their data indicates that the industries with the most complex sales processes include customized high-tech products, consumer packaged goods (HQ), and specialty chemicals, followed in complexity by medical devices, investment for high net worth individuals, and some pharmaceuticals.  Lower complexity industries that, according to their research, may still find LSTIs alone valuable for increasing profitability include consumable office products, bulk chemicals, consumer packaged goods (merchandizing).

Ms. Sweeney notes that implementing creative incentives has helped MyCorporation.com leverage team sales more effectively, stating “[creative incentives] creates camaraderie and focus and often when they are team-based incentives gets the team working together.”  The result is an increase not only in sales but also in customer service and experience.

What do you think? Do traditional LSTIs help or hurt your business’s performance?

Traditional commission-heavy compensation for salespeople does a great job of stoking the competitive flames and egging on sales pros to meet or exceed their targets (too good a job, according to some), but it also makes sales a relatively lonely job.

Sure, your manager has a vested interest in helping you out and your coworkers probably aren’t monsters – they’ll lend a hand when they can – but as the month winds to a close, it’s easy for a sales person to feel like sales is an individual rather than a team sport.

But not at Fishbowl. The 100-employee strong, Utah-based software company has a very unusual approach to commissions – every single employee gets one. The effect, CEO David Williams told Yesware, is that sales becomes a team sport that the whole company plays together.

“For salesmen, knowing that the entire company is rooting for them is pretty powerful. You don’t just have this isolated sales team that’s trying to hit their numbers. They have a hundred people supporting them in revenue creation,” he says.

How Does It Work?

Together with president Mary Michelle Scott, Williams recently wrote a post for HBR Blog Network explaining all the details, but the basic gist isn’t hard to grasp. Every employee gets a base salary and then, depending on their department, a certain percentage of their compensation comes in the form of a monthly commission based on revenue. Ratios of salary to commission range from 10 percent salary and 90 percent commission for salespeople to 80 percent salary and 20 percent commission for engineers.

Taken together over a period of months or years, compensation is generally higher than market, but it’s lumpy. “We have a track record that shows over time our model yields overall higher compensation,” says Williams, but he concedes that, “we have months that are very, very lean and months that are fat.”

How did this unusual compensation structure come about? “It originated out of necessity,” explains Williams. Back in 2004 he was on the board of a company that was the majority shareholder in the firm that would become Fishbowl, which at that time had failed to produce a product or any revenue despite several million in investment. Williams was sent to shut the company down.

He had a look at the team and asked the board to give him a month to try and turn things around. There was no money for salaries so everyone ended up working on commission. Over 10 years this evolved into today’s hybrid salary-commission system. “I just love it. I would not change it,” Williams says, explaining that, “bonuses are up to the whims of those in charge” while his compensation model allows “everybody to see very transparently how we’re doing.”

The cultural effects are also huge, he claims. “What it’s done is close the gaps between departments, so you don’t have a bunch of developers building something that they think they should build and then throwing it over the fence for testers to test and that hopefully your salesmen like to sell,” he says. Everyone is focused on revenue creation from the get-go.

Preconditions

“I’ve helped many companies around this area move into this compensation model, so I’ve seen it work in all sorts of industries,” says Williams, but that doesn’t mean the idea is for everybody. There are some preconditions for successful implementation, including a culture of fairly radical openness. You can’t monkey with the numbers and expect this system to work. “You need to be completely open with your revenue. Most companies are but sometimes you tuck things here and there and revenue is not necessarily that which you see,” he says. Not at Fishbowl, which pays commissions on gross revenue with no massaging of the numbers.

Why It’s Particularly Good for Salespeople

If you have the sort of leadership that can stomach that level of openness and also accept that some potential hires may have reservations about the compensation scheme, commissions-for-all can have particularly beneficial effects for the sales team, Williams feels.

“We all get on the same boat every month. You get programmers coming over towards the end of the month asking if there’s anything they could do to help any of the [sales team's] customers with workarounds or anything particularly they could build that would take an hour or two,” he says.

That sort of responsiveness and understanding is bound to attract sales pros to the idea, but putting everyone on commission not only makes people more likely to help out sales, it also eases the stress of making your numbers by spreading it around, much the way locker room camaraderie can ease an athlete’s performance anxiety.

“Every day we send out our month to date that shows the revenue and what department the revenue came from, and the last two days of the month we show it every hour. It’s really fun. It turns something that’s stressful at the end of the month—making your numbers—into something exciting,” Williams says.

Not so fast, says ThoughtWorks.  The privately held software firm recently did the nearly unthinkable—it eliminated all commissions and put its entire sales team on a fixed salary.

What Were They Thinking?

“ThoughtWorks is kind of a crazy organization,” admits Adrian Jones, the company’s vice president of global sales. Likening his employer to hippie ice cream makers Ben & Jerry’s in its pre-acquisition days, Jones explains that the firm’s chairman Roy Singham is passionate about social justice and sustainability.

