How To Motivate Higher Returns
By Brian Summerfield
Now, the model provided in Glengarry Glen Ross isn't going to be co-opted in any sales organizations anytime soon. There probably aren't many sales directors or managers out there who think that system would work for their teams. That said, there are plenty of mistakes made in real-life programs that lead to less-than-optimal performances from sales forces.
So, what are some of the most common problems found in sales incentives initiatives? One of big ones is focusing too much on the team's top performers.
"One of the biggest pitfalls we see when we audit programs is the common lament that the same people always win," said Mike Ryan, senior vice president at Madison Performance Group. "Organizations fall into that trap, where they reward the top performers only. What they tend to do, then, is overpay for performance, because the top people are pretty much the top people anyway. You don't necessarily need to throw a lot of your budget at them. Obviously, you want to reward your top performers, but giving your budget exclusively to those folks disenfranchises the people who are just a few steps below them."
Additionally, these programs sometimes focus too much on a particular service or product line. Rick Davis, president of Building Leaders, a Chicago-based sales consulting and training company, recalled when he worked at a company that released a new product and developed a sales incentive program around it. The problem was that the sales team got so caught up in the incentive for the new product that it took focus away from the company's main offering.
"I think one of the biggest pitfalls is that you incentivize for something because it becomes a special program, but it can take away from the main objective,"
Davis said. "The big picture for the company must always be considered."
Another issue is finding the right timelines. These programs can fall short of expectations if they're too long or not long enough, said Srinath Gopalakrishna, professor of marketing at the University of Missouri. The David and Judy O'Neal MBA Professor at UM's business school, Gopalakrishna recently released a report, titled "Assessing the Impact of Sales Incentive Programs: A Business Process Perspective," based on in-depth research he conducted on a program in an insurance company.
According to him, some contests can be "gamed" by more experienced sales professionals, who don't necessarily turn in the best performances.
"We found that there were different tiers of agents that responded in very different ways," he said. "When you set a contest that is almost equal to the sales cycle, you're going to have people who put all of their efforts in before the contest begins. And people will do what we would call sandbagging—they hold the sale for just a few days or weeks to push it into the contest period. They know that once the contest begins and they start looking for new prospects, they won't be able to close before the contest ends.
"So not much will happen during the contest, which is when you really want them to work a lot. Also, when you have a really long contest, it's very difficult to maintain the spirit, motivation and interest."
To really motivate the sales team with an incentive program, directors and managers should consider the following tools and tips.