Good salespeople share at least one trait: a desire to win. A sales manager’s job is to figure out how to channel that desire into the behaviors that will improve sales force effectiveness and drive organic, profitable growth.
Selling Power editors talked to two experts at global sales and marketing consulting firm ZS Associates – Chad Albrecht, Principal and B2B Sales Compensation Practice Leader, and Glenn Hollister, Associate Principal – about the best ways to motivate a sales team. Here are some takeaways.
1) Is it possible to create a compensation plan that’s both simple and effective?
A complicated compensation plan with multiple objectives can be confusing, and if salespeople don’t understand the plan, it won’t effectively drive behavior.
When creating a compensation plan, use this two-step process to keep things simple: First, identify and rank your strategic objectives. Second, plot objectives from simplest to most complex. “This allows you to put the most important things first and challenge the group on whether additional complexity is worth the potential confusion and lost motivation and direction it could cause,” says Albrecht.
2) Should reps be measured based on profit or the revenue they generate?
When it comes to revenue versus profit, Albrecht says that alignment with strategic goals is essential. “The overall strategy has to carry down to the incentive plans and metrics the salespeople are held accountable for and rewarded on. In that sense, motivation is not just getting them to act, it’s getting them to sell the right products to the right customers at the right price.”
On the whole, if salespeople are measured on revenue and they have any control over pricing or the ability to give things away, revenue will go up, but profit will go down. “Same thing if you tell them to chase profits,” says Hollister. “Neither is right or wrong. If I’m a young company with barely any market share, I might want to pursue revenue. If I’m a well-established company and we’ve carved up the market, I’d be more concerned about profitability.”
3) How do quotas figure into motivation, and how do you make them fair?
Not all sales territories are created equal, and since most incentive plans are linked to quota performance, fair and accurate quotas are essential to motivating the sales force. Yet Hollister says that even despite discrepancies in territory potential, “some companies give every territory the same percentage growth target for a quota, because they don’t know any other way to do it.”
Instead, best-in-class companies take into account historical sales data and a territory’s sales potential when making quotas to maximize accuracy and fairness.”When you roll out your sales incentive plan, a fair and accurate quota should go hand in hand with the new plan,” Albrecht says, who notes that in each of the last five years, ZS clients have listed “accurate and fair quota setting” as one of the top three incentive issues they face.
4) Which is more effective in motivating salespeople, money or recognition?
“Money is a primary motivator for sales organizations. But at some point, salespeople have made enough money to be happy, and the extra work required to make more just isn’t worth it,” Albrecht says. “At that point, money is less meaningful as a motivator, in which case being recognized in front of peers by a senior person in the company can actually have far more impact.”
In other words, never underestimate the appeal – or effectiveness – of recognition. Mementos can reap lasting results. “It’s not just the week’s vacation as part of the President’s Club meeting that hits home,” says Albrecht. “It’s the framed photograph of the rep shaking hands with the CEO that people see when they come into the office.”
Great leaders want to help sales reps wake up each morning with a sense of renewed purpose, energy, and desire to engage with as many prospects as possible. With the right approach, sales compensation and incentives will boost your sales team’s natural love of selling and help you achieve your strategic goals.