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The New Standard

How to adopt a performance-based sales model.

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What if everything you’ve been told about selling was wrong? What if up was down, left was right, good was bad and black was, you guessed it, blue?

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There is perhaps no topic researched and written about as thoroughly as interpersonal selling. Why? It’s important. It’s hard. It changes. And it’s one of the most central aspects of your dealership’s existence.

No sales means no revenue. No revenue means your dealership doesn’t have money to pay utilities, buy inventory and, oh by the way, pay you!

Wanna Hear More From Mark?


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Performance Based Selling

The Secret To Doubling Sales

By putting performance-based sales strategies to work for you, you should see an increase in sales, but how big? At the Peak Dealership Performance we have been conducting motorcycle industry workshops since 1990, and one of the most common questions we get asked is, "What’s the secret to doubling sales?"

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So lock the door, turn off your cell phone, put down the Starbucks, here is the secret to doubling sales: See twice as many prospects. Pretty simple isn’t it? Yes and no.

If the key is to see twice as many prospects, commissioned salespeople need to employ "peak prospect attraction." Most of us don’t do all we could to do attract new business. This chart is a great starting action plan to foster attraction. Adopt action items you aren’t currently employing and expand on the items you’re already using to create peak prospect attraction.

Standard Sales Models

Many approaches to selling include organized steps such as:

  • Approach
  • Interview
  • Demonstrate
  • Handle objections
  • Close
  • Follow up

There are many variations on this theme, but the biggest challenge with these approaches is that the focus is on the task and not the result. If I’m a sales manager working with a salesperson, and I ask him to update me on his performance they may say, "Well, I talked with several customers yesterday, and I’m building rapport with them now."

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If our dealership is using a general sales model, as a sales manager, I might accept this response as proof of progress. Unfortunately, many sales managers fall into the trap of thinking that this is action. Who could blame them? It’s what we’ve all been told for years.

From my perspective, here are some of the most egregious problems with these approaches:

  • There is no observable behavior or outcome.
  • The salesperson doesn’t really have a definite and defined next step.
  • Managers have no way to evaluate the process. Worse, we as a sales team have no way to accelerate the sales cycle.

Performance-Based Selling

Performance-based selling is a method of selling which focuses on results and milestones, constantly moving your sales people and your customers to the next agreement in your process.

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Let’s deconstruct this definition for some clarity:

A method of selling … This implies a step-by-step approach to actively pursuing sales. Funeral directors wait for business, not successful motorcycle dealerships.

… which focuses on results and milestones … A defined, often provable or observable performance. We don’t buy a hammer because we want a hammer, we buy a hammer because we want to drive a nail (or perhaps fix your 1979 Sportster).

… constantly moving to the next agreement … Sales success is not one big "yes" rather it is a series of small, ever-building commitments. This moves the customer to the next "yes" in your process (and there is almost always a next "yes.") Want to move forward? Squeeze the clutch, bang it into gear, rev the throttle and roll.

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… in your process. When you create your adaptation of these suggestions and make them your own, it will be better for you, your dealership and your market. And you will work harder, smarter and longer to make it successful because, well, it’s yours.

Mark’s Compensation Commandments

We will detail an example of a performance-based sales process next month, but before we get there, it’s important to discuss compensation plans which are as varied as skull-themed accessories for Harley-Davidson motorcycles! But here’s how I think it should be done:

  • Salespeople should work on commission: I don’t buy the no-commission-better-service perspective. I think when salespeople are commissioned correctly it creates a hyper-service, whatever-it-takes attitude. If my income is dependent on me taking care of customers, I’m going to get good at taking care of my customers. I’m also a fan of salespeople working on a wholly commissioned plan. No hourly, no draw, nothing but what you sell. I realize for many people, this may not be possible, so set commission plan targets; if those aren’t hit perhaps your plan could default to a living hourly wage? This sort of plan would allow you to transition new employees into the business with a base salary and then move them to a strictly commissioned perspective as soon as possible. What about slow times you may ask, that’s the great thing about sales … it’s only slow if you make it slow.
  • Base commission on gross profit: Paying salespeople on gross profit (the difference between the selling price of an item and its cost) is a great way to compensate because it protects the dealership. If the dealership pays someone a flat dollar amount to sell a motorcycle, the salesperson has less incentive to sell the motorcycle at full margin. For example if I’m paid $150 for every motorcycle I sell, I don’t care if I sell that bike for $7,800 or $7,300 because I’m still getting my $150. If I’m compensated on gross margin, I will be less inclined to "give away" discounts on the product because I’m giving away my own money. I’ll learn now to sell value, handle objections and provide such a great experience customers won’t want to do business anywhere else. In some areas of the dealership such as P&A and riding gear, you may want to pay a percentage of the retail selling price because it’s harder to get to gross margin. It’s the same premise, it’s just a smaller number.
  • Make it a group thing: Ever have a customer come in on their salesperson’s day off and no one wants to help that person? Ever have salespeople speak negatively about one another in hushed tones? Ever see salespeople try to steal customers from one another? Welcome to life in the shark-infested individually- compensated sales pool. Make it "we" and not "me." Pool the gross margin dollars for the month, and then everyone is paid a percentage of those dollars. Then it’s not your customer or my customer. It’s our customer. You can still pay different individual percentages based on tenure or other performance measures, but it still makes us a team in the truest sense of the term. What about low performers who don’t pull their own weight? Typically more successful salespeople will mentor that person so their performance improves or they get pushed out. Either way, the store, the customer and even the lower performer wins — they either get better or go find a job better suited to their skills!

Next month we’ll deliver that detailed example of the performance-based sales process. For now, think about what might be possible in terms of your sales potential, and when it comes to your commissions you will be able to reach your peak performance!

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For more on Peak Prospect Attraction go to
www.PeakDealershipPerformance.com
and watch the quick video overview.

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