P = C x M x E

This looks like something Einstein might have written. He may have. I saw this formula 30 years ago at a management training workshop and the instructor didn’t credit it as far as I recall. Understanding and applying what it says has helped me work more effectively with others. I hope it will do the same for you.

If you are an owner or manager reading this, it’s likely that you have been frustrated at times with an under-performing salesperson who appeared to have the ability to successfully sell. Or you may be the discouraged salesperson who sells the jobs but something seems to go wrong once you turn them over to the installation department.

At any given moment a single event can get in the way of success, but if there are continuing problems then there must be an underlying chronic issue. Let’s use this formula to help us understand what it takes to get consistently excellent sales performance.

The formula stands for: Performance = Competency x Motivation x Environment. It suggests that anyone’s work performance is a function of their job skills competency “multiplied by” their individual motivation “multiplied by” the environment they work in. I emphasize “multiplied by” because, just as in a mathematical formula, if any of the three factors are zero then the result is zero. Let’s look at how you can do your part to make sure the sales results you get are spectacular.

Performance will be defined as the outcome of the selling effort. We measure total sales, gross profit margin, net profit margin, average job selling price, close ratio and of course sales commission. The expression “what gets measured gets done” instructs us to have written, measurable goals in all of these categories. It’s a manager’s job to manage his team and his resources to produce these results.

Salesperson’s Performance Goals Example: Sell $1.5 million in add-on/replacement (AOR) work in 2008 at a 45% gross profit margin with a 42% close rate. This will produce $90,000 in commissions plus salary and benefits.

Competency relates to all of the important skills an effective sales person would need to produce the performance
goals. This category should be considered a work-in-progress since all of us can benefit from continuous skill-building training and practice. It’s been said that 10% of all salespeople produce 90% of the sales, and that 10% of all salespeople go to continuous training…I believe it’s the same 10%.

Sales Skills Competency Examples: Honest, results-oriented, dependable, enthusiastic, good interpersonal communication skills, good listener, amiable, good presenter, persuasive, good at closing, objection handling and follow up (to name just a few).

You might be wondering where you find individuals with these characteristics. The answer: you find the best people you can who are capable (and willing, as we will discuss in a moment) of developing these skills and then you train and manage them.

Motivation is a bit trickier to explain — and to manage. For our purposes I’ll suggest that someone can’t be motivated, they are motivated. To illustrate, if a salesperson often shows up late for work you might say that salesperson is not motivated. I say he is motivated. He is motivated to be late. If his paperwork is always incomplete then he is motivated to leave out information he knows he is supposed to include.

What I’m suggesting here is that you can observe a person’s actions and determine what their motivation is. If he does the right things, then you can realistically conclude that he has the right kind of motivation. What can a manager do about someone who is apparently motivated to do something different than is required? He should review the requirements, confirm they are understood, ask if support/training is needed, create an agreement, explain the consequence for non compliance and confirm all this in writing. If the person was just slacking off because there was no consequence, then I would fault the manager. If the person still chooses to not perform, then that’s all the information you need to have.

How do you know if someone is motivated? Ask them what they have done that makes them proud. If it’s the new couch he bought that has a beer cooler built in so he doesn’t have to get up from game-watching between Saturday morning and Sunday night, well, that also just might be all the information you need to have.

Environment includes all that has to do with the company including how employees are managed, working conditions, how the employee is treated, what the compensation is and all of those factors that go into making one company good to work for and another a nightmare. If you’ve seen the TV show “The Office” you have a clear idea of its “environment.”

The environment is the only area where managers really have control. Hire and train a motivated salesperson but don’t manage him to use the strategies and tools he’s learned and he’ll under- perform. Don’t back him up when there are customer complaints about installation problems and he will eventually leave. Cut a salesperson’s pay when he consistently exceeds his goals because he’s “making too much” and he’ll go to work for your competition.

Whether you are managing someone else or managing yourself, here are the quick-start guidelines:

• Make performance goals and expectations clear and measurable and put them in writing. Meet at least monthly to review results.
• Good sales people are made, not born. A good rule of thumb: if they have 50% of the competency you need and seem willing to learn the rest, make the hire.
• Someone is motivated to do what needs to get done or they are not motivated. “Incentives” only serve to buy time. Don’t waste your time and money thinking a person of character will change who they are for a few bucks.

Studies have repeatedly shown that the work environment will determine performance more than any of the other factors. Support, encourage, recognize, reward and appreciate good performance and you will get more. It’s as simple as that.

Here’s something Einstein did say, “Nothing happens until something moves.” Whether you are an owner, manager or salesperson, you need to do your part to make sure there is constant movement toward ever-improving sales performance.

Tom Piscitelli has more than 30 years of experience in HVAC sales, sales management, marketing, and consulting. He has worked with major manufacturers, distributors, contractors, builders, and utilities. In 1997, he founded Applied Learning Associates Inc. and began teaching the System Selling That Works seminar series. For more information on Tom and his company, go to http://www.sellingtrust.com.

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