Talent Acquisition

Hiring Quality Salespeople in the New Year

Anyone who feels unaffected by the Covid Crisis this year has missed the point. This was the year for us all to look inside ourselves, figure out what we stand for, and work at discarding the rest.

For Advanced Hiring it’s been a good year. Revenues were solid, but most of all we’ve been able to help you, our valued clients, find super talent.

Clients who’ve jumped into the fray have said they got talent they had never been able to find before.

One of our clients and good friends, Cameron Robinson, described a hire we found as “like dating way out of my league.” She of course was being overly modest, as she and her company is an example of people and a company that cares, but you get the point.

The amount of high-quality sales talent available is amazing. You owe it to yourself to upgrade the quality of your sales team now.

Years ago I was a very active stock trader. I specialized in down markets. But one rule I learned the hard way is the economy is more optimistic than pessimistic. After a downturn things always come back. I expect we’ll see a revitalization of small and medium sized businesses soon.

If you need help getting starting using the System, please reach out. We’re here to help.

Best wishes for a Happy and Prosperous New Year from all of us here at Advanced Hiring System to all of you!

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Human Resources, Talent Acquisition

How to Set Up a Winning Sales Compensation Plan (with Examples)

An effective sales compensation plan will strongly motivate and incentivize your salespeople to help your organization achieve their short-term and long-term business goals while improving and maintaining a profitable margin.

According to the Harvard Business Review, 85% of US companies have a sales incentive plan in place. However, less than 9% believe their compensation strategies are driving optimal sales performance and business results.

That means more than 90% of companies nationwide are wasting billions of dollars on their sales forces and failing to hit their business objectives.

So, how do you develop and execute a winning sales compensation plan that will align top sales talent with your goals?

Components of the Sales Compensation Formula

The foundation of the sales compensation plan will be dependent on several factors, such as assembling a planning team, prioritizing what your business is trying to achieve, defining the roles and responsibilities of your salespeople, and accounting for selling approach and sales cycle.

1. Build a Compensation Planning Team

A sales compensation strategy cannot be executed alone. Instead, recruit key players across your entire organization to help bring your plan into fruition.

Build your team with at least one director, vice president, senior manager or representative from your sales, marketing, finance, and HR departments.

Also, make sure that your legal team is aware of the changes to come so that they can review your plan in a timely fashion.

2. Prioritize Your Business Objectives

You keep hearing to align your compensation plan with your business objectives. But what exactly are they?

This is a perfect time to reevaluate what matters to your company as a whole.

Less than 9% of US companies believe their compensation strategies are driving optimal sales performance and business results.

With your planning team, ask yourselves the following questions:

  • Are we more concerned with increased revenue or cash flow?
  • What’s more important, the average contract length or size of the deal?
  • Should we prioritize improving our retention rate or upsell rate?

There are no “right” or “wrong” answers here.

However, your planning team should focus only on 2-3 concise goals at a time. Otherwise, it will be more difficult to align the rest of your organization with these objectives.

Some other goals to consider include acquiring specific customers, cutting expenses, and driving sales for a given product or service.

3. Define Salesperson Roles

Some products and services sell themselves. Other times, customers need some level of guidance or assistance in order to complete a purchase.

Money drives behavior. So, if a salesperson is playing a strong role in your sales process, then you should recognize that with a competitive mix of base salary and commission.

The opposite also holds true. If the sales process is more collaborative and requires more heads to finalize a purchase, then lower the commission rate.

One exercise is to create a sales positions chart, where each role is identified. Look back at job applications and descriptions to help match hiring criteria (knowledge, skill sets, years of experience, etc.) with appropriate pay.

You may even need to create junior and senior roles in order to adjust for new hires and promotions.

4. Create a Competitive Employee Benefits Package

Richard Branson famously said, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

A competitive employee benefits package will do just that – offer perks that are important to your candidates and employees.