“Revenue is the oxygen of the company. It’s what helps the company to live. It’s not the objective of the company,” he says. But it’s not just idealism that drove ThoughtWorks to bin commissions. There was also a business case for the radical shift.

From Clueless to Collaborators

The software industry, as Jones sees it, is changing. As software eats the world, selling it becomes less about convincing potential customers of its potential and more about collaborating on the best solutions possible.

Previously, he explains, “software was forging new markets. Each year was exploring new areas of a business that could be automated, and while we still have huge innovation in the industry, basically everyone’s wired, IT solutions touch every part of the business. What purchasers of software and hardware need now is very different to what they needed before.”

What does this have to do with sales incentives? “If you go back 10 or 20 years, customers needed their software sales person to give them insight into what was typically an opaque pricing policy. Now that is really irrelevant. More and more companies want to be transparent with their pricing, People can Google it, so the interaction with a salesperson is much more about adding value. An over involvement between the salesperson and their commission — the size of the deal — gets in the way of really helping the customer to get the best value,” Jones says.

“The commission scheme was actually getting in the way of the appropriate level of dialogue with our customers.”

Added Agility

Working without commissions not only encourages salespeople to adopt a collaborative mindset about customers, it’s also in line with the agile software development methods ThoughtWorks champions. ”Agile development processes put a huge emphasis on openness, visibility and transparency, and what we’re finding with having removed the direct commissionable element that’s based on revenue, is that our sales people are much more willing to be open and transparent about the realities of the deals. We’re getting less incidence of sandbagging, for example,” Jones explains.

Not only are salespeople not monkeying around with timing or doing “Hail Mary” deals under pressure that could potentially dent the firm’s long-term relationship with a customer, the sales organization as a whole is much more adaptable. Traditional commission schemes only allow a company to shift strategy once a year (and often arrive months after January 1 anyway).  Given the pace of business today, that makes little sense to Jones.

“I liken it to: you put on a blindfold on January 1, you run as fast as you can until December 31, you take the blindfold off, figure out if you ran in the right direction and then put the blindfold on again,” he says.

Big Caveats

Jones may be enthusiastic about his firm’s radical move, but that doesn’t mean he thinks dropping commissions is right for everyone. Large public companies with sales-driven cultures won’t be giving up on commissions any time soon, but even smaller organizations should take a long, hard look at their cultures before considering such a switch. “If the culture of the organization is not ready to take this on, it would be very difficult to implement it,” Jones says.

“It’s early days for us,” he also concedes. The service side of the business dropped commissions in 2012. The product division made the switch only at the start of 2013, but Jones says the company is pleased with the results so far. “The signs from the professional services side are very encouraging indeed,” he says though there are downsides to weigh against the positives.

The sales team has lost a few dissenters and the recruiting process has become more challenging. “We are having to be more thoughtful about the types of people who we can bring into this environment. We really have to look deeply into individuals’ motivations, their career plans, aspirations,” he says. Just making your targets is no longer enough, but Jones adds, “we have had a couple of people who we’ve hired just in the last couple of months, for whom the dropping of commissions was a positive factor in their decision.”

What do you make of ThoughtWorks’ no-commissions experiment? 

So how can firms minimize the pain from the 20% or so of cross-buyers on average who cost sellers money, and maximize the benefits from the remaining profitable 80%? With Shah and Kumar’s research in mind, we’ve outlined three key strategies below.

1. Reward your sales reps for profit, not just volume

Companies with large proportions of unprofitable customers may want to reexamine the internal and external incentives created by their marketing and sales strategies.

Some sales departments, for example, reward their representatives based on the volume of products sold rather than on revenue. This may run the risk of encouraging customers to simply spread the same total level of spending across more products.

But even compensation systems based on revenue can also be problematic if the deals salespeople cut are too costly due to lavish service agreements or other costs that arise after the initial sale.

As Chicago entrepreneur Jay Goltz wrote in the New York Times in 2009, once sales commissions become decoupled from margins, “the salesperson can cut all kinds of deals that will generate great commissions but lower gross profits.”

Some, such as entrepreneur and Inc. magazine columnist Norm Brodsky, would do away with sales commissions altogether, and instead pay salespeople salaries or wages, like other employees. While this may help businesses strengthen their focus on ongoing relationships with customers over initial contacts, it may also weaken the healthy competition that commissions can provide.

For businesses that do pay commissions, it may be as important for businesses to emphasize the quality of each cross-selling opportunity though, for instance, profits per customer, as it is to measure the quantity of units sold.

2.    Choose your cross-buyers carefully

Predictive modeling techniques now allow firms to identify which of their customers may be interested in cross-buying which of their specific products. While inputs for these models will vary based on the natures of the customers and of the products sold, they may focus on goods or services that are complementary to those already purchased by the client. Customers who purchase cloud customer relationship management (CRM) services, for instance, may also be interested in other types of enterprise cloud services such as security or productivity software.

The smartest sales teams, however, may also look at historical transaction data to determine whether an existing customer is a good candidate for a profitable cross-sale. Customers with histories of product returns, early terminations of contracts, or overuse of customer service channels, for instance, could raise red flags—more on this in the next section.

