Making Sales Motivation Programs Effective

Cash isn’t always the right award to motivate your sales force.  For years we’ve seen companies throw cash at sales objectives with poor results.  It is the obvious go to award and the easiest to implement and administer but not always the best one.  To make a motivation program effective, you need to make the rewards relevant and specific to the needs and demographics of your sales force.  

For most salespeople there are three instinctive motivations that can influence their performance:

1.     The proper balance between remuneration and rewards 

2.     The desire to achieve success and exceed goals 

3.     Recognition and security

It is essential that remuneration and rewards for salespeople be strongly linked to performance. If you already have a very strong cash incentive or bonus, it might not be best to just add more cash to it to get a boost in a particular objective.  If an increase in sales is how your salespeople earn their base and bonus compensation, the best ones will be doing all they can to earn as much as they can already.  Probably more than any one type of employee, salespeople will work to seek their comfort level, and when they achieve it, they don’t move much to get more.

If you don’t have a sound compensation package not linked to accomplishments, don’t be surprised by the poor performance of your salespeople or by seeing the best of them move on. When designing your system, it's critical to have a real gap between the excellent, the good, the average and the people who struggle. The best won't be motivated to go above and beyond if there's little-to-no difference. For motivation programs to achieve incremental performance over a short time, consider non cash awards interesting to demographics of your people.  And in those types of programs choice of award is critical.  Let them set their sights on what they want for their own lifestyle.  Do you really think that the hot briefcase of the moment or a new watch will motivate everyone?  It surely motivates the ad rep that is selling them to you.

Any decent sales person we’ve ever met is driven by success. They need victories to move forward so put in place objectives around the different selling steps for your product and formally recognize those who achieve them.  Then grow those objectives and set increasingly ambitious targets to move that group to higher and higher levels of performance and recognition.  A myriad of selling skills can be addressed in these types of programs.  One of the main benefits is that it is easy for each salesperson to measure their real contribution to the company and enjoy the recognition they receive from it.

Good salespeople are typically less concerned with job security, than the average employee. They can take risks more easily than the general population. This allows them not only to be at ease in a job where the activity is clearly measured and driven by performance, but also to change jobs if a more interesting offer comes along in another company. When you are finalizing your overall program be sure to congratulate and celebrate the ultimate successes.  These are the group of people that you will move your company forward.

Simplify Sales Recognition!

The best approach to sales recognition is almost always the simplest one.  The award industry offers a vast array of awards and recognition systems from which to choose and for whatever reason sales management rarely starts their investigation of how to recognize sales people using the KISS principle.  They often choose the most complex way of handling an issue that should fundamentally be very easy and straightforward.  And in the process they commit large budget dollars to the administration of these systems, essentially taking those dollars away from getting to where they will do the most good….the salespeople themselves. 

When you think about it, recognizing sales performance should be a simple (and happy) thing to do.  But for some reason everyone wants to complicate it.

Over the years, the reward companies have dreamed up elaborate schemes to sell their awards, often priced substantially over retail.  But are these elaborate systems what you really need?  We’ve seen countless numbers of them that have feature after costly feature that are rarely used.  One of these features is a training program to teach your management how to recognize employees.  Frankly it’s a shame that has to be done.  Every sales manager should have at least the ability to thank someone for doing a good job. 

To begin, throw out the complicated stuff and just tell your managers to simply recognize salespeople for doing a good job whenever and wherever possible.  Measure the managers to make sure it gets done, and give them a budget to do it.

If you think you need to give a tangible award for sales performance there are a lot to choose from.  Having managed salespeople for years, our feeling is to let them choose the award they want. 

If you want a good one with terrific flexibility and value, we’d be happy to send you samples of two high value, low cost and easiest to implement systems in the industry.

For more information on Ultimate Choice Inc.’s products or services contact us at Ultimatechoiceinfo@cox.net

How to Screw Up Your Sales Incentive Programs

Here are some of the mistakes that we often see companies make when attempting to design an effective sales incentive program.  These mistakes can turn your program into one that is very ineffective at best or harmful at worst.  Implementing bad incentive programs can be money down the drain.

Creating Conflict Within or Between Departments

Make sure that your rules don’t conflict with the other department procedure or worse with performance improvement programs they may have in place. You will always have some conflict, but you can work to optimize operations so that the conflicts are less likely to occur.  Consider rewarding cross-functional teams as a part of the program

Motivating the Wrong Outcome

The easiest of these to check is getting increased sales without corresponding profit, or leaning too heavily on profit that you decrease wanted sales increases.  Look for a balance in what you want your outcomes to be.

Don’t Have a Top Stop

Unless you have a product availability or service issue or will have undue increased operating costs concurrent with dramatic incremental sales results, don’t put a cap on performance.  Top stops will eventually de-incentivize outstanding performers--or at least limit their overall performance.  You can adjust rules structures for “windfalls” that may occur if necessary.

Protect Current Business While Motivating for New Customers.

Salespeople will be the first to see they can earn incremental commissions by focusing on new customers over current customers.  You can and should adjust rules structures to accommodate for this possibility.  One way is to simply set a “must maintain” type of rule in order to earn for new business, or tie the new business earnings structure to the maintenance of current business. 

Reward Behaviors Your Salespeople Control. 

Move your objectives to the lowest possible level that your salespeople can control.  Nothing will kill a sales incentive program faster than tying it to unreasonable objectives or to corporate objectives out of their control. 

