Sales Incentive schemes are one of the most important sales tools to get right and it’s one of the most likely to be got wrong. Here we provide a do and don’t list to help to design/check your own scheme:
- Make sure you are clear as to its main purpose. Any payment should look to deliver performance over and above the performance expectations attached to salary.
- Understand the difference between’ Why Work Here’ bonuses – usually paid out annually and connected to company performance, that don’t motivate on a daily basis but show appreciation – and ‘Why Work Harder’ bonuses – which are more directly related to individual performance, paid out more often.
- Make it a simple as possible. The best ones are where salespeople can work out their own bonus / commission in advance of receiving it; the worst are where they can’t equate their payments to what they sold.
- It should be agreed and implemented before, not after, the period it covers begins.
- The connection between performance, effort expended and reward should be as explicit as possible. In motivational terms, the shorter the gap between delivered performance and payout the better.
- Never change the rules half way through (usually done to avoid big payouts), it kills motivation and any trust in the system. Always add a rider that the scheme is subject to annual review and any previous payouts are no guarantee that the level will be maintained.
- Be very careful with ‘House Accounts’. These are revenue streams linked to managers that are outside the main Sales Exec scheme. Again they are usually used to prevent salespeople earning big commissions. The problem with them is they distract managers from managing, create cynicism and perhaps worst of all can deskill salespeople over time, as the House Accounts are often also the most complex, demanding customers that need high quality attention. If salespeople never work on these types of accounts their learning becomes stunted.
- Schemes should be uncapped. Scary when management doesn’t know what they are doing, very motivating for the hungry salesperson.
- An individual salesperson should be able to earn more than their manager, but if all the team are ahead of their targets it should mean the manager earns more than any one individual.
- Manager’s bonuses should not be paid out on the aggregate sales team numbers because this allows the poor performers to be carried by high ones and the manager having no incentive to sort the problem. A sales manager’s bonus trigger should be that all salespeople in their team must be at or above 100% of target. Tough, but if sales excellence and a high performance culture are goals, necessary.
If you would like to talk over designing a motivating, business enhancing sales inventive scheme please contact us.
This month we thought a table you can print out and take to the beach could act as a provocative thought starter. We were asked by a client to look at what change would be involved in moving from a vertical, functionally focused sales approach where the salesperson plays the traditional role of business winner and main contact point, to a company-wide, multi functional sales effort where the salesperson acts as the coordinating lead.
Where we trialled this we found the account value
increased more quickly through additional and extension sales, customer delight increased and the sales team’s job satisfaction flowed suit. The company quickly rolled-out this approach to all its key customer groups.
We captured the main areas in the table above. Because of the pan-company nature of this type of selling we have termed it Enterprise selling
If after your holidays you would like to talk some more about this approach please contact us.
We thought you might enjoy some stories we’ve heard over the last 12 months as to why business targets haven’t been met, smile inducing unless you are paying the wages:
- A Japanese owned UK sales office has used the floods as a reason why there numbers will be poor in July. Sounds reasonable until you realise they are based in Northern Ireland and 90% of their business is done on the island of Ireland.
- A call centre person who was running their own ebay business from the work PC, used it as an excuse in their appraisal as to why their numbers were down.
- The order was lost in cyberspace, which is the modern equivalent to being lost in the post and the adult version of my dog ate my homework.
- The sales director who built a complex financial model showing the interdependencies of over a dozen finely weighted factors that explained why the business was suffering. When his CEO asked him what the strategy was to correct the trend line, the SD replied by saying that was part two of his research that he hadn’t yet started. He was able to think very deeply about this whilst on his garden leave.
- The salesperson who was down on target on a formal Performance Improvement Plan (PIP) and coming up to a quarter end still behind the numbers, who booked a days holiday to go to the races and was off sick the following day due to excessive alcohol consumption. At their review meeting (after again missing target) he told his manager, ’everybody needs some relaxation time’.
- The struggling MD who told the whole company by email that unless performance improved heads would roll and it wouldn’t be his. (His chairman contradicted the last part).