Barbara Findlay, small-business strategist and author of Small Business Marketing for Dummies, believes many businesses spend far too much time trying to please customers who will never be happy, while quietly neglecting relationships with the clients who provide the highest margins.

“[F]or every minute you spend putting out fires, spend four minutes nurturing your most content and profitable customers,”  wrote Findlay in Entrepreneur magazine in 2011.

If a customer’s characteristics match the profile of an unprofitable cross-buyer, firms may consider the customer as an upselling opportunity instead, focusing on selling upgraded substitutes to previous goods or services purchased rather than on expanding to entirely new types of products or services in order to minimize the additional service and other costs associated with such expansions. Or, if no profitable upselling option is available, they may designate these customers as no-sells.

3.    Limit resources devoted to “problem customers”

Sometimes customers cross-buy on their own, rather than in response to any active promotional effort. When the most costly customers attempt to make cross-purchases, however, businesses may need to consider taking active steps to limit their relationships with them.

How do you know whether your client would represent a likely loss for your firm as a cross-buyer? According to Shah and Kumar, the most risky cross-buyers tend to display at least one of four common warning signs.

• They overuse customer service in all channels, whether it’s online, over the phone, or face to face.
• They spend money, and then take it back, often through returns, or early terminations of agreements or contracts.
• They only buy during sales promotions, and usually at steep discounts.
• They never increase total spending—just spread the same amount of money among a greater number of smaller cross-purchases.

“This is the client who literally makes you sick,” wrote Maverick Business chief executive officer Yanik Silver in the Washington Post last year.

Terminating customer relationships altogether isn’t easy—although it may be easier for cloud-based service providers, for instance, than it is for brick-and-mortar outfits such as retail chains and other situations where there are no contracts. It can also lead to bad publicity.

Limiting resources devoted to the most costly customers may be a more practical solution. Firms that provide services for a fixed fee per month, for example, may limit the number of hours they will provide to customers during a service period.

Conclusion: Don’t lose sight of the individual cross-buyer

Despite the potential pitfalls, cross-selling will continue to make sense for companies in a wide range of industries as a way to deepen customer relationships, and as a path to higher revenues. Despite the 20% or so of unprofitable cross-buyers discovered in Shah and Kumar’s 2012 study, all businesses they surveyed still managed to increase profits per customer in the aggregate through their cross-selling campaigns. As Halah Touryalai at Forbes magazine wrote in 2012, the more products or services companies cross-sell to clients, “the harder it is for them to break away.”

As they plan their next cross-selling campaigns, however, firms might be careful not to lose sight of the financial risks—and unique opportunities—presented by each potential cross-buyer. Keeping track of this information may require some extra research into individual customer transaction histories and profiles. But this extra legwork could very well be worth it. In Shah and Kumar’s study, cross-buyers who are unprofitable for firms accounted on average for 70% of company shortfalls experienced when the cost of goods and of marketing to a customer exceeded the revenue realized, also known as “customer losses.” For many businesses, this makes minimizing these losses through smarter cross-selling a significant source of potential profits.

By Nacie Carson, Yesware Contributor

Startups don’t need employees. They need dedicated team players who are committed to going above and beyond to move the organization forward.

But to really sell staffers on your company, both sides need to connect not just about the product or service that you’re performing, but rather on why you’re offering said item or service. Think of your new hires as your first layer of customers.

Simon Sinek, author of Start with Why, notes that the most successful companies have understood that customers need to be inspired in order to purchase a product. In other words, they need to viscerally connect with the company’s mission or vision. Sinek explains, “People don’t buy what you do, they buy why you do it.”

The same is true for effective startup onboarding: for new hires to transition from mere employees to dedicated disciples, they need to connect with the  “why” of your company—the mission, vision, values, reason for existence—not simply the “what”—the mechanics, the product, the services. 

It is that connection that will keep these new hires working late into the night, taking ownership of their roles, committing to quality, and loyally sticking with the company instead of jumping on other opportunities that might come along (a particular risk for your Millennial hire).

Yet traditional onboarding is really the onboarding of the “what,” not the “why”—at least not in any impactful sense.

After all the excitement and hype that occurs in the interview process, the first day on the job is almost always a let down for the new hire due to the perfectly adequate focus on “what”: endless pages of paper work, reviewing role requirements, issuing training manuals, awkward introductions, and a detailed tour of the cabinets in the office kitchen.

The closest new hires get to the “why” of the company is reading a handout with the mission statement on it or watching an outdated, grainy welcome video.

But getting new hires up to speed on the “what” of your company is relatively simple—presumably, you have hired competent, intelligent people who will be able to pick up on the nuances and needs of your products and services. 

Getting new hires onboard with the “why” can be more challenging, which is why this focus needs to be consciously addressed from the beginning of the onboarding process.   

