Create a sales development plan for a first year rep
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A best practice for managing digital only sales teams is to create one year sales development plan, and use that to establish monthly sales targets. The numerical part of the plan is a monthly build-out that shows how sales will accumulate.
Attached (to the left) is an example to use as a sales development worksheet for a first year rep. It can be started on any month that they are hired.
Here are the items and assumptions in the plan explained from Row two on:
• Month - Months are simply labeled 1 to 12, neutral as to when the reps start.
• Weeks in the month - This uses a 4/4/5 forced model. If your books run on the actual weeks in a month, alter these numbers accordingly
• Average monthly new sale - This is simply the total expected billings per month from one new contract sales.
• Sales per month - This row refers to the number of expected sales per month, based on your company's performance standards. At least one per week should be the expectation, based on two to three solid selling appointments a day. There is a two month ramp up period in which number of sales is only one every two weeks.
• Total monthly billings - This is the total sales projected if these performance standards are met. Can be used as the sales goal, as it is for the comp plan below.
• Tracking annual billings - This is the revenue the rep is tracking for one year forward at that months level of sales.
• Total contracts sold - This is the total revenue from all contracts sold that month.
Compensation
Reps appreciate a plan that shows them what they will be making and exactly how to get there. A bonus of attaching compensation to the annual goals is that you can determine cost of sale more easily. While your compensation plans will be different, two key elements are worth considering:
1. Set goals once a year, annually, not monthly. Because plans is for a year, that also means that goal setting is once a year, rather than monthly. This is much fairer for a good rep than continually stacking their goal higher, and gives them a road map that matches expectations for appointments and sales. You can add bonus compensation - say a point each - if reps exceed goals by 10% and 20%.
2. Cost of sale goes down over time. If your hunter will be handling a book of business the next year, then commission "last year's sales level" is less than for new growth sales.
Here is a quick walk through the line items starting with Row 23:
Salary - This report plugs in a base salary of $2000 a month.
% on prior year sales - This line reminds reps that the sales level at 20% is double that of the sales level for prior year sales, which will be 10%.
% of new sales - This is core commission number is set at 20% of new sales for the first year. While this means the COS in the first year will be high, most companies are focusing on some kinds of "sticky" products that allow them to retain customers at above 90% rates year over year.
Total - This line adds the salary and commission together.
Bonus - Since goal for this rep is based on acheiving the levels stated in this plan, a bonus of $400 is paid. You can also split the bonus $200 on number of contracts and $200 on goal.
You can also pay, for example, an extra point to reps being 10%, 20% or 30% over goal, to encourages them to build the list faster, in return for much higher income. Include these as sublines on the plan, so reps can see what they will earn.
Total - This is the real income if they are meeting targets.
Tracking - This line shows the annualized income at each new level they attain as their sales accumulate.
Draw - We've added in a $4,000 a month draw for several months.
COS - This line shows the COS, which will drop in year two as sales increase and the commission on prior year also falls. Running this number shows that COS is around 25 to 30% monthly by the end of the year, while the total for the year is still 44%. Good to have these numbers in your back pocket when talking to accounting about adding reps!
Cash loss - For management only - shows the cash invest in the rep.
Rolling net - Shows when and how the rep will cash flow. Add in expenses such as taxes and healthcare to get a real number.
Update real numbers on these sheets for your highest rep - and an average or struggling rep (without names of course) - to give them a realistic - and visual - picture of what works and what success looks like. This gives them something to shoot for!
Use this goal setting sheet with the contract, Contract tracking worksheet. By handing out the contract tracking worksheet at sales meetings, the whole team sees top sellers not just achieve revenue goals, but also who achieved the most new contracts or largest ones. This is a great jumping off point for discussions around "how they did it."
Other useful Articles, and links for assembling and optimizing the performance of your digital sales team:
Shift Sales into High Velocity worksheet
Ten Best Resources to find Digital Hunters
No Pipeline in Your CRM? Use this worksheet
Managing a Dream Team of Digital Hunters
