Determining which sales model makes the most sense for your business is a little like trying to balance a scale – every change you make on one side is bound to have an impact on the other.
Case in point: A recent CSO Insights study highlighted a popular sales model that resulted in more than 85% of reps nationwide achieving quota.
The downside: The rigorous training and commitment required to make a model like that work also resulted in a 24% turnover rate.
Here are the pros and cons of three of the most successful sales models in business today … the type that world-class organizations use to shatter goals and maintain their competitive edge:
1. The training and development plan. More than 75% of best-in-class companies consider their salespeople a constant work in progress, which means every rep is required to take part in some type of formal training and development each year. Most of that training (e.g., in-house workshops, conferences, seminars, etc.) is geared toward identifying and overcoming each rep’s weaknesses.
The pros of a training and development sales model:
- reps are constantly improving, which generally means progress for the department as a whole
- new salespeople are generally assigned a mentor, which eases their ramp-up time, and encourages collegiality among the ranks
- 71% of salespeople (on average) achieve quota on a regular basis, and
- there’s a balanced attack, where healthy competition and team collaboration are the norm.
The two biggest cons of a training and development model are:
- a high percentage of top reps leaving because they don’t feel the company values their immense contributions, and
- managers spending almost all of their time trying to maintain an equal partnership with every salesperson.
This plan makes sense for any company that values its employees, and prefers to promote from within.
2. The 80/20 plan. Most managers are familiar with the notion that 80% of their sales will inevitably come from the top 20% of their salesforce. The 80/20 plan is based upon managers spending almost all of their time coaching that top 20% to maintain peak efficiency.
Here are the biggest pros, according to various research:
- a high-octane salesforce where the best reps are constantly competing to outdo one another
- a no-nonsense department where salespeople know low performance will not be tolerated, and
- a narrow focus where managers know who to focus on in order to maintain their numbers.
The three biggest cons:
- on average, fewer than half of salespeople achieve quota in a system like this
- subpar reps very seldom improve over time, resulting in a staggering 38% turnover rate, which means
- managers are in a constant recruiting cycle, a reality that inhibits their ability to focus on big-picture tasks.
This plan makes sense for large companies that can afford to turnover nearly 40% of their salesforce on an annual basis, provided it drives top reps to continue pushing for better results.
3. The deregulation plan. The expectation in a deregulated marketplace is that shifts in business will dictate what changes are needed. A lot of sales organizations operate according to the same philosophy. According to Sales Analyst Jerry Colletti, quota is adjusted annually in a deregulation model based on:
- the previous year’s numbers
- company growth vs. market growth, and
- what type of adjustment has the best chance of maximizing profits.
The biggest pro: Salespeople feel like the company puts its employees first, which has the potential to increase loyalty and performance.
The biggest con: Deregulation comp plans change on an annual basis – a dynamic that could cause major headaches for managers and reps.