Start with the “Why,” Then Deal with the “What”

For agile startups, adjusting the onboarding process to focus more on “why” doesn’t need to be a cumbersome, costly process. Here are some strategies to help your organization more effectively connect new hires to the “why” of your work that likely fits within your current onboarding practices:

• Pick the Right Person to Tell Your Story—Every company has a story: why it was founded, what the founder hopes to accomplish, what the company has done since inception. Telling that story in person – not just through a handout or video – can effectively resonate with a sense of purpose. But what can make an even bigger difference is finding the right person to tell it. The story won’t pack as big a punch if the introverted, stoic VP shares it instead of the charismatic, earnest CFO. So, be sure to make the company’s storyteller one who can deliver it with the most impact.
• Link Wherever Possible—When showing a new hire the company ropes, be conscious of linking the departments, their functions, and particular people wherever possible to the original story. Instead of, “here’s the HR department,” try “here’s the HR department, John our CEO brought Mary here on in 2011 to help manage the personnel boom we experienced after the first Gizmo took off in the market.”
• Appoint Greeters—In addition to the official telling of the origin story, ask one or two specific members of the team to independently approach new hires and introduce themselves, extend a welcome hand, and tell a little bit about what connects them to the mission or vision of the company. What drives them to come to work every day? Hearing how the “why” impacts other members of the staff in a more casual environment provides another connection point for new team members.
• Explain the Role in Context—When onboarding new hires for their specific position, take the extra time to discuss how their particular role requirements support and advance the company’s operations. Why is this function important? How will the individual’s work directly contribute to the mission, vision, values, or reason for being? Contextualizing the new hire’s role in “why” from day one bridges the gap between mission and function permanently in their minds and makes them an integral part of it.

What is exciting about startups is that unlike larger, more established companies, every employee is enthusiastic about being part of something with potential (and future high earning power).  But to move that excitement from something shallow and untethered to a deeper-rooted sense of loyalty and commitment, the new hire needs to be connected to something more substantial than the promise of future riches. They need to be connected to the bigger picture, the mission, the vision—the “why.”

Because, as Sinek might say, new hires won’t connect with what your company does, they will connect with why your company does it.

 Nacie Carson is the author of The Finch Effect: The Five Strategies to Adapt and Thrive in Your Working Life and founder of www.TheLifeUncommon.net.

By Brian Hamilton, Chief Executive Officer, Sageworks

If you want evidence that our nation’s debt is casting a cloud on the economy, just talk with business owners. 

Sageworks recently polled accounting professionals and bankers who are in constant contact with the owners of privately held companies. Nearly three-quarters say the national debt is making it less likely that businesses will increase hiring.  A similar proportion said the debt, which stands at around $16 trillion, makes it less likely businesses will boost other investments as well.

Can you blame them? Owning a business is itself a very risky proposition, even if overall economic conditions are stable.  Owners often have their own capital and their own livelihoods at stake. They realize that, at a minimum, the debt puts our economic structure at risk. On a more practical level, they understand that the national debt is bound to result eventually in an increase in the cost of their own borrowing. Why would they want to take additional employees, equipment and infrastructure on our current debt load? It would be like deciding to add another floor to a house that is known to be structurally unsound.

Some large, publicly traded businesses have recently banded together to argue that the national debt must be addressed. But, without a broader push by privately held companies, Congress will continue to delay action. Private businesses, which number about 27 million and account for over 54 percent of aggregate non-residential fixed investment, need clarity on how the debt will be reined in, especially now that we know what our leadership in Washington, D.C., will look like.

Our national debt is an economic cancer that grows year after year, almost independent of any particular administration. Part of the problem in tackling this disease is that it’s a complicated issue full of mind-numbing jargon and mind-blowing numbers. As any physician will tell you, patient education is critical to treating diseases (in a non-partisan way!).

Let’s start.  Total government spending is estimated to be $3.56 trillion in 2012. Revenues, including some tied to Social Security trust funds, may total $2.44 trillion. That leaves a budget shortfall of $1.13 trillion, or $1.19 trillion if you exclude the current surplus tied to Social Security.  This kind of deficit for just one year is astounding. Therefore, spending for this year alone is nearly 50 percent over and above revenues coming in. This is akin to an established company with sales of $100 and expenses of $150.

This is where it really gets dire.  Consider the alternatives. Even if you cut all “discretionary” U.S. government spending (which includes all expenditures for the military and courts, the FDA and the EPA, disability benefits for veterans and construction of roads), current revenue levels mean our national debt would still grow by 16 percent to $18.6 trillion within the decade.

This is because the “mandatory” portion of federal government spending (the part which isn’t negotiated by Congress each year) is snowballing. This is spending for benefit programs defined by lawmakers such as Social Security, Medicare, Medicaid and poverty-related programs, as well as spending for civilian and military retirement plans.

The interest alone on our national debt is another major drain. Estimated at $220 billion this year, it is approximately equal to expenditures for retirement programs for military and civilian government workers, as well as disability payments to veterans.

