Excellent sales management can elevate your company to the next level. It does not matter if you represent a young start-up or have been in the field for years, you must acknowledge that sales are the single most important thing at the end of the day.
Whatever your current business situation is, it is important to remember that great sales managers always try do their best with what they have. This sales management guide is designed to help you do exactly that.
What is sales management?
Sales management refers to all activities, processes, and decisions involved in managing sales function within a business.
However, for a sales manager, it only means one thing: coordinating and developing a successful sales team.
Like every management cycle, it is built on continuous observation, coaching, decision making, forecasting and making adjustments.
Essentially, we can break down sales management into three key areas:
- Sales strategy
- Sales operations
- Sales analysis and reporting
Sales management is a lot like coaching a sports team. You have a roster of players that must be turned into a championship team.
The cycle starts by acknowledging your current situation. Sales are a practical extension of marketing strategy. So to start on the right foot, you have to know everything about:
- What products do we sell?
- Who are we targeting?
- What is our unique selling proposition?
After you become familiar with the company’s marketing plan, it is time to get real with the sales strategy. Sales managers primary function is to convert marketing objectives into a specific and measurable sales task and supervise its execution. In other words, come up with a game plan and stick with it. Just like a coach does.
In the following parts of this guide, we will walk you through the next steps and issues that typically arise during the sales management process:
- Key terms
- Defining the sales task
- Acquiring sales talent
- Conducting sales training
- Motivate sales team
- Defining a sales force structure
- Forecasting sales performance
- Creating sales territories
- Setting sales quotas
- Managing sales team
- Designing sales compensation
- Communication sales compensation
- Managing underperforming reps
- Measuring sales performance
Account – A regular, paying client.
Buyer persona – fictional, generalized profile of an ideal customer with specified age, job, gender or other relevant demographics.
CRM – Customer Relationship Management. It typically includes CRM software that helps to manage customer data or sales pipeline.
Client relationship management system – Customer relationship management software that helps an organization determine the preferences and needs of their customers by tracking, recording, organizing and managing all customer interactions.
Closing – Convincing a prospect to make a definitive buying decision.
Cold Calling – The process of approaching potential customers for the first time, without prior introduction, relationship or contact.
Conversion – Turning a prospect into a customer.
Deal – An agreement on something with a client or prospect
Decision-maker – A person who is in charge of making buying decisions.
Demo – Demonstration of your product or service.
Demographic – Characteristics of the population or particular groups in it, such as age, gender, hobbies or lifestyle choices, etc.
Filtering – A step between lead generation and lead qualification where new lead information is filtered for validity.
Funnel – Also called sales funnel or sales pipeline. A designed systematic process that customers go through on their way to closing.
Gate keepers – People who screen your attempts to approach a decision-maker.
Inbound calls – Business calls initiated by the clients. It includes most of the customer support calls.
Inbound marketing – Marketing approach focused on attracting leads through relevant and helpful content.
Key Account – A client with a large budget that makes up a large portion of purchases and is significant for the business.
Lead – A potential client that could be interested in doing business with you, usually with little information about you or your business.
Lead generating – Initiation of consumer interest in business products or services via advertising media.
Lead management – A process designed to generate new leads via various marketing campaigns or programs.
Lead management software – A computer program designed to streamline lead management process. It can be integrated as a feature in a CRM software.
Lead qualification – A screening process to figure out whether a lead has a motive and ample buying power to become a prospect and later an opportunity.
Opportunity – A qualified prospect that has shown interest in your products and has presented his needs and requirements for you.
Prospect – A qualified lead that is interested to know more about your products and services.
Quota – Monthly, quarterly or yearly sales targets used to measure sales success.
Sales analysis – Measuring, analyzing, reporting and making decisions based on sales results.
Sales operations – Building and maintaining the sales team.
Sales enablement – The process of ensuring that sales representatives have all the tools, skills and information needed to sell.
Sales force – People responsible for selling products and services.
Sales forecasting – Estimating future sales volume to predict company’s performance in the future or to make better, information based decisions.
Sales management – A comprehensive set of activities to create and manage a sales team.
Sales management planning – Organising a plan to achieve the established sales objectives.
Sales management strategy – Defining the sales process and finding the best way to approach it.
Sales manager – A person responsible for leading, managing and coaching a sales team and supervising the sales process.
Sales pipeline – Systematic and visual representation of your sales process.
Sales process – a Systematic approach that enables sales force to map out and track interaction with prospects from the point of engagement to a close.
Sales representative – Or simply sales rep. Your sales team member who is responsible for specific accounts or territories.
Sales target – Objectives that business or individual sales rep expect to meet per sales period.
Sales tracking – Keeping tabs on, recording and detailing all aspects of your sales process and activities.
Sales tools – All means that help you to improve your sales management process, such as CRM software, lead generation instruments, sales pipeline, funnel and others.
Sales Velocity – simply put, sales velocity is a marketing and sales metric used to measure the speed at which opportunities and leads turn into revenue, month over month.
