Incentives in sales seem to be a pretty straightforward business. The person who sells the most stuff gets a bonus. Simple right?
Actually, it’s not always the case. In fact, incentivizing people the wrong way can cost you money and even damage your business. Let’s look at how NOT to incentivize your sales staff.
1. Incentivize Sales Activities That Don’t Generate Income.
Any business needs customers to make sales. So, if you have loads of customers, surely the sales will follow? Sadly, this is not necessarily the case and not all customers and client accounts are made equal.
If you put a juicy incentive on the table for the person who generates the most customers, one of your more enterprising team members may start to think how they can bulk up of the amount customers they signed up, grabbing the low-hanging and often less desirable fruit.
The bottom line is that scoring two major accounts that need minimal after-sales support could make up a sizable percentage of your annual turnover. Conversely, you could score 20 tiny accounts which need a lot of after-sales support and that barely make a difference to your profit. Yet, the salesperson who signed them on would be the one with the one walking away with the new iPad 7 that month.
Key takeaway: Always incentivize the sales activities which profit the business directly.
2. Offer the “Big Juicy Carrot.”
We all know these incentives. They’re the Cadillacs and trips to the Bahamas of sales legend. We post a couple of photos around the office as constant reminders of the reward that awaits the person with the most sales or that generated the most revenue. Sales teams fight hard to win these incentives. Sometimes a little too hard…
The end of the month draws in and your two best salespeople (and arch nemesis of one another) are fighting for the top spot incentive. One of them heads over to the watercooler for a drink and the other picks up his phone while he’s away from his desk.
A major account’s on the phone, one that just might cost that sales guy the week sipping mai tais on the beach. How honestly will he act?
Key takeaway: Always put conditions in place and tread carefully when using big juicy carrot incentives.
3. Compartmentalize Your Sales Teams.
There are many ways to breakdown a sales force into sections. You can do it by region, location or turf covered, years spent with the company, overall revenue generated on average and other metrics. Many companies with large sales forces tend to lump everyone together in one group and then put an incentive on the table for the people that earn to most.
This seems fine in principle, but you’re actually alienating about 90% of the team. The people in the middle of the pack, certainly towards the lower end, have already conceded the “fact” that the top 10 players are going to win the competition and so they don’t even try.
Key takeaway: Parse down your salesforce into smaller groups to let everybody have a chance of winning.
4. Don’t Update Your Team Regularly When Incentivizing.
As we’ve said before here on the CallProof blog, one of the best ways to keep your staff motivated and engaged is to provide regular miniature updates on the state of play within competitions.
Rather than using metrics such as the most sales made for the month, create a points system, adding a numerical value for each of the relevant sales activities. We did a whole article on this subject and it’s a fantastic way to keep your sales team engaged fully with your new and effective incentive strategies.
If you’re a manager, what’s one successful incentive that you’ve offered to your salespeople in the past? Salespeople, what’s one incentive that has inspired you significantly?