The world of sales is changing, and sales compensation has always been an issue.  How do you strike a balance between incentive and reward?  In this interview with Geoff Vincent, we learn about a terrific sales compensation calculator that you can use in your business.

Q. Geoff, you’ve been in Marketing most of your career, so what’s your interest in sales compensation?

A. Firstly, I’ll say that I have been in B2B marketing for 20+ years and therefore have always worked closely with Sales. So I’ve made it my business to understand what makes a Sales rep tick, such as sales compensation plans. More recently, I was in a general management type role and had a sales team working directly for me so I was directly responsible to develop a sales plan to drive results, which would include sales compensation. I came to understand the importance of a good comp plan to drive results and also discovered that I like it.

Q. How did you come up with the idea of a sales compensation calculator? Why did you develop it?

A. Lately, I consulted at a small business that has a sales team. However, that team lacked any sort of compensation structure or plan that was tied to company objectives or actually communicated to reps what was expected from them. The solution I suggested was to simply provide a sales rep with performance expectations that indicated minimum requirements but also incentives to overachieve, all tied to company objectives. Finally I thought, what better way to communicate all this than in a sales compensation calculator.

Q. What is the business principles behind the calculator?

A. In short, it’s Pay for Performance. The idea is that a company should always pay fairly for performance delivered. Specifically, a company should outline objectives (quotas, if you like) for a sales rep and expect a minimum level of performance in exchange for salary and commissions. But the company should also pay incrementally more for above-and-beyond performance.

Q. What are the key elements of the calculator?

A. There are four key elements:

Firstly, pay a sales rep salary plus commissions. Secondly, assign a sales quota which is measurable by a time frame (monthly, quarterly, etc.). Thirdly, expect a certain level of performance for the salary. This is typically expressed as a % of quota, say 80%. Call this the commission threshold. Lastly, pay commissions after a rep achieves their threshold and accelerate that commission rate after the rep hits full quota.

Q. Who uses the calculator? Who is it really for within a typical company?

A. The calculator can be used by a CEO or CFO to plan and forecast cost of sales at various performance levels. A sales rep (or sales manager) can use it to calculate probable and potential earnings based on varying sales achievement levels.

Q. Any final thoughts about the sales Compensation calculator?

A. Yes, a couple, Firstly, it’s a flexible tool. For example, although I advocate a salary & commission pay structure, the calculator accommodates 100% commission scenarios too. Secondly, while this is designed for smaller companies who do not have a formal performance management methodology in place for their sales reps (nor have the expertise in-house to create one), it can also be used by larger companies where a simple plan may just be the better way.

The 4 point sales comp schema described above is available as an online tool or as an excel download at Sales Compensation & Commission Calculator.

CEOs of businesses who have a small or no marketing team can still (and should) aspire to understand their customer’s level of satisfaction that his/her products and services. But you’re not quite big enough yet to have dedicated marketing or administrative resources to create, implement and analyze a customer satisfaction survey. What to do?

Today, I’d like to introduce you to an easy and effective methodology that any CEO can implement and immediately start to measure customer satisfaction. The premise for this methodology is that even having a “minimalist” measurement of customer satisfaction is better than none. But even a simple program can yield impactful, actionable information.

Here’s the process in just a few easy steps:

1. Customer emails. You need them. If you don’t have them, start collecting them now.
2. Create a survey with the following questions:

How likely are you to CONTINUE to be a customer with [your company name] for another year?

• Kind of goes to the heart of things right away doesn’t it? This question is about RETENTION and will give you a pulse check from your customer base real fast.

Over the coming year, do you expect your business with [your company name] to increase, stay the same or decrease?

• This question is obviously related to the preceding retention question but now we start to peel back the onion to better understand specific INTENTION to spend and trend thereof. One could also view this as a measurement of share of wallet.

How likely are you to recommend [your company name] to others?

• I love this question. It’s a way to measure degree of ENGAGEMENT with, or loyalty to, your company. Who wouldn’t want a current customer to make a recommendation.  Now, ask and measure it.

What is your overall customer satisfaction level with [your company name]?

• Now that you’ve “forced” your customers to think a little bit about retention, intention and engagement, you now ask them to sum things up with their overall SATISFACTION level.

