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If you read my last post you know that I am a big proponent of calculating how much money you want/need to make on an annual basis as a primary goal for sales professionals. This principle should also be used by sales managers to motivate their people. It’s simple, determine what your income goal is and then see what you need to do in order to achieve that goal. This sounds easy to calculate, and is, by using the following formula. Reality check: Calculating the goal is easy, getting there is where the real work comes in. As we all know, if you don’t have a target…

Your Total Pay = Your Base Salary + Your Annual Commission

Let’s break it down one more step.

Your Total Pay = Your Base Salary + 12(Monthly Average Order Total X Commission Percentage)

Using the assumptions above you can calculate how much you need to sell each month to reach your annual income goal by using the following formula.

Monthly Average Order Total = (Your Total Pay – Your Base Salary) / (12 X Commission Percentage)

Here’s an example.

Debbie wants to make $83,000 per year, her base pay is $45,000 and her company pays her 15% commission on each order. How much does she need to sell each month to reach her goal? (And you thought you’d never use those word problems from junior high algebra.)

Monthly Average Order Total = ($83,000 - $45,000) / (12 X .15)
Monthly Average Order Total = $21,111

Debbie needs to sell $21,111 per month to make her annual income goals. How she is going to do it is where the real work comes in.

Welcome to my brand new sales idea blog called Sales Vitamins. I will be updating this on a regular, if not daily, basis. I’ve been in sales, sales management and sales training for over 20 years and one thing that I know is that busy sales professionals don’t have a lot of time to read sales books, view sales CDs or even read long sales blogs. I’m going to keep these posts “short and sweet”…and meaningful to you.

Keeping Score. Your boss is always talking about “sales goals.” These goals are normally broken down by revenue amount, new business attainment, product category, SIC code, etc. This is true whether you’re brand new to sales or the VP of Sales for a Fortune 500 company. Coming up with these goals usually takes about 30 seconds, which is a testament to how valuable they are. The most important goal, however, for the sales professional and sales manager to focus on is the one that actually means something to the person tasked with the goal: compensation. If a company has a sales compensation program that is not broken (many are), then sales personnel will be rewarded for the selling behaviors that the company desires. If the sales employees are making the compensation they need to make, then the company should be reaching its goals as well. Again, this is based on a compensation program that is actually rewarding sales staff for selling the revenue amounts, products and types of customers that the company desires. So…why not work it backwards? How much money do you want/need to make? Set your compensation goal and see what has to be done to reach that goal. If you’re a sales manager, then do it for your entire group. This way you will be working toward a goal you care about.

Hint to sales management: your sales staff does not care about any goals other than this one despite what they may say in order to be politically correct. It’s time to get real with them.

Oh, and by the way, if you work it backwards and you find that Superman could not possibly sell enough to reach your goal then I don’t need to tell you that it’s time to do some soul searching.

To be continued tomorrow.