Complexity can Kill your Sales Plan
If you haven't read Daniel Pink’s book, To Sell is Human, you might think you are in just working in a department, such as Legal, Customer Service, Information Technology, Marketing, Manufacturing, Human Resources, Supply Chain or just about any department except for sales. (If you are responsible for "Sales" as a formal sales person or executive leading sales, you might want to jump to Part 2 to learn more about compensation plan research.)
Part 1: You are in "Sales"
Consider how much of your time every day is spent "selling". When was the last time you didn't have to convince others before you could:
- Hire a new staff member;
- Change the brand image for your company;
- Change a project management protocol;
- Retain a social media, content marketing firm;
- Increase your advertising spend;
-Replace the company CPA?
Unless you work in a vacuum or for yourself, you likely needed to build consensus around your ideas and projects before proceeding. This is all selling and we all do it at work and, more importantly, at home.
By the time Dan Pink finishes his analysis, he concludes that:
"1or 9 of us are in Sales".
Since most people are not in the "Sales Department", their sales effectiveness is measured in: conviction, conversion and education of others about products, services, and investments--rather than in direct revenue generation.
Here are a few core suggestions to apply everyday if you are in a formal sales role or not:
Stop "Up Selling" and start "Up Serving". Service is the key to selling with integrity. Not paying attention to service is why the old view of slimy sales persons has been so hard to shake. (This is true if you are 'selling' IT systems, logistics services, nutritional products, gym memberships, or even business opportunities--you must offer great service and delight your 'customers' if they are signing a contract or just nodding approval to your latest idea at the water cooler--make her look brilliant for approving your proposal.)
"Customer Mindset is critical." What you are pitching may benefit you and your organization, but that cannot be foremost in your mind. How you benefit the customer by delivering as promised and even beyond has to be your focus. This is tougher to do, but it also means that unless you are selling a true commodity you are not competing on price alone. Differentiate to your customers and understand their needs.
"Buyer beware" mentality is dead. If you know someone saying or implying that in their actions, take their picture because they are extinct and just haven't died yet. The internet has killed this forever. You have to manage your image and your online content--on your website, in social media, and through well thought out PR.
Part 2: Your Compensation Plan is not doing what you think
Many of you know I do a lot of work with direct selling companies and their sales compensation plans can make those in general industry look like simple addition because of all the financial and psychological behaviors direct sales companies are working to incentivize in their independent sales forces.
The problem is that complex compensation plans are not consistent motivators of most people--and many people cannot identify the best type of person to be a strong sales person. (Hint, they are not all extraverts. Check out this article by The Warton School's Adam M. Grant on "The Ambivert Advantage" in the Journal, Association for Psychological Science in 2013).
"What to do with your complex sales compensation plan?" Dan Pink suggests that companies "Rethink sales commissions." some companies, like Microchip Technology have successfully eliminated commissioned sales people and provide 90% salary and 10% potential on overall company growth. And the company grew after the change.
But "Rethink" does not always mean abandon, and for direct selling companies and other firms relying upon independent contractor sales forces, paying a salary is not an option.
When a commission based compensation plan is called for, consider simplifying the program and adding perquisites to keep high performers reaching. (I'll write more on this at another time, but if you think complex is better read Donald K. Chung's Harvard Business Review article "How to Really Motivate Salespeople", April, 2015.) Here are some key insights:
The more predictable your sales cycle the better suited it is for commissions based earnings. (For instance is it recurring monthly or quarterly, paying commissions only can work fine. However, if its a drawn out complex sales cycle, then optimally commissions need to be supplemented by a base pay of some kind.)
Shorter payout periods work--even as short as weekly. (Shorter payout periods keep underperforms motivated and engaged more effectively.)
People manipulate the timing of sales very little. Little evidence of people manipulating timing of sales was found, so maybe service is the driver and the sales are closing on the customers needed timeline more than in past times.
Capping commissions hurts sales.
Properly timed "gifts" can build performance. Just don't give the gift at the beginning of the performance period or you will be disappointed--hint: they actually slack off.
If you want to discuss sales and how to reward people effectively, let's talk.