Please provide any comments, feedback or suggestions regarding any aspect of your dealings with [your company name]. If you would like to be contacted, please provide your name and phone number or email.

• This is a completely open ended, free form section, where you invite any and all comments also known as verbatims. This is the qualitative information within a quantitative structure and will provide added insight to the survey.

1. Use an online survey tool and copy & paste these questions into it. A good online option which is free and widely used is SurveyMonkey. To help you visualize these questions, I created this survey in SurveyMonkey. Click here to see this survey and feel free to fill it out so you can experience exactly what your customers will go through.
2. With your list of customer emails, you now send out an invitation to complete this survey. I recommend that the invitation come from the company CEO as this shows a high level commitment to listening to customers. Sales reps should also be encouraged forward a link to the survey to their customers as a way to drive up responses rates. Also, as a result of this initiative, the CEO should be prepared to get calls from customers …and there’s nothing wrong with that at all.

A comment about frequency: Your first survey will provide your baseline results. All subsequent survey results will be measured against each other including the all important first one. I recommend doing this survey at least twice a year. Customers may get fatigued if they are asked for their feedback more frequently. However, if your customer base is big enough, you could do a quarterly survey, but send it to different customer segments each time.  The more frequently you do surveys, the more current your information will be and trending patterns will emerge more quickly.

Don’t forget to see this sample survey in action by clicking here.

That’s it! You’re on your way. Remember the old saying about “You can’t manage what you don’t measure”? Well, this can be your start by “measuring” customer satisfaction.

RETENTION  à    INTENTION à    ENGAGEMENT à   SATISFACTION

In our first of three articles, we discussed a relatively simple methodology to identify the predominant industries for one’s customer base and also market sizing for same. We called it: Determining Industries and Market Size – The Cheap and Cheerful Method.

Yesterday, we moved on to a somewhat more elaborate analytical effort to find your best customers, but it will give you substantially more detailed information to base your planning upon. We’ll called this one: Determining Industries, Market Size, Firmographics and “Best Customer” Profile

Today, we complete this 3 part series with the final few steps to complete: Determining Industries, Market Size, Firmographics and “Best Customer” Profile.

1. 1. Develop the KEY firmographics of your database.

Using the matched data, you now want to do a few database exercises to give yourself separate views of sales volume, employees, NAICS code and State. I’ll show you examples of these in a moment.

How to do the analysis: There are probably a number of methods and softwares that can enable you or someone on your staff to do these analyses. I prefer to use the Pivot Table function in MS Excel because it’s a commonly used software and (for me) it’s not too difficult to learn. Here’s a good introductory video about Pivot Tables.

The purpose is to take our 4,000 lines of data and collapse it into useable tables. In other words, we’re going to take data and turn it into information. When the raw data is organized into summarized tables, you can quickly see where the numbers cluster. The clusters for any given firmographic element are what I call the “Sweet Spot” and all of the sweet spots combined provide a “Best Customer Profile”. Please note that you are the one who identifies the sweet spots. The pivot table function does not do this for you. This is where your best judgment comes into play.

Let’s do an example using our 4,000 matched database scenario. You’ll use Pivot Tables to develop summarized tables for Sales Volume, Employees and NAICS code. Here’s a view of the tables you should build using the Pivot Table function:

Our final analytical step is to combine all of these “Sweet Spots” into one profile.

This is the firmographic profile of this company’s best customers:

You now have statistically reliable data that tells you:

• Your best industries
• Your best customers by size for sales volume and number of employees
• Your best geographic markets

1. 2. Determining Market Size and Market Share.

This last task is easy and should not cost any money to accomplish. Equipped with the firmographic profile of your best customers, you now want to determine how many other companies match that same profile …this is the market size.

You simply go to a business list provider, give them the firmographic profile of your company’s best customers and ask for a count of all companies that match that profile. Easy!

Determination of market share:  In this example, we would ideally want to identify the number of customers (of the 4,000) that have all three of the firmographic characteristics in common. If you have an analyst who can do this data manipulation, then you can take the resulting number and divide by the market size and you now have your market share. In the absence of this analytical skill set, I would be satisfied with simply taking the number of customers who match by industry code, adjust that number down by 20% to 25% (to broadly reflect sales volume and employees). Use the resulting number and divide by the market size and you now have your market share.

