Incentivize sales sourced pipeline

With growth at all costs taking a back seat to operational efficiency, the ability to generate sales sourced opportunities is more critical than ever.?Although the data is slightly different across the board, directionally it’s all the same, sales sourced opps close at a much higher rate and generally in a shorter timeframe with a higher ACV.

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The question then becomes how to help motivate the sales team to focus, or refocus, on generating more pipeline on their own.?If you have seasoned reps that have become reliant on working leads from marketing or SDRs, this can be difficult.?The tactical component of resources needed, segmentation, training, etc can probably be another newsletter on its own so I won’t be covering all of that here.

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What I want to focus on though is how you can help incentivize the sales team to see the value in outbound.?

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Far too often I see the following play out:

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Sales leadership identifies the need to increase sales sourced opps. Leadership then decides to start putting weekly or monthly outbound targets for the team to hit.?Sales is told they need to start increasing pipe and they need to start doing more outbound and hitting these new metrics.

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The outcome??Sales sourced close rates go down.?This happens for two primary reasons.?One, the team is improperly trained or supported to ramp up their outbound and two, the team is focused on hitting outbound metrics, so quantity increases but quality dissipates.?The team is focused on activity and quantity to appease the dashboards, not quality and results.

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I’m certainly not saying that outbound metrics should never be institutionalized within sales teams, but here’s where I would start.?Instead of just throwing new KPIs out there or even changing comp plans to incorporate outbound, first share with the team the value of outbound…show them the $$...pull vs push.

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What’s the value (commission) that a sales rep earns from each outbound discovery call they set??Whether that prospect ends up in the pipeline or not, find the data and take each rep through this one on one.?Or as a sales rep reading this, do this yourself.

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Here’s how to set it up:

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Look at the last 6-12 months of data and consider your sales cycle when pulling the below:

1)??Discovery meetings held from AE sourced outbound motion?

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Example:?35 Intro/Discovery meetings created by rep in the last 6 months

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2)?How many of those closed (so your win rate on those Discovery meetings)

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Example:?7 of those closed.?20% conversion rate from initiate meeting to deal (I’ve seen much higher)

3)?Calculate your Average Contract Value on those deals (ACV)

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Example:?Let’s say the ACV for them was $30k.

4)?What’s the AEs average commission per deal:

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Example:?Let’s use 10%

5)?Calculate the commission per Intro/Discovery meeting set

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Example:?AE closed 7 Deals * $30k ACV * 10% commission = $21k in commission.

6)?Now divide that $21k by the 35 Intro/Discovery meetings it took to get those 7 deals:

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$21k / 35 intro meetings = $600!

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So, for every initial meeting (qualified or not) that an AE sets up, the data shows us the AE will make $600 in commission.?Just for setting up a meeting.

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And this is on $30k ACV deals…if you’re selling $50K ACV deals, it’s $1k per deal!

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When a sales rep understands that from their own historical data that they are making $600-$1k in commission per outbound meeting set, you’re going to get more buy in and more motivation to increase outbound efforts.?

PS - Although the math can be a little more complex, you can use this same logic for SDRs or even your CSM/AM team.