Incentivizing sales is a challenge. Ask anyone chasing growth. It may be easy to energize a sales force, but it’s important they’re incentivized do business the right way, not the easy way.
Managers often make the mistake of incentivizing for performance which is already paid through commissions. Consider incentivizing for compliance with company processes and policies. That’s what often gets overlooked.
If a process requirement lacks value, it probably shouldn’t be there. On the other hand, valuable processes tend to get skipped over when salespeople are chasing the sale. Incentivizing compliance is a win-win.
Let me give you an example:
- You’ve designed your prices to allow up to 15% for sales commissions.
- Your sales people are on 100% commission at 7%
- Your sales managers are paid a moderate salary, plus 3% of sales once targets are met.
It’s a common scenario. The incentive is straight forward: If your sales people don’t sell, they don’t eat. If your managers don’t motivate, they leave a lot of money on the table. If you’re having trouble hitting scale, you still have commission money in the budget to service stretch goals (increased commissions for having exceeded targets). But there’s a problem lurking under the surface.
How to avoid a high risk mix
Policies and procedures aside, you’re not just incentivizing sales with this classic scenario. Without intending to, you’re also incentivizing corner cutting and misleading practices. The key here is to incentivize method as much as results.
While I’m sure you’ve hired people with integrity, and your training policies direct how you want them to sell, the need to eat is going to dominate at some point. Your ambitious sales people (and you do want them to be ambitious) will start replacing assertiveness with aggressiveness. The deals struck will take on a whiff of deceit. In the short term, your sales people will hopefully hit their numbers, but your brand will suffer. When your brand value trails off, so too will sales. It doesn’t have to be like this.
There is a better way
Yes, you want to incentivize growth, but why not try incentivizing customer experience KPIs? Your targets – long and short term – are increased sales, but the two shouldn’t operate in isolation. Key performance indicators – as they relate to consumer preferences and perceptions – are at the heart of a healthy business relationship. Managing your sales practices in the context of a healthy relationship builds long-term business and causes short-term sales to happen along the way.
Start with clear and defined strategic objectives. At Plasmechanica, we’re the professionals at drilling down; so, if you’re challenged by this, contact us for a free consultation. We’ll get you pointed in the right direction.
Clear objectives appropriated targeted will draw an appropriate market. By that, I mean prospects for whom your product or service is relevant. If your marketing is congruent, your sales energies can shift from prospect persuasion to customer satisfaction.
Let me break that down for you:
Marketing and Sales are two separate but integral business activities. One leads to the other. While sales focuses on the product and its conversion into revenue, marketing is about consumer needs that can be resolved through the product. There’s a cart and horse relationship between them. Minimizing the marketing function and pushing undue responsibility on to Sales puts the cart before the horse, so to speak. This is what tends to happen in the classic scenario.
Traditionally, Sales was geared toward outreach. Motivated sales people were tasked to prospect, to go out into the world, meet prospects, and convince them of the need for your product at the price you (and the market) determined. These sales people were often used as carriers and manipulators of the marketing message, rather than beneficiaries of it. Today, in the minds of discerning consumers, this practice is invasive, unwelcome, and unnecessary. Contemporary online marketing – and consequently, marketing in general – is about creating in-bound engagement with savvy, informed consumers.
Marketing cultivates the customer. It establishes awareness of the need, and the existence of solutions. It provides product knowledge and catalogues the options available. It’s at this point that the newly discerning prospect can be handed off to Sales, and sales can satisfy any remaining questions prior to closing the deal.
Isn’t it so much better that informed consumers are now pre-qualifying themselves?
So, what are you doing to ensure your marketing procedures are supporting your objectives? Have you defined a handoff procedure from Marketing to Sales? Isn’t time you did so?
Pushing your sales people into a short-term mindset can blow up your business. It’s a sad irony to think you might be hosting a month-end sales celebration today only to find yourself facing a year-end financial crisis.
Try incentivizing things like “returned business”, and “customer satisfaction metrics”, etc. Institute referral benefits
Business owners often make the mistake of forgetting the customer when incentivizing sales.