Targeting – Reaching out to the segments and groups of the population that are similar to the buyer persona.
Territory – The area which is sales representatives responsibility.
Warm calling – Opposite of cold calling. Approaching customers with whom you have an already established relationship and experience.
Whale – A massive new lead that is at least ten times larger than your average sale.
Defining the Sales Task
A sales task formulation is first and the most important step in the sales management process as it sets a direction for your team. Here you establish your sales goal and describe how are you going to achieve it. A well-defined sales task includes a definition of your product, target audience, selling tactics and how are you going to communicate with your team.
A clear and measurable sales task helps your team to work more efficiently, reduces anxiety and increases overall team’s motivation. The more precise your sales task is, the better. The clarity of your sales task can significantly improve if you:
- Assign a particular number of accounts for each rep. Sometimes geographical allocation can be ambiguous and unclear. The more accurate the account coverage is, the easier it is to act on them.
- Set precise and attainable account management goals. It includes personal sales targets, activity goals, different quotas for different products, etc.
- Use trustworthy information system. A poor system may distort sellers perception of input and results, all while simultaneously skewing accuracy of feedback.
- Assess and correct field sales on the go. Make use of field sales management tools, such as management by objectives, scheduling field time or monthly feedback sessions. Your team will perform better if you deliver consistent coaching and guidance.
Acquiring Sales Talent
When you know what and how are you going to achieve, it is time to assess your team and, if necessary, make changes. Every sales manager needs people who are the best at carrying out the sales task.
To fill your all star roster with the best players, make sure to:
- Look for the best talent amongst your competitors and establish a relationship with them.
- Find good candidates where best workers usually go: industry conventions, conferences, and meetings.
- Scan for the in-house talent: people who already know your enterprise and product.
- Create a profile and work closely with your human resources staff.
- Even when all the positions are filled, make sure to have a few extra candidates ready in case of unforeseen circumstances.
- Maintain a good reputation, offer an excellent compensation package and if necessary, engage senior management in the process. Best sales people know how valuable they are and they love to be appreciated.
Conducting Sales Training
“Train people well enough so they can leave, treat them well enough, so they don’t want to.” Richard Branson
No matter how impressive your team members might be, they still need to be on the same page when selling your product.
First, outline your sales process – funnel. Emphasize how long your sales cycle should take. Then, recognize the skills needed to manage it effectively.
As a sales manager, your job is to enable your representatives to sell. As a coach, you also have to guide them through your sales funnel. Your team consists of different people, so sometimes, formal training is not enough. Make use of metrics to identify individual struggles and develop your players.
Best sales managers usually lead by example, but you may not always be able to teach the necessary skills or expertise yourself. Consider hiring a professional sales trainer, expert speaker or author. Other alternatives include sharing good books, online courses or attending live events.
Whatever training strategy suits you and your team best, put time and effort to make it something out of the ordinary. Don’t make it just a routine in the office, make it stick.
Most importantly, training is an ongoing process. Learned skills need to be constantly refreshed and built on, especially during this time of changes.
Motivating Sales Team
Even in such an exciting field as sales, employee motivation can be an issue. However, being a decent manager as you are, you can tackle it in numerous ways:
- Build trust with your team. Trust is a cornerstone of motivation and the best way to create trust between you and your subordinates is by being transparent. Share your stories, failures, and disappointments and build on the real experience.
- Encourage your team to follow a balanced and healthy lifestyle. Show them that you care not only about their sales stats but also about their general well-being.
- Ask individuals how they would like to be managed. While it may sound comfortable, it is known that one size does not fit all and adjusting to the individual needs can go a long way.
- Distinguish between their personal and professional goals. Provide them with solutions that truly make a difference by identifying what is truly important for your employees.
- Hand out great rewards. Awesome rewards inspire people, and we are not talking about the money here. Do something personal for your employees: organize a contest, invite them to the BBQ, bring them food to work, or go to see movies together. Manage creatively and remember, that great management is more about earning respect and having fun instead of just trying to buy it off with a better salary.
Defining a Sales Force Structure
In this step of sales management process, you decide how many sales reps you need. There are two methods that you can use.
A top down approach:
1) Divide total annual revenue by the average sale sum per client. That gives you a rough idea of how many customers you need.
2) Then, figure out how many calls per customer you need to close a deal and multiply it by the number of clients (1). That helps you to estimate the number of calls required to meet your yearly target.
3) How many calls is a single rep capable of making per year? Divide (2) by this number and you will have your estimated number of employees.
A bottom up approach:
- Lookup the total number of accounts you have in your area.
- Decide how many calls you need per account to generate a sale. Multiply it by the number of accounts to get the yearly number of calls needed.
- Calculate how many calls a representative can make per year and divide it by the total number of calls required per year (2).
That should help you to estimate how many team members you need.
Forecasting Sales Performance
These days sales performance forecasting can be done in two ways: manually and automatically.
The manual approach includes analyzing the market potential and sales potential.
Market potential is the size of the market. In other words, how much demand there is for you and your competitor’s product in your area? How much you and your competitors can expect to earn?
