Paying up Featured

11:34am EDT May 31, 2002
Business owners say, "Of course my people are focused on growing my business. That's why I pay them." But can that owner prove he or she is paying for growth? And if not, how can this be accomplished?

While every employee can contribute to growing the top line of a company, three groups have primary responsibility for sales: Sales, customer service and marketing groups. To focus each group's efforts and each member's compensation on growth, let's use the framework of the PACER Process, developed to help business owners build stronger businesses.

Sales

Sales departments find new business and grow more sales by working with prospects and customers. Sales management means moving customers through the acquisition funnel from suspects to prospects to qualified prospects to developed to closed deals.

To pay sales managers and staff for growth, determine which stage of the funnel is the hardest and most critical hurdle in closing new customers. Learn which activities and which salespeople move the most business through this step and compensate them the most.

If developing a prospect is the hardest step, pay those who develop prospects more than those who close business. If the same people do more than one job, pay them separately for each prospect they develop and each one they close.

Customer service

Inside sales and service groups typically focus most of their efforts on keeping and growing existing customers. These groups succeed when their retention and development efforts push customers through these funnels: The retention sales funnel, which includes one-time buyer/win back; reordering buyer; and customer; and the development funnel, made up of customer; cross-sold customer (multiple products or services); and advocate (will push your business to others).

Turning a reordering buyer into a stable customer is a key step. If it takes three reorders for a buyer to become a loyal customer, pay reps more for getting those three sales in a row. If inside sales reps are excellent at cross-selling, compensate them for specific successes.

Marketing

Marketing teams can influence all three sales funnels when they develop new markets and products, and generate awareness of the company. So compensate them on how much impact the programs and tactics they develop have on growth.

A referral program that generates the needed number of new customers and sales means incentive compensation based on actual sales can be paid to the marketing staff. And if a program to generate inquiries from prospects is working, compensate your marketing department.

There is a direct link between compensation and growth, and it is possible to pay anyone in sales, marketing or customer service based on how their contribution translates into business growth.

The first step is to understand how the business really finds, keeps and grows its customers. This requires time and objectivity not available in most companies, and few go on to the next step and compensate staff for their specific roles.

But if more companies did, their owners could really say, "Of course my people are focused on growing my business. That's why I pay them." Andrew J. Birol (abirol@birolgrowthconsulting.com) is president of Birol Growth Consulting, which helps business owners grow their companies. He can be reached at (440) 349-1970 or at www.birolgrowthconsulting.com.