Start by creating a master list of the benefits your company offers. Show every fully subsidized benefit they get from joining your team.

Here is a list of popular employee benefits you should consider offering:

  • Health insurance
  • Dental insurance
  • Vision insurance
  • Life insurance
  • Pet insurance
  • 401(k) with matching
  • Profit partnership program
  • High earning potential
  • Non-recoverable draw
  • Direct training with the company’s CEO
  • Potential for career growth
  • Potential for management positions
  • Paid time off (PTO)
  • Flexible work schedule (4-day work week, option to work from home)
  • Fun office environment and work/life balance
  • Gym membership or discounts
  • Relocation assistance
  • Commute assistance

5. Factor In Selling Approach and Sales Cycle

Aggressiveness is another important factor to account for when creating your sales compensation plan.

We’re not talking about who has the shortest fuse, but rather who’s more willing to ask the hard questions and bounce back from failure.

Salespeople with strong D-personalities are more inclined to welcome failure due to their tenacious nature to hit the goals they’ve set for themselves.

If you’re looking for salespeople to generate and close new leads, then offer a higher commission. If you opt for low outreach and upselling existing accounts, consider a more conservative pay.

Make sure to account for the sales cycle and types of products or services being sold, too. Will your sales team need to sell once or multiple times a year? Should people who sell newer products be rewarded higher than those who sell older products?

Example Sales Compensation Plans

Remember, there are no “right” or “wrong” sales compensations plans.

They each have their pros and cons. What matters is which plan is going to incentivize your sales team and help your company realize their business goals.

1. Salary Only

Salary only is the most straightforward compensation plan: salespeople have a fixed annual income with no commissions or bonuses.

It offers stability. It’s probably favorable by the finance department because it is the easiest to manage. But it also the least common plan put into practice.

Why? Because your top sales talent are no longer motivated to work hard. Unless you have a strong company culture, don’t be surprised if they soon walk out the door.

We only recommend the salary only structure for companies that operate in industries that prohibit direct sales, have small sales departments, or expect their salespeople to spend most of their time to other responsibilities.

2. Salary Plus Bonus

Salary plus bonus structure offers a fixed annual income and an annual, bi-annual or quarterly bonus for hitting a target number sales.

This plan makes it easier to predict if a sale rep will miss, meet, or exceed their quota. And if they are consistently hitting their target, then they are somewhat guaranteed more of a stable income.

However, top performers may think twice before onboarding if the bonus isn’t high enough or if they’re being micromanaged. If they do decide to stay, your sales team may just perform the bare minimum to get by.

Don’t burn another dollar on a bad hire! Watch our free webinar to learn how our proven AI recruiting system can land you sales superstars.

3. Salary Plus Commission

Salary plus commission is the most commonly used plan. It offers a fixed annual income plus commission sales, which are paid out weekly, monthly, quarterly, or bi-annually.

Salespeople are more productive, motivated, and independent under this plan. It provides a safety net when business is slow or the market is volatile. Plus, the company is able to grow more aggressively.

The obvious drawback is that reps won’t get commission if they don’t make any sales. This structure can instill a more competitive environment around the office. Also, it makes it more difficult to change accounts and direct salespeople to perform non-sales activities.

60:40 is the industry standard for fixed income and variable compensation. This can adjust depending on the complexity of the sale and sales cycle, involvement of the sales rep in the customer’s purchasing decision, origin of leads (i.e., were they provided or generated by scratch?), and selling approach.

4. Commission Only

The commission only model pays out salespeople after performing certain activities or milestones. For example, a sales rep gets $1,000 for every new account or upsell.

It’s not the most attractive structure, but that’s the point. This compensation plan invigorates superstars who are against quotas, confident in their sales ability, and aligned with your company’s goals. For the right salespeople, the payout outweighs the risks.

It’s still equally as terrifying if you aren’t making sales. Non-performers will naturally be weeded out. A lack of steady income can burn out reps who feel overworked or stressed.

