Improving sales force structure and sales compensation plans to increases sales motivation.
There is no 'I' in 'team' and there is no ‘we’ in ‘sales’. Performance based compensation works very well as a means of motivating salespeople. There are other ways although few understand them and among those who do, even fewer consider these other ways to be practical alternatives.
It’s not surprising that staff are often mercenary in there decision making. Especially if that is what their sales compensation plan promotes. This shouldn’t be a problem if a sales person’s job is largely solitary and his or her duties can be carried out without much assistance from others. There are a number of circumstances that require a team orientated approach where success is hindered by a sales person’s otherwise laudable single minded pursuit of success.
Customers don’t organise themselves to suit their suppliers sales force structure. Invariably, those with more than one office, straddle any geographic territory assignments.
A common solution is to assign accounts according to the location of the head office. Once again, customers don’t locate their centres of operation to fit the travel needs of their suppliers.
Efficiency would be served if the local staff looked after customer offices in his or her area. This idea breaks down when those involved can’t agree on how the commission should be split. Even when they do agree, all parties then tend to favour other business where they receive 100% credit and the customer, who is subject of the split, is neglected.
Salespeople can easily be perceived as self centred or self serving and entirely focused on money. If you have carried a sales target, you will know that missing it by too much or too often puts your job in jeopardy. Few in any role are prepared to risk sacrificing their job in order to be seen as a team player. Attempts to force people to act against their own best interests tend to have a negative impact on sales motivation.
Another approach is to associate individuals with their accounts instead of geography. Applying intelligence to account assignment allows for optimising efficiency.
This usually means everyone having very different targets because it is difficult to divide up accounts for locality and then balance the value of expected business to align sales targets. When you add to this the need to take into account each sales persons specialisation or expertise, the task of intelligent account assignment may seem overwhelmingly difficult.
Allowing a free for all in which whoever finds an opportunity and wins the sale, owns the account is an approach favoured by smaller organisations. Apart from motivating salespeople to be seduced by far away opportunities and lured into supporting customers hundreds of miles away, this leads to the best sellers retaining the choicest accounts and then resting on the ongoing revenue.
Success in selling means achieving a target month in and month out or quarter by quarter, however it is measured. Forgive this cliché for it is appropriate - salespeople are only as good as their last result. Past success is quickly forgotten, pushed aside by the ever pressing need to keep business flowing.
Those companies who sell through partners and direct to end users in the same territory, invite conflict. Even when a sale through a partner affords the same credit in terms of target contribution and commission, many direct sales staff will still prefer to take the business themselves. Being seen to bring home the essential sustenance is an important sales motivation.
Paying commission to more than one salesperson for the same business seems a reasonable alternative to the law of the jungle. Providing that it is accounted for in the budgeting process and every one puts the spirit of cooperation first, this approach can reduce conflict between teams. On the down side, it is an accountant’s nightmare and it offers less effective salespeople places to hide where they can be seen to achieve target without comparable contribution.
Sales managers should sort it out. That’s what they are paid for and it certainly forms a significant part of a sales manager’s role. Disharmony uses up great gouts of energy that should be used to secure more business. Since sales managers also have targets and performance based compensation, circumstances can lead to rifts between managers of different territories, all the way up to country level.
Salespeople and managers are usually in their positions because they are competitive people who strive for success. They are paid for results and so the numbers become a measure of success or even self worth. The money is the score card. Sales motivation has many subtle drivers.
Yet there hangs just out of reach, the teamwork dividend. We all know that a team of people who pull together can achieve great things, way beyond their combined weight.
A solution may be found in self led teams where compensation is based on the team result. There are many examples of companies achieving great efficiency improvements with self led teams in functions other than sales. Read Tom Peters or Loren Ankarlow for case studies.
Can it work for sales teams? As a sales manager at SGI, I experimented with two teams to reduce the management burden of too many direct reports. Both experimental self led teams delivered outstanding results, with an average per person performance against target above every other salesperson in my team.
Within the teams, contribution wasn’t even and relationships suffered from the usual frictions yet the experiment delivered better results than any other individual or group within my sphere of responsibility.
Earlier personal experience underpins this result. In my first sales role, commission wasn’t part of the package. Instead, everyone in the company received a bonus based on the overall result. The amount was a percentage of salary. It was a great environment to work in. At the end of each month, when we needed to get products out of the door, instead of going home, we would join the warehouse staff to pick and pack, working late into the evening under the direction of the warehouse manager.
Non fiscal extrinsic motivation can come from peer pressure, camaraderie, competition, and expectation. Intrinsic motivation depends on having passion for the work and abilities to match. Managers who understand sales motivation can increase job satisfaction and enjoyment for staff. It entails taking the time to understand and having the latitude to do the right things for the individual.
Teams, who are inspired by their goal, work better. People who have the trust of their management tend to do well. Self organisation opens up all sorts of opportunities for efficiency gains. Managers who relinquish control can get outstanding results, if they have the right people doing the right jobs.
Here is a radical suggestion. Have a sales team set their own compensation plan. Give them the same constraints the managers have. See what they come up with. Listen to their proposal. Try it out. It’s a bit scary to rip up the rule book, to discard the old truths and write some new ones. It takes your breath away. It’s seems high risk yet, as Mario Andretti of F1 and Daytona fame said, “If everything seems under control, you're just not going fast enough.”
Article by Clive Miller
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