- The CEO with a dysfunctional board who ‘doesn’t do conflict’. Every other director wishes she did.
- And finally there’s the more boring standard set of reasons for business difficulties of which the most common are; the weather, economy, lunatic competition, globalisation, government policies, difficult customers, pricing/cost issues and changing demand patterns.
We’ll leave you to decide how much truth is being spoken and how effectively people are trying not to explain the problems but to transcend them.
Performance Management is a hot topic in many organisations as they struggle to define themselves as high performing businesses. The difficulty many face is that the organisation holds many different views about what performance management means and different parts of the business deliver performance management differently.
This can mean that more time is spent discussing the differences and problems that the similarities and opportunities. Every organisation is on a performance management journey, the skill is in knowing where you are on that journey as well as having a clear idea of where you want to be.
A disparate set of current approaches may mean that some parts of the business need to take a different track towards improvement than others. This doesn’t signify failure and certainly shouldn’t result in mixed messages. By setting key goals and ensuring that there is a shared view of what the organisation aspires to in performance management terms, each area can move forward from where it is, at a pace that makes sense.
This careful assessment avoids a sheep dip approach which may cause frustration as well as prove expensive and ineffective.
To talk about how Predaptive can work with you to map a performance management journey that starts where you are contact us.
Linking coaching with objectives and project tasks or activities is a highly productive and effective modern method of training and developing people in organisations, especially for staff in teams and departments, and for developing organisations themselves.
Although coaching has become a very widespread development tool, there are issues about how best to manage and deliver it in an organisational setting. These include confusion over exactly what coaching is, how best to manage the stakeholders in coaching, when coaching is/ is not an appropriate intervention and how to work effectively with a complex coaching industry.
Anybody interested in improving organisational performance should be coaching as a matter of habit. Everybody interested in improving their personal performance should be receptive to coaching. These two points look self evidently true, so why is so little coaching going on?
Structured Training’s approach to coaching uses a proprietary framework Total Coaching™ to effectively link the organisational and relationship dynamics with the required skills and techniques. Done in this way coaching can embed into the organisation and become a ‘style norm’ for anyone in a position to performance coach. We also understand the strong link between effective coaching and the capturing/disseminating of best practice. You don’t have to be a manager to coach-in role model behaviours.
To find out answer these questions:
Your company has just been taken over by a larger concern. The performance of your sales team has dropped and some are looking for other jobs. You know that they are looking to you for leadership.
- Re-organise the team to more closely match the perceived needs of the new organisation.
- Praise the team for the good work they have done in the past. Demonstrate your enthusiasm for the new regime and confidence in the future.
- Articulate your vision of the future of the organisation. Affirm the corporate values and demonstrate what the positive implications are.
- Discuss the issues one by one and persuade the team that they are unfounded and offer to negotiate on their behalf with the new management.
You run a newly formed sales team. You and your team are as yet unsure as to their roles and responsibilities.
- Call a meeting with your team and tell them what their KPIs should be and allocate tasks accordingly.
- Call a meeting with your boss, then discuss and agree what the KPIs should be for the team in the wider organisational context.
- Focus the role and responsibilities of the team on the corporate objectives and set KPIs that reflect these.
- Discuss with and ascertain from your team what KPIs they would find most stimulating within the broad context of their roles, and develop the team’s objectives from this start point.
One of your senior sales people has some people management responsibilities (who is fairly new to the company) is very autocratic in his approach. You understand that he approaches the job in this way because he feels that this is what the company wants, ie to achieve results one must drive sales people.
- Discuss the situation with him and offer him a management training course.
- Tell him that you want him to manage more democratically and agree a plan of action with him.
- Persuade him that his career will benefit more from a democratic style than an autocratic one.
- Share with him the corporate beliefs in democracy, trust, self-motivation and development.
For more further information on leading sales within an organisation our High Performance Sales Management course will equip sales directors, sales managers and sales leaders with the understanding and tolls to create a high performance framework to drive additional growth…