Forecasting sales potential is about claiming your share of the market. How much of the market potential can you win?
You can base both of these metrics by looking at either objective or subjective data. Objective data is based on past metrics and data. Subjective data stands for industry experts forecasts and opinions.
Automatic sales performance forecasting is based on external systems and services. That is the most attractive solution for businesses today. To make more objective sales decisions, you can make use of such tools as Teamgate.
Creating Sales Territories (Optional)
Sales territories are about allocating initial prospects. The main question here is who will sell where.
As mentioned previously, it is very important to point out as many details about the accounts as possible.
Another tip in assigning territories is to make them equal in sales potential, not physical size. If it is possible, make use of geographical boundaries, but be sure that they same similar numbers of customers.
Lastly, be ready to change and improve your territories constantly. The number of customers and the abilities of your salespeople tend to change over time.
Setting Sales Quotas
Every rep in every area should have an annual sales goal for the year. Quotas are a key metric to evaluate how well a salesperson did in his area. When setting sales quotas, it is important to remember, that data driven approach always guarantees more precision.
In contrast, inaccurate or unattainable sales quotas create a negative view of the managers, cause frustration, unfairness and can hurt you other ways.
The best technique to set sales quotas is the bottoms-up approach. It is based on real reps capabilities and historical team results. The key questions here are:
- What are the stages of our sales funnel?
- What are our conversion rates before each stage?
- How do our conversion rates look like per territory?
To help you with the bottoms-up approach you can make use of Yesware’s quota calculator.
If you have a variety of products, you should create a different quota for all of them. And most importantly, keep track of them and address issues on the go. Even if the quota is annual, good managers break them down to smaller periods. As a result, they enjoy better insights.
Managing Sales Teams
Great teams have great coaches and great sales teams have excellent sales managers. There are many books with tips and tricks on how to handle the teams and it would be impossible to fit them all in one paragraph. However, several important things you should know about sales teams management are:
- Take care of your top talent first. Many managers tend to take their eye off top performers and focus on the lesser ones. It only seems logical to help others. But in reality, top talent strives for attention and recognition, so you should consider dedicating even more attention to them along with some perks.
- Treat everyone fairly but not the same. There is a big difference between discrimination and unfair treatment. Every one of your employees is a different person and what works for some will not function with the others.
- Create winning environment. Encourage your team. Challenge them. Surround your subordinates with the best people and information available. Create an environment where they can do their best.
- Give your salespeople all the attention they deserve.
- Empower your people to grow. Growth is an essential element of job satisfaction. Make sure that your people feel like they are learning something new every day.
Designing Sales Compensation System
Another critical area of management is rewards. In other words, how much do you value your team members?
In general, there are two ways to design compensation plan: flat salary plans and variable commission programs.
Flat salary is fixed so your rep will get agreed amount no matter what.
Variable commission payment is linked with the number of generated sales and offers no limits. However, nothing is guaranteed as well.
The best approach in sales is to use the combination of both. Establish a competitive base salary and on top of it offer some bonuses for the reps or teams that achieve their target levels or quotas.
Communicating Sales Compensation
Great managers make sure that their reps are getting paid enough. Implementing sales compensation system consists of three steps:
- Communicate. Your reps want to know how they are getting paid. Consider creating a document that explains everything about how the plan works.
- Administer. Share the plan with HR or financial department, since they will have to process it, too.
- Measure. Observe how your plan operates and receive continuous feedback. There is nothing worse than figuring out that your plan was not working at the end of the period.
Managing Underperforming Reps
Your superstars are getting the best rewards, but what about underperformers?
There can be a million reasons why a sales representative struggles.
However, like in every other management issue, you should start by searching for the root cause of the problem. The 5 Why’s model can you to discover it.
Amongst the most popular reasons for lagging performance are the following:
- An employee lacks specific tools or skills.
- An employee is unmotivated.
- An employee is not the right fit.
There are many ways to stimulate underperforming reps once you identify the right reason. Possible options include leading by example, accepting responsibility for the problems or creating a culture of motivation.
In the worst case scenario, you have to fire someone, which is never easy. However, it is the only viable option if the employee continues to perform way below the standards.
Measuring Sales Performance
No matter what kind of a coach, planner or analyst you are, data driven decisions are the most reliable ones. Therefore, performance tracking and measurement are sales managers best friend.
To measure well, you have to measure right things. For a sales rep, the most important number is conversions. Of course, to see the bigger picture, there are many other numbers that you should take into account, such as total revenue, gross margin, the number of initial prospects or won accounts. Also, mind that raw numbers can be deceiving, so take advantage of the ratios.
Data analysis can consume a lot of your time, but smart managers know how to free up their time. Make use of intelligent data management systems designed to help your decision making. After all, numbers are just indicators and you need to be out there for your team.
At the end of the sales management cycle, you should report the results back to your reps, senior management, and marketing department. Good sales managers know how important insights are for the business and their team. From here, it is time to repeat the cycle again. Good luck!