Three things make a mature sales operation: a reliable customer record, a target built on logic rather than a wish, and an incentive that drives the right behaviour. Break one of them and you break all three.
1 The customer record: the forgotten asset
- Identity data: legal name, tax number, address and contacts.
- Commercial terms: price list, discount tier, payment terms and credit limit.
- Trading history: orders, invoices, returns and complaints.
- Contact log: visits, calls, proposals and their outcomes.
- Account owner: the responsible salesperson, and who covers when they are away.
The customer recorded three times
“Al Noor Est.”, “Al Noor Trading Est.” and “Al Noor”. Three records for one customer, so their balance splits three ways and they exceed the credit limit with no warning from the system. Deduplicating by tax number rather than by name prevents this at the root.
2 Segmenting customers
| Segment | Description | How to handle them |
|---|---|---|
| Key accounts | A few that produce most of the revenue | A dedicated owner and an annual plan |
| Growth accounts | Small today with real potential | Invest in expansion and cross-selling |
| Steady accounts | Regular orders at a reasonable margin | Efficient, low-cost service |
| Draining accounts | Thin margin and heavy demands | Re-price or exit politely |
Not every large customer is a profitable one
A customer buys a lot, but wants daily delivery, returns 15%, pays after 120 days and consumes half of customer service’s time. Measure customer profitability after the cost of serving them, not by how much they buy, and the list of “our best customers” will change considerably.
3 Building the target and forecasting
The base
Last year’s sales stripped of one-offs
The market
Sector growth, inflation, competition
Capacity
Headcount, stock and supply ability
Allocation
Across months, regions, products and reps
A target not tied to real capacity is a number for presentation, not for management
Four open opportunities for next quarter:
| Opportunity | Value | Probability | Weighted |
|---|---|---|---|
| Customer A — in negotiation | 400,000 | 80% | 320,000 |
| Customer B — proposal sent | 300,000 | 50% | 150,000 |
| Customer C — qualified | 250,000 | 20% | 50,000 |
| Customer D — prospecting | 200,000 | 10% | 20,000 |
| Total | 1,150,000 | — | 540,000 |
The rep says “we have one million one hundred and fifty thousand in the pipeline”, and the number fit for planning is 540,000. The gap between the two is the gap between an optimistic report and a budget that can be delivered.
4 The commission scheme
| Model | How it works | Where it fits |
|---|---|---|
| Fixed salary only | No commission | Technical services with long cycles |
| Percentage of revenue | % of sales | Simple, but encourages discounting |
| Percentage of margin | % of gross profit | The safest for protecting profitability |
| Accelerating tiers | A higher rate above target | Pushes past the number |
| Tied to collection | Earned once the cash is received | Where credit sales are common |
Every incentive produces a behaviour — so choose it deliberately
Commission on revenue produces discounts. Commission paid before collection produces sales to customers who do not pay. A tier that jumps at a certain number produces deals pushed from December into January. Always ask: what behaviour does this scheme make profitable for the salesperson?
Lesson summary
- The customer record is an asset of the business, not one person’s memory, and is deduplicated by tax number.
- Segmenting customers decides how each group is served and invested in.
- Customer profitability is measured after the cost to serve, not by purchase volume.
- The target is built from the base, the market and capacity, then allocated.
- The probability-weighted forecast is the number fit for planning.
- The commission scheme creates behaviour, so design it on margin and collection.
5 Test your understanding
Three quick questions
Pick the answer you believe is correct and you will see the result immediately.
1. One customer is held under three different names in the system. The most serious effect:
Credit control operates at record level; split the record and the control stops working.
2. A pipeline holds 1,150,000 in opportunities, weighted at 540,000. Which figure goes into the budget?
Weighting reflects the likelihood of the revenue arriving, and commitments are built on that, not on the optimistic total.
3. A company pays commission on invoicing rather than on collection. The expected outcome:
When the reward is detached from the cash, issuing the invoice becomes a goal in itself.