This plan also doesn’t account for market penetration or the quantity of opportunities, meaning there could be an severe imbalance of leads among salespeople.

5. Territory Volume

The territory volume sales compensation plan is team-oriented. Multiple reps work together in clearly defined areas and are paid for their efforts across said regions. Total sales are then split evenly among all sales reps in that given territory.

It’s ideal if sales territories are clearly outlined and rich enough to support competitive wages. Otherwise, they run the risk of losing their territory to competitors.

6. Profit Margin

Profit margin, also known as gross margin, compensates based on profit rather than sales. For example, if $100,000 is generated in sales and $70,000 is spent on the cost of goods sold, then the profit margin is 30%. The commission is then calculated as a percentage of the margin.

It’s an attractive model for those who are interested in long-term incentives (e.g., company shares). It also helps drive the sales of certain products and services, whatever yields the most profit for the sales rep.

Keep in mind that this strategy should only be used if you’re focused on generating revenue and able to properly track profit margins. Also, sales reps will need some level of discounting power or else it makes for a harder sale.

Communicate, Implement, and Measure

Once your planning team has picked a sales compensation plan, the next step is to address it to the rest of your organization.

High-level executives should speak about the plan with utmost transparency. Focus on the good – new business goals, higher earning potential, more benefits. Do prepare to answer questions as seasoned players may contend these new changes.

Once everyone is on the same page and the strategy has been implemented, monitor your plan and analyze the results after 3-6 months. When under review, have your planning team ask themselves:

  • Are our sales objectives clear and easy to understand?
  • Do the incentives encourage wanted behavior or unintended consequences?
  • Are we on track to achieving our short term and/or long-term business goals?

Adjust accordingly and revisit the plan in another 3-6 months. Your compensation plan should be strong enough to attract, motivate, and retain top sales talent while aiding your company as a whole.

Attract Top Sales Talent with Advanced Hiring System

Since 2001, our award-winning AI recruiting system has helped more than 2,000 startups, medium-sized business, and Fortune 500 companies from all industries to effectively hire sales superstars, cut down expenses, and generate new revenue.

In our free webinar, we go over why most hires fail and the process to finding and hiring salespeople who can really sell.

Let us help you achieve your business goals. Contact Advanced Hiring System today!

Alan Fendrich


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Personality Assessments, Sales

Sales Personality Tests: The Ultimate Weapon for Hiring Success

Riddle me this: why are some sales organizations still holding out on pre-employment testing?

Sales personality tests have been around since the 1970’s. That’s nearly 50 years of data, all leading to the conclusion: assessing candidates improve hiring success.

This is also important in sales hiring where motivation, company culture, and level of comfort in the position are very critical to the success and growth of your bottom line.

Why Employers Avoid Personality Testing Their Candidates

Let’s address the elephant in the room: legality.

Use of litigation when civil and employment rights appear to have been violated often scares employers into hiring candidates blindly.

The fact is, however, that there is nothing illegal about personality assessments as long as it’s not discriminatory, is valid and up-to-date, and follows equal employment best practices.

If an employer is able to demonstrate that the test in question is directly related to potential performance and competency for the job in question, then there is no reason to avoid testing.

Another reason that a company may be unenthusiastic about sales personality tests is just simply being reluctant to change. This includes:

  • Unwillingness to add new line items to the costs of hiring.
  • Creating a rift in employment processes where previous employees did not receive equal testing, which makes it more difficult to fairly evaluate performance, merit increases, and promotions.
  • Deploying a new hiring process across all departments, thus involving all managers whose resistance to change likely varies.

7 Advantages of Using Personality Tests In Sales Hiring

Let’s face it – if you care about your company’s bottom line, you can’t base your sales hiring decisions on sentiment or gut feelings. The only true objective method for identifying potential top performers is by creating a benchmark for success.