Suppose we decided to increase taxes/“revenues”?  Even if you doubled all individual and corporate income taxes while also doubling employee and employer contributions to Social Security, our nation would still have $11 trillion in debt at the end of the decade, assuming spending plans were unchanged.

Because of all of our past yearly deficits (racked up during both Democrat and Republican administrations, one a fan of social spending and the other of military spending), the United States currently has more than $16 trillion in outstanding debt, and foreign governments own nearly a third of it. China alone owns $1.15 trillion in U.S. Treasury securities.  For perspective, consider that China is providing financing that’s nearly equivalent to the 2012 expenses for every part of our federal government that Congress can actually negotiate – the “discretionary” spending that includes our military, justice system, social services, education, transportation and energy.

If nothing changes from current-law tax and spending, gross federal debt will approach $20 trillion within the decade, the CBO projects.

Can this be considered anything but a crisis? It is the worst kind of problem, an insidious one that has surfaced after decades of horrific incremental neglect and mismanagement. Can it be reversed? The answer is yes, of course, as America has a rich history of tackling hard problems once we set our minds to it. But, given that the political parties seem to be squarely at odds on many major issues, it also seems unlikely. What is needed is a negotiated law and debt-reduction plan (perhaps covering as much as 25-30 years) that takes effect automatically and that Republican and Democratic leaders agree to in advance. When a new president or Congress inevitably comes in with their particular agenda, they would be boxed into the limits of an overall plan already agreed to. 

View this as an entitlement program in reverse. A plan that is not subject to the whims of good political speechwriters. At this advanced stage of our debt problem, this is the only way out.

People with illnesses take drastic measures to save their lives, and their families encourage and support them through the fight. In the same way, businesses and individuals of all political parties need to call on our elected representatives to lay out a treatment plan that touches every part of our economy.

Mary Ellen Biery, Research Specialist at Sageworks, contributed to this article.

Brian Hamilton is the co-founder and chief executive officer of Sageworks and a noted expert on privately held companies. He is an original architect of the company’s artificial intelligence technology, FIND, which is used by approximately 700 financial institutions and 5,000 CPA firms to perform financial analysis of privately held companies. He is currently a guest columnist for Forbes and Inc.com.  Brian also oversees Inmates to Entrepreneurs, a community outreach program focused on teaching ex-offenders to start low-capital businesses. 

Let’s face it: sales can be a grind.

On the bad days, there is no job as regimented, as rote or as repetitious as a salesperson’s. If you are an outside rep, your airport/flying/rental/meeting/hotel cycle can destroy one of the true joys of life. If you are an inside salesperson, you call your leads in the morning, email your pipeline in the afternoon and repeat.

Falling into this mindset is a form of living death. Your brain activity fades. Your waking hours blur. When you dream, it’s in your telephone voice. You have a telephone voice! When the bad days stack up in rows of five, when the unending stream of follow-ups, cold calls and manager check-ins become habitual, you know. You have become a “sales zombie.”

This is not you!

Your life is not inexorably like this! You might feel trapped in routine, but it doesn’t have to be that way. If you examine it closely, sales is actually the most random, freewheeling, challenging and bizarrely fun job you can have. Here are seven ways to recapture that chaotic freedom–and not one of them involves getting yelled at by your boss.

Remember We’re All Human

 Although you might get 30 new leads a day, 150 a week, 7,500 in a year, every single one of them is a human being. Even at the worst run companies, marketing departments don’t put dogs on lead sheets. Every single person you talk with every single day has (or had) a mom, a hobby, a tragedy, a moment of glory. Take 10 seconds before you make your next call and remember that.

Print this out and tape it to the top of your monitor: “I’m talking with another human being.”

Pay attention (no, really pay attention). There’s a lot more information available to us than we normally grasp. Did they pick up on the first ring or the sixth? Is this person inside or outside? What’s that humming in the background?  People express much more to each other than we normally realize. Pay attention to your prospect’s tone and word choice. Why did they say “cold cuts” instead of “baloney”? Do they have a runny nose?

Get off the script. Drop the canned intro and the rehearsed responses. Move to a genuine conversation as soon as you can. Of course you have an objective–you want to sell this person something! But reading from a script is the worst possible way to do it. Remember: You are talking with another human being. This is what you are good at. This is why you are in sales.

Cut the crap. Bad calls, rude people, the frustrations of leaving yet another voicemail, another unreturned email proposal… these happen every day. You must become an expert in dropping the crap before you start the next conversation. Everyone does it differently–stand up, walk around, get a drink of water, joke, watch some YouTube, whatever it is. Don’t carry that crappy feeling from one bad call to another.

Clear-cut your pipeline. Your sales pipeline is like your basement–you accumulate stuff there that you think you might use.  But you don’t, and more stuff comes in. One of the best ways to shake up your sales day is to blow away your pipeline. It sounds radical, but it can be liberating and productive to simply cut any deal that you haven’t worked on in thirty days.  Or delete any opportunity that won’t close this quarter. Your timeframes will vary depending on your sales cycle, but be aggressive. You should aim to erase 50 to 75 percent of your total pipeline value. Now, suddenly, that cushion of imagined, delayed or doubtful deals is gone. You aren’t fooling yourself anymore.