A few final thoughts about this approach:

• The methodologies described above are intended for use by small or medium size companies who require good estimates of market size and market share but do not have the resources to hire staff or organizations that do this for a living (and charge significant fees for their services). In other words, either of the solutions above will provide good estimates of size and/or share but are not a substitute for an intensive, robust market size and share exercise but which could easily be a five or even six figure investment.

• The so called “sweet spot” ranges for sales and employees are intended to show the best ranges to target. These are the niches that your current sales and marketing efforts would indicate to be your best bets for new customer acquisition. However, that is not to say that one shouldn’t target prospects that fall outside these ranges. In fact, you may have a business growth strategy that specifically targets companies that fall outside these ranges. My one suggestion would be to test these secondary ranges and analyze the results before going full steam ahead with expensive acquisition programs.

• Lastly, I currently do not have any kind of commercial relationship with Melissa Data and have not personally experienced their abilities regarding data cleansing and append services. Please proceed using our own best judgment on what company you might like to engage with this kind of project.

To see the entire text of these three articles RIGHT NOW, click on the following link:

Determining B2B Market Size and Market Share – A free BizCompare White Paper.

Yesterday, we discussed a relatively simple methodology to identify the predominant industries of one’s customer base and also market sizing for same. We called it: Determining Industries and Market Size – The Cheap and Cheerful Method.

Now we move onto a somewhat more elaborate analytical effort (and it will cost a bit of money) but it will give you substantially more detailed information to base your planning upon. We’ll call this one:

Determining Industries, Market Size, Firmographics and “Best Customer” Profile

Let’s dive in:

1. 1. Generate a list of your CURRENT customers.

You want to generate a list of ALL your very good present customers. Eliminate dormant customers, poor payers, perennial money losers (ones that you keep just for the cash flow but would otherwise “fire”) and any other customers that, for whatever reason, you could live without. Your list should now represent the customers that you would consider to be yourbest customers. Put them all in a spreadsheet. For each customer, include company name, full address with zip code, phone number and you might as well include any other data at hand like their sales rep’s name, sales, average sale (if applicable), source (how they came to you), etc., all in separate columns. Presumably, you would LOVE to have hundreds more customers just like them.

2. Indentify the industry to which your customers belong.

This next step is the part that will cost some money because you will need to engage a “data cleansing and append” company. These companies maintain massive databases of virtually all companies in the U.S. (and internationally) with rich information on each company. They provide data cleansing and enrichment services and will also sell lists of companies for marketing purposes.

They will take your database and, in general, do the following:

Apply an address correction software to your data (this helps with matching)

• Run your database against their universe of companies
• Endeavour to match each company in your database to the same company in their universal database based on company name, street address, city, state and 5-digit ZIP Code
• The average percentage match rate is 30% – 60%, but varies depending on the accuracy of the data in your list.
• They will return your database with extra data appended to each matched record that can include employee size, sales volume and NAICS code (all recommended).

Cost: I researched one provider of this kind of service, a company called Melissa Data. They have a minimum order fee of $500 but they charge based on the size of the initial database you give them, the elements you want to append and the percentage match rate they ultimately achieve.

Let’s show an example using published pricing from Melissa data: You submit 10,000 records and you want employee size, sales volume and NAICS code appended to as many records as possible. They achieve a match rate of 40%. Their cost would look something like this:

* Example: 10,000 x 40% x $60/M = $240

You could call this a pay-for-performance pricing model because they only charge when they get a match (in this case 4,000) not on the entire input file (10,000).

Match rate: You may wonder why only 40% or so are matched and this may seem low to you. However, in the world of basic data matching, 40% is not a bad result. It is possible to achieve a much higher rate, perhaps as high as 75% but that would entail a much more elaborate matching process that comes with a price tag that is many multiples of the solution I’ve outlined above. Also, in this example, we matched 4,000 and having that as our sample set should deliver a statistically accurate outcome. So it’s not absolutely necessary to have a high match rate to get your desired outcome, which is a profile of your best customers.