That’s why sales personality tests are a great place to start. They allow you to identify and classify a candidate’s personality, values, and dispositions, making it easier to predict their proficiency in the sales world, whether that’s on the sales floor, the road, over the phone, or online.

Contact Advanced Hiring System today to learn more about how we use sales assessments to attract and hire top sales talent.

Makes Hiring More Reliable

Rather than taking a candidate’s word for what they have done via their resume, sales personality tests evaluate what a candidate will do in a given scenario. This helps put people in the right role.

While they may not make sales managers, the candidate may be ideal for an auxiliary role as a senior business development representative or account executive.

Shrinks the Candidate Pool

Let’s say you work at a large hiring organization in your city or metro region. Or maybe you have a blanket policy of always accepting resumes, even when not actively hiring.

These are scenarios that can add to your hiring manager’s frustration in simply getting through the flood of low-quality applicants. By subjecting candidates to personality tests, you do two things:

    1. Lower the number of application submissions by eliminating those only casually looking for employment.
  1. Screen for a predetermined set of success factors.

These two things will help you narrow your focus and attention on hiring top performers instead of a mixed bag of candidates.

Screens without Unconscious Bias

If you are struck by a strong first impression that dilutes the rest of the application process, how can you be certain your hiring process is truly valid? Studies have shown that by creating a system that lessens the weight of first impressions you avoid unconscious bias.

To further put testing into a positive light regarding its legality, sales personality assessments prior to a face-to-face meet can help reduce the liability of discrimination based on age, race, gender, sexual orientation, or disabilities. It ensures that you see the potential of a prospective hire based on values before anything else.

Finds the Right Cultural Fits

Did you know that 83% of recruiters surveyed that finding a cultural fit is the second most important hiring factor? That means hiring someone who aligns with a company’s culture, values, and mission is sought after than employee referrals or industry knowledge.

But why is there so much emphasis on hiring cultural fits? For good reasons, of course:

  1. Employees that feel connected are more productive, happier, and less likely to jump ship. That equates to increased performance, stronger morale, and decreased turnover rates.
  2. Cultural fits shine with future potential and willingness to take on greater responsibility down the road.
  3. They help you determine and understand what are your company values and principles and how they set your business apart.

Behavioral interviewing is another effective technique for hiring cultural fits. They allow you to ask open-ended questions that help you gauge how candidates would operate in day-to-day challenges as well as predictors of future behaviors and how they will mesh with the rest of your team.

Strengthens Your Sales Team and Onboarding Process

Everyone has their preferred sales approach, so understanding their personality type can help determine which team or environment works best for them.

You also want to onboard qualified candidates that balance your strengths and weaknesses. If you have too many introverts versus extroverts, cold callers versus account managers, or D-personalities versus C-personalities, you may be doing your team an injustice.

It Takes Money To Make Money

Think of the time, cost of materials, and hours you’ll be saving your company by using sales personality tests for screening candidates, especially if you offer pre-employment testing online. The time and money saved can be invested in improving your company elsewhere.

Provides Valuable Hiring Insights

Everything can be improved, including the hiring process. Sales personality tests can identify questions that may be trickier than others. It may not be intentional, but you could be weeding out qualified candidates without even knowing it.

Make sure to add a step in the onboarding process where new hires provide their feedback about the personality test. It will help you evaluate the testing you have in place, and whether it’s worth seeking out new options.

Let Us Improve Your Sales Hiring Success Rate

Here is a recap of the benefits of using a sales personality test in your hiring process:

  1. Makes hiring more reliable
  2. Shrinks the candidate pool
  3. Screen candidates without unconscious bias
  4. Opens the floor for discussion
  5. Finds the right cultural fits
  6. Strengthens your sales team and onboarding process
  7. Saves time and money
  8. Provides valuable hiring insights

Our data here at Advanced Hiring Systems has shown that using sales assessments, when used correctly, can tremendously improve your sales hiring effectiveness.

Free yourself from hiring headaches. Contact us today for a free consultation.

Alan Fendrich

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