International Door & Operator Industry

SEP-OCT 2012

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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Page 59 of 132

SALES&MARKETING (continued from page 55) gross margin you expect to make. That will establish the sales dollars needed to net zero profi t. Then estimate the additional sales needed over and above break even to allow for the net profi t desired. Do this by dividing the profi t dollars desired by the gross margin percentage. Once you establish the overall sales budget you are then ready to assign individual sales quotas to each sales person. Many things affect this decision including the types of products to be sold, geographical territory and markets covered. For instance if the sales person is going to sell primarily residential products you need to decide fi rst which products. Garage doors, entry doors, awnings, gate systems? Once products are established, which market segments will be solicited. Builders, homeowners, multi-family? Then, which area of your company's territory will be covered? If their role will be commercially focused, the same deci- sions need to be made. Which products? Overhead doors, commercial pedestrian doors, dock equipment, other? Which markets...general contractors, industrial sales, service and maintenance? What area of your territory? I suggest that you make the sales person part of the budget- ing process, especially people that have been selling for you for some time. You are likely to get much greater buy in if they are part of the process instead of just receiving a number. Once the individual sales quotas are assigned, clearly communicate these expectations. Do this in writing and break it down in terms of annual, monthly and weekly quotas. Bite sizes pieces are easier to digest. So maybe focus on the daily sales quota for best results. Always require your sales staff to know where they stand on a daily, weekly and month-to-date basis. Requiring each sales person to turn in or email a simple "booked sales report" weekly is a good way to keep them focused and you informed of their progress. I would caution you to set realistic, attainable sales quotas. It is far easier to raise the bar on a sales quota once the goal set has been met. Setting unrealistic sales quotas for your team can only set them up for failure. Once the sales team member gets a taste of success it is far easier to increase the amount expected. Compensation - There are numerous ways to establish an effective compen- sation plan for your sales team. I would strongly urge against a straight salary method. A better plan involves paying for sales performance. Typically some variation of commission on sales made is a big part of the plan. Having a sales person's salary tied directly to their sales efforts is not only rewarding but typically will yield them a much better income. One that is especially effective involves a minimal base salary, a straight commission on sales made (and payment collected) and a monthly bonus for meeting and exceeding gross profi t expectations. Sales people should be held accountable for each job's profi tability. It is customary to often deny commission if a job's profi t- ability dips below expectations due to an estimating error or cost overrun. Part of the compensation plan may allow for sales contests or spiffs through- out the year. Often the manufacturers represented by the door dealer will assist in these contests and offer incentives for selling their products at key times of the year. If a company vehicle is provided, this should be considered as part of the sales person's compensation as with fringes benefi ts including medical insur- ance, vacation time and retirement plan options. Finally, if a year end bonus is considered it should always be tied to sales performance for the year, not how long they have been with your company. Again, communication is the key for a successful compensation plan. Each sales person should understand their plan Continued on page 58 VOLUME 45 ISSUE 5 2012 57

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