Confidentiality: You may have reservations about data security and the confidentiality of your customer information in the hands of a third party. What I can tell you (and I worked for Dun & Bradstreet for 10 years) is that companies who do this kind of sensitive data work go to great lengths to handle a customer’s proprietary data with utmost care and security. Frankly, they have to because if there was even a whiff of data security issues, it could do serious harm to their business. In short, they have maximum incentive to handle your data with extreme caution.

In this example, you would get your full database back and 4,000 of them will have this key firmographic info appended to it. This is your raw database to start the next phase of the work that we will discuss …tomorrow! That’s right folks, please tune in tomorrow to read the final article in this series of three. OR …

To see the entire text of these three articles RIGHT NOW, click on the following link:

Determining B2B Market Size and Market Share – A free BizCompare White Paper.

Figuring out what your market share is can be difficult.  But it doesn’t have to be.  In this 3-part series of posts, I’m going to give you some practical ways that you can figure out your share of the market.  These articles are also featured in a white paper which features these two methods of calculating market share that you can download at BizCompare.

You’re the CEO of as growing B2B business. While things have been going great, you don’t really know the true potential for your company. Specifically:

What is the size of the market that you play in?

What is your current market share?

The answers to these two questions are the foundation for your Marketing planning and the challenge is how to answer these questions and have confidence in the numbers.

In this series of 3 articles, I will present two scenarios that any CEO or marketing/sales leader of a small business can employ to determine market size and/or market share numbers.

Today’s article and our first scenario is what I call the “cheap and cheerful” solution that costs nothing but a bit of time. It answers the question:

• What are all the general industries to which your customers belong?
• Approximately, what is the size of your market?

The second scenario is more involved (and will be covered over two article publications) but will give you much more detailed information such as:

What are all the specific industries to which your customers belong?

• More specifically, what is the size of your market?
• What are the predominant “firmographics” for your customers (i.e. sales, employees, etc.)
• What is the profile of your best customers?
• How many prospects match that profile?

Let’s get started!

Determining Industries and Market Size – The Cheap and Cheerful Method

Here’s a 4 step process that won’t take you longer than a few hours to complete. When you are done, you’ll know approximately what industries you play in and the market size. Here goes:

1. Generate a short list of some of your CURRENT customers.

This needs to be a list that is manageable but also large enough for some commonalities to emerge (more on that later). I recommend you get a list of 20-25 of your largest customers and another 20-25 of your fastest growing customers*.  You need their company name, street  address, city, state, zip and phone. Presumably, you would like to have dozens more just like them. Put all this information in a spreadsheet.

* While I suggest a total of 40-50 customers, if possible I would advise trying to use more customers in your analysis. This will just increase the sample size, ergo the accuracy level.

1. Indentify the industry to which your customers belong.

This next step will take a few hours because you need to do some high level research on each of your customers. However, this is an easy task so if you have an assistant, a sales administrator or any person with some smarts and eye for detail, so you can delegate the task. Objective: You want to indentify the NAICS code for each customer.

One customer at a time, cut & paste the customer’s name and address into Google. Here’s an example for a fictitious company: Sample Company 1234 Anywhere Ave Sacramento, California 95838. A Google search would show a result as follows:

Look for search results for your customer in business directories (as highlighted above) like BizCompare, Manta, AllBusiness or others.

Next, click on one (or more) of the business directory links and look for the company’s NAICS code. Example:

The number “561499” is the official NAICS numeric code. The words “All Other Business Support Services” is the official NAICS description. Record the number and description in separate columns in the spreadsheet beside each customer name. Repeat for all customers. You now have 40-50 of your best customers all in one spreadsheet ready for analysis.

1. Now, indentify the DOMINANT industries by looking for industry patterns.

Go to the NAICS description column and apply a “sort” or “filter” function. Both actions will deliver the same result which is to cluster companies by NAICS description.  Now, perhaps for the first time, you are looking at objective information telling you the specific industries to which your best customers belong.  What is the data telling you? How many unique industries are there? What are the industries with the most occurrences? Starting with the ones that occur the most you now have your target industries to help fuel your growth.

1. Look for the total number of companies in your target industries.

Now that you have your top NAICS industry description, you want to find out how many companies are in those same industries. You have a couple of approaches to choose from:

• You can do a Google search using the industry phrase (“5614999 – All Other Business Support Services”) and, again, look for sites like BizCompare, Manta, AllBusiness or a government site like the U.S Census Bureau. Or
• You can simply go directly to these sites and search/browse for your target industry.

