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"Show me the money!” Many are familiar with that memorable line from the movie Jerry Maguire. But really, how effective is “showing them the money” with respect to sales comp design? Do large bonuses, commissions and monetary rewards make as much of an impact on behavior as we believe they do?  

As a former rep who “carried the bag,” I can honestly say that money is a core motivator, but it has its limitations as a lever. The financial component of a sales compensation plan is the easiest, most controllable and most quantifiable lever to drive behavior, but many other motivators and demotivators should be taken into consideration, including the ability to earn that money. 

While putting a large bonus in front of a rep can be a huge incentive, if the rep thinks that the bonus is tied to an unattainable goal, it can be hugely demotivating. The salesperson has to think that the risk versus the potential return will be worth it. For example, if you hire a rep for a territory that has been vacant for a number of years, both target goals and bonuses need to be structured to overcome any perceived disadvantages of working that territory. Similarly, if the commission on a product is high but the value of the product is so low as to require a potentially unattainable volume of sales (in the mind of the rep), that also is demotivating. 

So what motivates a salesperson if not just money? Bearing in mind generational and gender factors, successful salespeople generally are competitive risk-seekers with entrepreneurial spirits. They have the “fire in their bellies” to succeed. While empowering employees and providing ownership are good practices for any organization, they’re even more important in sales organizations. As much as is practical, empowering salespeople with the authority to manage their territories as they see fit (finding a balance between giving reps “carte blanche” vs. “big brother” management), and allowing reps to provide input and help manage the data, tools and processes that allow them to sell (including feedback opportunities, sales force advisory committees and councils, and various “champion”-type roles) are huge motivators.   


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Determining the right level of rep empowerment is key to motivating your reps. While reps appreciate having more control over their accounts, they still won’t have much control over the many variables that can affect the final purchasing decision. To find out if your reps have the right amount of empowerment and ownership, conduct surveys to check their engagement levels. Truly empowered reps are both engaged and focused in order to do what they’ve been hired to do: sell.   

Allowing reps to achieve targets and goals also is an important motivator because making it easy to sell can lead to success. But it’s not merely enough to have the “right stuff.” Salespeople also have to use it. An investment in the world’s best sales data, CRM system and mobile sales force automation tools and dashboards will be meaningless if a rep doesn’t believe in them or doesn’t understand how to use them. If a rep thinks that she can't easily or effectively measure her own progress toward set goals or targets, she won’t be motivated to sell. 

Other motivators include factors that are generally much harder to control, like the product itself and its market share and potential, the company and its reputation, individual managers, company loyalty and support, the workload, the intellectual challenge, opportunities for promotion, and company perks and freebies. These motivators often get the short shrift because of the difficulty of tracking ROI and the difficulty of trying to improve them.  

Of these other motivators, however, peer recognition can be hugely important. Because successful salespeople are competitive by nature, having a “President’s Club,” an award for the top rep of the year or other contests are usually highly effective and don't necessarily need to be tied to a monetary payout. However, make sure that these peer recognition programs are executed flawlessly. No one wants a repeat of the bungled best picture presentation at this year's Oscars

Selling your sales compensation plan to the sales reps is half the battle. Reps don't want charity or a freebie, but they also don't want the odds hugely stacked against them. You can have the best-designed sales compensation plan in the world, but if your reps don't believe that they have equal or better odds of achieving success, and the support to do so, then your efforts are moot.  

Take it from me, an ex-cold-caller: A motivating sales comp plan isn’t always about showing reps the money. There’s a lot more to it than that.

 

Topics: sales effectiveness, Incentive plan design, Incentive compensation, Sales Bonus, sales comp, fairness, sales comp plan, Energy