Speed up. Sometimes you need additional speed to reach escape velocity. On your next call, talk faster than you normally do. Instead of contacting 40 people today, do 80. At 3 p.m. on a bad day, I will occasionally run from one meeting to another just for the hell of it. This is fun in airports too. Everyone thinks you are late for a flight, but you are just running for the sake of moving faster. Rapid acceleration from our normal pace. There’s nothing like it.

Slow down. Sometimes the endless attention-grabbing activities are distracting us from what really matters. Are you really spending your time working on the most important thing? We should all be more skeptical about how we use our time at the office. Is this meeting really worth 20% of your day? Pausing to consider, evaluating our activities, just going to the bathroom once a day without checking your email, all these little actions bring perspective to our work day.

Life as we know it is precious and fleeting. And remember, we sleep through a third of it. Luckily, we work in the strange, pressurized, intense world of sales. We make our companies go. We bring in the revenue that pays everyone’s salaries. It’s an awesome responsibility, and it cannot be done if we are walking dead.

So, please try these small and subtle ways to shake up your day. And, share your best suggestions for waking up below.  

This article initially appeared on Inc.

There are, however, five additional metrics that are worth tracking as well. These are signposts that indicate how you and your team is doing. They can be early warning signs that something needs to change. Or they can measure other aspects of your company’s life.

But tread carefully. Complexity is the enemy of efficiency. For every new metric you introduce, you and your team will spend significant time tracking, reporting and considering the meaning of what was measured. Before you adopt any of these or other additional measurements, estimate the investmentand be willing to spend double. Then go forward and reap the benefits

1) Touches

How many times did each salesperson contact each prospect and/or each customer?* There are several reasons to count Touches. You can figure out the optimum number of Touches per customer type, so you don’t waste time chasing deals unlikely to close. Hubspot has done great work quantifying this [link]. You can make sure that you are Touching the right customers enough. Without counting Touches, the squeaky customer wheel will absolutely get the grease, no matter how unprofitable they are. And counting Touches is a great way to compare salespeople. Missing a revenue target is more understandable if the number of Touches is high– bad streaks happen to everyone.  But there is no excuse for low Touches.

Please note, I’m not talking about calls made, voicemails left, emails sent, or meetings scheduled. Those are measures of speed dialing and spamming, not sales skills. Touches are successful contacts made or conversations had with a customer or prospect. You must have effective and cost-efficient systems in place to measure phone, email and in-person touches before putting this metric on your team.

2) Time-To-Close

Otherwise known as Speed or Sales-Cycle-Time, this metric measures the various days/weeks/months that it takes a salesperson to close each deal. The importance of this metric is easy to see, although the desired result is company specific. In some companies, a salesperson who closes a $200k deal every month is preferred over someone who takes twelve months to close a $2.4m contract. But not if each sale requires custom development and significant deployment effort.

No matter which your company prefers, Time-To-Close can be a helpful measure for sales to track. As with number of Touches, you can use Time-To-Close as a way to eliminate trash from the sales funnel. If the opportunity is over a year old, it’s unlikely to close. For your company, that year might be as short as a month. Time-To-Close is also a good measure to compare salespeople.

3) Time-To-Respond

This metric is tougher to measure reliably, because it’s more granular, but it can be very effective at predicting customer success. A recent study showed that prospects were X times more likely to buy from a company’s website if they received a contact within 10 minutes of visiting [link]. Similarly, after the salesperson has established interest, quick response time to a prospect’s questions, objections and proposals can mean the difference. It’s easy to see why – in the mind of the buyer, fast response in the sales process signals an eagerness to support the partnership in the long term. In cases where products are close substitutes, quicker response time is a strong advantage.

4) Customer Response

Many companies track calls made or emails sent. In most companies, moving prospects down in the pipeline (and therefore assigning them a higher likelihood to buy) is tied to a salesperson’s activity. For example, you’ve sent the prospect a proposal – now you can move them from a 10% to a 25% likely to close. That approach is senseless in a number of ways, but the most obvious one is this – SENDING THE PROPOSAL DOESN’T MATTER. The customer accepting the proposal, reading the proposal, marking up the proposal, and returning the proposal… those things all matter.

There’s not enough space in this article to discuss this idea in depth. There’s another blog post on that. Let me simply propose: we stop measuring pipeline stages as activities of a sales team, and start measuring them as activities of our prospects and customers.

5) Time-to-Cash

All other things being equal, the customer who pays fastest is best. This metric combines a salesperson’s ability to negotiate quick payment terms, and their skill in choosing customers to pursue and close. In some companies, where prices and discount schedules are fixed, how fast the customer pays is second only to volume for influencing the salesperson’s  compensation.

