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Dear David: Implementing minimum sales standards

April 25/May 2, 2016; Volume 30, Number 22

By David Romano

Dear David:

Screen Shot 2016-04-28 at 12.50.28 PMFrustration is not even the word to describe how I feel about the performance of my sales team. I have some employees who really work hard and perform yet others are inconsistent. I have tried different incentives, threats and pleading but nothing really seems to make the bottom half of my team better. Is there something I can do?

Dear Frazzled Owner,

If it makes you feel any better, just about every other flooring retailer has the same issue. You are in a catch 22—do you accept this frustration because you need bodies to cover the floor or do you require them to do more and risk them quitting or having to be terminated when they don’t deliver? The good news is there is an effective way to correct this problem by implementing minimum sales standards.

So what exactly is a minimum sales standard? It is a policy that states if the sales associate’s performance falls below the set standard for a fixed length of time, he will no longer have a sales position with the company.

To be clear, minimum standards and goals are two different things; standard defines what must be achieved and goals define what one would like to achieve. For example, someone might have a goal to sell $1 million so he can earn the type of income desired; however, the minimum standard may be only $600,000. These are two different things that should not be intertwined.

Here is what needs to happen for standards to be effective and accepted by your team:

  1. The standards must be realistic. They are not a stretch, they are not something only a few achieve, but they are also not a “gimme.”
  2. The standards must be carefully constructed. Rules must be clear and there needs to be enough time for corrective action to take place when performance is below that standard.
  3. The standards must be validated. Sales associates deserve to know how standards were determined and if they are achievable.
  4. The standards must be enforced. Once the rules are set, people must be consistently held accountable and corrective action must be taken.
  5. The standards must be consistent. No one is above the rules regardless of tenure or likeability. If exceptions are made for some while others are strictly held to standards, you may have some dissention and possible legal ramifications.

According to financial studies my company, Benchmarkinc, has done over the years in which we have collected financial data for thousands of flooring retailers, the average retail sales associate in North America sells just over $660,000 per year; the average “outside” sales associate sells just north of $1.1 million. You can use these averages or you can run sales reports for your own company and establish the starting point.

To set your exact standard you must decide the minimum sales you are willing to allow. If you use the $660,000 figure that would mean sales associates on average sell $55,000 per month. It’s up to you to set what is realistic, carefully constructed and validated so there will be less resistance upon implementation. If circumstances change and they severely affect the ability to drive sales for either the individual or the company as a whole, these standards should be examined and possibly adjusted.

Now the tough part: Regardless of how much you like an individual and how well he has performed in the past, if he is below your minimum sales figure for 90 consecutive days he must seek employment elsewhere. It always ends up ugly when standards are enforced for some and not for others.