Compete Your Salespeople Against Themselves

It has been standard practice for managers to compete their salespeople against other company salespeople.  Don’t!  You should want them trying to beat the brains out of your external competition.  The most successful incentive programs challenge salespeople to want to excel on their own.

For more information on Ultimate Choice Inc.’s products or services contact us at Ultimatechoiceinfo@cox.net

Effective Design Patterns for Sales Incentive Programs

60% of all U.S. businesses use non-cash sales rewards, spending conservatively $23 billion annually on these awards.  Following is a summary of research completed by the Incentive Research Foundation about the effective design elements of these sales incentive programs.  For purposes of the research, the respondents were designated either top performing companies (those with the highest revenue growth, customer satisfaction, and employee satisfaction scores in their industry) or average companies. 

Setting Program Objectives: Emphasize Multiple Behaviors

In the past, sales programs concentrated almost completely on increasing sales dollars.  The research showed that many more objectives are now used in these programs.  Most companies now use a mix of objectives, including: 

·       80% increasing overall sales

·       76% improving morale

·       58% productivity

·       47% gaining market share

·       27% increasing sales of specific products

·       21% changing the sales culture

·       17% promoting cost reduction

·       16% rewarding training completion

Rules Structure: Center on Quotas

Companies use multiple targets to achieve awards, including:

·       80% earn awards on achieving quota

·       71% earn awards by being a top performer

·       51% earned awards based on team performance

·       40% for discretionary sales awards

Rewarding the Right People: Expand Your Footprint

Designers are shifting from programs that just award the top performers to one that includes more of the middle.  More than half (56) of top performing companies said they wanted their program to reach more participants.

Program Funding: Start at the Bottom

Top performing companies are nearly 100% more likely than average performing companies to use a bottom-up budget model and fund programs as a % of income during the program period.  Other interesting notes were:

·       The average business used 7.2% of income to calculate budgets, top performing businesses use 9.4% of projected income.

·       Less than half of average performing companies in the United States have no top stop on their programs, but almost 80% of the top performing businesses have no top stop.

·        The typical sales person can expect to earn $3,916 in a top performing business annually, with the top performers in these companies earning over $5,000 in award.

What Awards to Use: Combination is Common

Sales programs can use one of many award types, including recognition awards, recognition events, merchandise, symbolic awards, gift cards, logo merchandise, individual travel, group travel, group incentive travel, and cash. On average, businesses use more than seven types of awards for sales incentives.

The top four awards used were:

·       72% use gift cards

·       44% use award points redeemable for a variety of things (including gift cards)

·       44% use merchandise

·       34% use group or individual travel

Multiple Programs: Efficiency in Consolidation

Most companies reporting use a single sales incentive program for the entire organization, but more than half of the top performing companies had multiple sales programs managed by one operation.

Program Support: Think Outside Your Walls

·       60% of all companies operate their own sales programs. 

·       60% of top performing companies used outside support from external partners.

·       Half of companies engage outside supplier expertise for best ways to motivate participants and over two-thirds using external award suppliers

Administration: Communications and Tech Support 

The IRF research indicates that 43% of a top performing company’s budget generally goes to program administration (design and operation) versus only 30% of a budget of an average performing company.

Over 70% of businesses use some level of program-specific technology to support their non-cash sales incentive programs.

Measuring Effectiveness: Multiple Metrics

More than 75% of top performing firms fully leverage the data produced by their programs to quide decisions in future program design.

Following are the most used metrics and %:

·       66% overall product sales in dollars

·       49% net new customers

·       37% product sales in unit

·       36% revenue

·       25% productivity

·       24% staying in budget

·       14% customer satisfaction surveys

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net

Do You Have a Do It Yourself Sales Incentive Mentality?

The traditional carrot-and-stick type incentive programs put the focus solely on the result, and not on the means of achieving the result. While these types of programs can achieve results, they can also encourage bad behaviors that can do damage to the brand and hurt sales in the long run by creating unhappy customers who speak out on social media. It’s well known what some salespeople can do in narrowly focused programs – shift the timing of sales to maximize points, sell something a customer doesn’t want, push harder than is appropriate, make promises that can’t be kept, etc. It is unfortunate, but since the only program measure is the outcome, some salespeople do resort to such tactics!

For many years the incentive industry has extolled the importance of designing programs that not only address the results, but also the best ways to achieve them. The industry is full of research and papers from groups like Incentive Marketing Association, PPAI, SITE, Incentive Gift Card Council, Rewards and Recognition Network and the Incentive Research Foundation.  These organizations house a wealth of knowledge and have produced extensive research to help design incentive and recognition programs that will produce results.  Unfortunately these materials are almost never used.  Why?

In the high energy quick fix mentality of today’s business, people planning incentive programs are looking for a quick fix or a bright shiny object to motivate and often don’t want to hear about, let alone pay for, a program design process, even with the promise of better results or return-on-investment measurement. Many managers feel qualified to follow their own instincts. This often boils down to a determination that motivation is just a matter of dangling desirable carrots with perhaps a few unwritten threats thrown in for good measure. 

If you are interested in planning a sales incentive program we would advise you to engage the award companies who have the knowledge to help you make it successful. Award companies have knowledge to design programs based on accumulated best practices.  Just like the great mechanic, they not only know how to use a wrench, they know what nut to turn. 

For more information on Ultimate Choice Inc.’s products or services or other white papers please contact us at Ultimatechoiceinfo@cox.net