Wrap Up

It’s worth mentioning that although these metrics are usually tied in to compensation, they don’t need to be. It’s tough to know how accurately you’ll be able to measure these, and even tougher to know what the desired numbers should be. People tend to pay attention to what is tracked whether or not it figures into their paycheck – oftentimes public recognition and shared goals are more powerful motivators than compensation anyway. And tying a bundle of sales metrics together increases the opportunity for gaming the system – a considerable waste of sales brainpower.

But even if it’s not tied to compensation, and even without explicit goals in the first year or two of the program, introducing one or more of these sales metrics (and eliminating ones that are driving unproductive or deceitful behavior) can generate outsided benefits for your company.

* Note: For simplicity sake, I’m combining sales hunters (new customers) and sales gatherers (repeat customers) all in the sales group. Same with inside and outside sales.

** This article first appeared in an edited form in 1to1media.com

Larry Heimlich of Chiswick Services LLC

Larry Heimlich is an experienced hi-tech sales leader for medium size entities and startups with 20 years of mentoring and managing great sales people. He has experience in a variety of markets including B2B enterprise software, SaaS, HR, healthcare, benefits, and technology. He has successfully implemented strategic selling principles and has provided leadership in companies that sold products ranging from SaaS, services, and capital equipment. Currently, Heimlich is managing partner for Chiswick Services LLC, a consulting practice focused on sales and marketing strategies for growth companies in the technology space. Verticals include SaaS, HR, healthcare, financial services and benefits.  He has successfully grown companies from $0 to $10 million in two years.  Read on to find out more about his innovations and successes.

Janelle Wheel: Tell me about some of your successes in industry.

Larry Heimlich: As a chief sales officer, I’ve been fortunate to have helped a number of companies rapidly increase their revenues and profits.  Two went on to successful IPOs. One company was a Fidelity-backed HR services and benefits outsourcing start-up that went from $0 to $10 million in two years and $50 million in four years.  We began with two sales reps and grew to 90. In one case I was brought in to re-engineer a healthcare company that was stagnant at about $13 million in annual sales.  In four years, we increased revenue to $36 million and market share from 8 to 25%.  Over that time the sales staff grew from 15 to 59 sales reps. Another example was a medical device company that we took from $3 million to $40 million in five years.

JW: You’ve had a lot of experience in growing sales organizations.  How do you develop expertise and train sales reps?

LH: Unfortunately, many small companies provide limited training programs for new hires.  If training is provided, it usually is informal and mainly related to products and not sales. Part of the formula in growing great sales teams is to figure a way to provide, not only product training, but sales training.  At smaller companies budgets for these activities are usually small to non-existent and creativity is required. It also has to be a continuing focus. You cannot develop consistent product and selling strategies with once a year or once a quarter group training. Messaging and methods need to be dynamic as you learn more about your customers and the markets. This means that communications and training need to be on-going, regardless of the experience of the team. Look at other professions. Would you ever go to a doctor or lawyer who never took a course after finishing their formal training or education? Sales is similar. Training cannot be a one-time event. I’ve also learned that training can be accomplished with a small budget and a lot of creativity.

JW: What do you look for when hiring reps?

LH:  I’ve determined that great sales people have three critical traits. They have a fierce desire to win and will work hard to be successful. They are empathetic and can understand the mindset of the prospect. Last, they are intelligent. If their personality doesn’t match these characteristics, it’s likely they will not be a top performer. I also prefer to hire someone who has succeeded in prior sales roles and might have had formal sales training at a large company. I place less of a premium on direct product experience. It’s easier to train someone on products or markets than strategic selling.

JW: How do you track success?

LH: Revenue at the end of the period is the ultimate scorecard but if you’re only focused on that, it’s too late. Every company needs to develop several weekly and monthly metrics that are predictive and easily tracked and published in addition to the sales results. Metrics may vary from industry to industry.  Examples of useful metrics are dollar value of formal proposals, number of proposals, face-to-face meetings (where appropriate as with enterprise sales), phone calls, emails and other initiatives. You can sometimes develop useful metrics simply by observing the behavior of the top sales producers in the organization.

JW: What are some of the significant challenges that sales organizations are facing today?

LH: Having “the good leads” has always been a challenge. In some respects, it’s more challenging today with advent of Web 2.0 and social media. There are so many companies and solutions promising to provide quality prospects that it’s difficult to determine how and where to make investments. Ultimately, it’s about sales productivity. Your sales people are frequently your most expensive employees and you want them spending time at what they do best…selling. Here is where sales and marketing need to develop strong relationships and understanding of what is going to provide value which is incremental revenue divided by the investment.

JW: How do compensation planning and quotas influence sales success?

LH: Good compensation plans are important as they influence sales behavior and should reflect the goals of the company.  Over the years, I’ve developed and implemented a number of comp programs. There are several design principles that I’ve used to great success. They include:

• The more reps sell, the greater the percent commission or reward.
• There should be incentives to close business in the company’s time frame: in the fiscal quarter and fiscal year.
• Incentives should reflect desired behavior such as multi year contracts.
• There should always be incentives for closing business ASAP in an effort to discourage “sandbagging.”
• Top performers should also be recognized for superior performance other than cash.  Getting sales professionals to imagine themselves receiving an award or plaque at an annual sales event in front of their peers and management is highly motivating.
• Quotas should be high performance targets but should be sensitive to the business climate.  You can’t outperform the market. Warren Buffet once said, “When an industry with a reputation for difficult economics meets a manager with a reputation for excellence, it is usually the industry that keeps its reputation intact.”