Either way, in short order, you will be presented with the number of companies for that industry. Example:

Note: When looking for number of companies in a specific industry, there are bound to be some variations between sites and database. So I suggest that you look at 3 or more sites to the see the number of companies on each site, take an average or select a number you’re most comfortable with.

Complete! You now have:

• Your dominant industry classifications
• Your approximate market size

If you are looking for sales leads or for a marketing list, you are now equipped to go to any business list provider and request a quote for a list of qualified companies. By providing them with the NAICS industry classifications you just researched, you are significantly narrowing the field of targets, probably saving yourself money along the way by not targeting un qualified prospects.

Next up!

Tomorrow and the next day, I will discuss a methodology to do this same analysis but with more precision providing greater insight.

To see the entire text of these three articles RIGHT NOW, click on the following link:

Determining B2B Market Size and Market Share – A free BizCompare White Paper.

You’re a busy CEO of a growing company and you want to feed your sales team with a steady stream of leads …leads that are NOT out of the phone book. But you’re not quite big enough yet to have dedicated marketing or sales resources to source new leads. What to do?

Here’s a 5 step process that won’t take you longer than a few hours to complete. When you are done, you’ll have hundreds if not thousands of sales leads to distribute to your team. Here goes:

1.  Generate a short list of some of your CURRENT customers. This needs to be a manageable list but also large enough for some patterns to emerge (more on that in a moment). I suggest you get a list of 20-25 of your largest customers and another 20-25 of your fastest growing customers.  Get their company name, full address and you might as well include any other data at hand like their sales rep’s name, sales, average sale (if applicable), source (how they came to you), etc. Presumably, you would LOVE to have dozens more just like them. Put them all in a spreadsheet.

2.  Look for preliminary patterns. It’s possible that this is the first time that you’ve looked at your best customers in this manner, all at once. Do you see any patterns? For example, do these customer cluster by geography? Are there any other discerning commonalities. Let this wash over you …you might be surprised what insights it solicits.

3.  Identify the industry to which your customers belong. This next step is the most time consuming because you need to do some cursory research on each of your customers. However, this is an easy task so if you have an assistant, a sales administrator or any person with some smarts and eye for detail, delegate the task. Objective: Indentify the NAICS code for each customer.

One at a time, cut & paste a customer’s name and address into Google. Here’s an example for a random company: Apple Center Whittier Paralegal, 14454 Whittier Blvd, 90605. A Google search would show a result as follows:

Look for search results for your customer in business directories (as highlighted above) like BizCompare, Manta, AllBusiness or others.

Next, follow that link and look for the company’s NAICS code. Example:

The number “541199” is the official NAICS numeric code. The words “All Other Legal Services” is the official NAICS description. Record the number and description in separate columns in the spreadsheet beside each customer name. Repeat for all customers.

4.  Look for more patterns. Go to the NAICS description column and apply a “sort” function. Alternatively, you can also apply a “filter” function. Both actions will deliver the same result which is to cluster “like” companies by NAICS description.  What is the data telling you? How many unique industries are there? What are the industries with the most occurrences?

Now, maybe for the first time, you are looking at empirical information telling you the specific industries to which your best customers belong.  Starting with the ones that occur the most, you now have your target industries to help fuel your growth.

5. Look for other companies in your target industries. Now you have your top NAICS industry descriptions and you want to find other companies in those same industries. You have a couple of approaches to choose from. You can do a Google search using the industry phrase and, again, look for sites like BizCompare, Manta or AllBusiness. Or you can simply go directly to these sites and search/browse for your target industry. Either way, in short order, you will be presented with a list of companies for that industry. The list could easily be thousands of companies so some sites provide ways to further filter the results by state, number of employees and sales to refine and reduce the quantity of companies (see a sample list of companies with filtering tools).

Voila! You now have a list of companies in relevant industries that you can distribute to your sales team. In many cases, the individual company profiles on these business directories provide valuable information for your sales reps such as contact name, additional locations etc.

A word of caution. While I suggested a total of 40-50 customers, I would advise if possible to try to use more customers in your analysis. This will just increase the sample size and ergo the accuracy level.