JW: How do you avoid the inevitable land mines in growing companies?

LH: I’ve seen many businesses get into trouble or fail for the same missteps despite Santayana’s warning that “those who cannot remember the past are condemned to repeat it.” But landmines are also changing and are sometimes unavoidable; managing them is when there is no substitute for experience. Larry Heimlich can be reached at ChiswickServices@comcast.net or by calling  617-416-4751

Have successes or innovations of your own that you would like to share?  Post them here!

The Bridge Group reports that the base pay for sales reps has held steady since 2007, yet total compensation has decreased from $99,000 in 2007 to $95,000 in 2009, and increased slightly to $98,000 in 2010. The 2010 Bridge Group report found that, on average, only 50% of sales reps were able to make quota in 2010.  In fact, only 42% of companies reported reps exceeding quotas, and these exceptional reps accounted for less than 50%.

According to the CSO Insights 2010 Sales Compensation Performance Management Report, only 50.9% of reps were on track to meet their 2010 quota, leaving 49.1% of reps under quota.  13.5% of companies reported that less than 50% of their reps were expected to make quota; 30% reported that 51-70% of reps were expected to make quota; 41.9% reported that 71-85% of reps were expected to make quota; and only 14.6% reported over 85% of their reps were expected to make quota.

Having half the sales reps in the country is even more discouraging when you take into account the amount of money for which each person is accountable.  According to the Bridge Group report, 36% of sales reps are responsible for quotas in excess of one million dollars, and the average annual quota per rep was $889,000, a 33% increase from the 2009 average of $716,000.

There is a disparity between SMB (small and medium businesses) focused and enterprise focused sales reps, and those who focus on both SMB and enterprise with annual quotas of $791,000, $1,020,000, and $853,000 respectively.  CSO Insights reports a similar distribution of average annual quota assignment per sales rep.  According to their report, 17.8% of reps have quotas less than $500,000, 20.9% have quotas between $500,000 and $1,000,000, 14% have quotas between $1,000,000-$1,500,000, 12.6% have quotas between $1,500,000-$2,500,000, 10.6% have quotas between $2,500,000-$4,000,000, and 11.8% have quotas in excess of $4,000,000, with 10.8% reporting quotas not expressed in dollars.

Despite low numbers for quota attainment, CSO Insights reports that companies are actually increasing quotas.  They report, in fact, that the weighted average quota for 2009 was $1,580,000 and in 2010 it increased to $1,760,000, an average increase of $180,000.  That’s 11.39%.  In another report, CSO Insight reported that 80% of businesses raised their sales revenue targets in 2010.

Here is the breakdown: 20.1% reported quotas that were less than or the same as 2009 numbers, 14.8% reported a 1-5% quota increase, 21.5% reported a 6-10% quota increase, 14.8% reported an 11-15% increase, 8.1% reported a 16-25% quota increase, and 20.8% reported a quota increase of more than 25%.

Companies continually increase quotas for sales reps, but when CSO Insights asked managers if they believed their sales reps could achieve these quotas 8.7% responded that they definitely would not meet their goal, 33.6% were concerned about meeting their goal, 47.7% believed they could meet their goal with some extra effort, and only 10.1% predicted they would meet or exceed their sales revenue goal easily. If half of sales reps regularly miss their quota, and 40% of managers admit to being concerned about missing quotas, why do companies keep increasing them?

In other words, who really loses when a rep misses quota?  The salesperson does.  CSO Insights asked companies to what degree they felt compensation plans drove rep s toward meeting their quotas.  10.6% of companies reported to CSO Insights that compensation plans consistently drive precise selling behavior among reps.  63.3% stated compensation plans generally drive precise selling behavior.  15.3% reported that compensation plans have minimal or no impact on their reps’ selling behavior.  10.8% were unaware of any correlation.  The vast majority of firms believe that compensation plans help drive sales reps, and yet some reps are still unable to meet their quotas.  So why isn’t this monetary form of motivation causing better results when reps can only gain from meeting their quotas?  What then must be done to compensation plans in order to help underperforming sales reps to meet their quota goals? Can anything be done? In a previous Yesware blog post, Matthew Bellows interviewed Daniel Pink about comments he made on the decisions by two companies he has profiled regarding their compensation plans.  Both companies dismissed the traditional quota/bonus system of compensation in favor of increasing base salaries and end-of-the-year profit sharing while dissolving commissions.  After moving away from the quota-driven sales force the sales team was able to flourish, and the alleviation of competition has allowed reps to collaborate, increasing total sales.  While there are many solutions for the missed quota debate, eliminating compensation plans has proven to be successful for both the sales rep and the company.