Sellers often seek the path of least resistance, and if your programs aren’t designed to incentivize them to sell, your sellers may game the system and engage in activities that won’t help themselves or the company.
If you design your commission plans and your structures effectively, you’ll create more effective sellers who feel like they’ve actually earned something and who will achieve wins more often.
As a sales leader, you know that your sales reps will make outbound calls and try to close deals. Your goal is to incentivize them to do their jobs. You want them to be happy. You also know that if they are earning something, they will feel good.
In the natural order of things, if they are doing well, they’ll love working for you and the company will prosper as well.
In her book, The Sales Development Playbook, Trish Bertuzzi lays out different concepts to help organizations develop the proper incentives. Sometimes companies design their incentives poorly so that reps are only encouraged to make phone calls.
Many reps will game that system because it doesn’t measure anything meaningful to the company. If you’re only counting activities, they’ll figure out that all they have to do is make phone calls.
You know, though, that appointments lead to more deals. So if you’re expecting an appointment every 20 phone calls, but your reps are simply calling and hanging up without having meaningful conversations, you won’t likely achieve those appointments.
Trish points out that many companies promise great incentives but we neglect to clarify the actual process were seeking. We make promises about being able to “earn more than the CEO” without explaining our expectations.
We fail to tell them, for example, that the sales cycle is seven months long, so it will likely take them about three months to really get established. They probably won’t make any real money until about 10 months into the process. Then it will take about 30 days beyond the close date for them to get their payout.
You can help them survive the long cycle by offering ways for the rep to win. Perhaps you’ll provide a more competitive base because you realize it will take them a while to build a commission.
Set up for success
Without a meaningful way to win, your sales reps may stick around for a few months and then move on to something else. Instead, set them up to succeed.
If you’re talking about your BDRs, how can you give them an opportunity to make money? If your AEs earn 10 percent for a closed deal because you know it will be a while before they close a deal, they’ll be eating pretty well. If your BDRs, on the other hand, earn only 1 percent, they’ll have to wait a long cycle before they get their piece. How excited do you think your people will be to work hard in the cycle?
What if you pay them per appointment set, but they get part at the beginning of the process and part at the back end of the process.
If you offer $10 for each appointment, they can earn $5 at the front and $5 at the back. If your reps set quality appointments with qualified prospects, they’ll earn $5 at the beginning and $5 at the end. If the prospect isn’t a quality one, they’ll get the initial money but not the money at the end.
Then, if you realize that your sellers have a lot of rejected opportunities, you can determine that either the AE is doing something wrong or the BDR is. Once you determine which is the case, you can coach them to close those deals.
Here’s the other challenge. Some sales reps will realize that they’ve already earned what they needed for a certain month and they make the decision to sit on other opportunities for the following month. They hang on to them to make sure they’ll hit their numbers the next time.
Again, you can incentivize this. You can set an expectation of 20 leads per month, or five per week. If your reps hit that number, they will earn the full amount for those appointments. If your reps only land 16 appointments, their earnings will be pro-rated to reflect the shortfall.
If, on the other hand, some of your sellers exceed the 20 appointments, you can raise the amount they’ll earn for quality appointments. They’ll still get half at the front and half at the back.
Now everyone is happy because they are earning money throughout the process instead of starving until the deals close.
Make sure your sellers have an opportunity to eat.
I’m a strong believer that if hire the right people, pay people right, coach them, and train them, they’ll perform for you. But you also have to make sure they don’t game the system. Make sure that everyone walks away with the sense that the process is fair.
You can take it on your own or as part of the semester group.
If you and your team are interested in learning more, we’d love to have you join us. Call (561)578-1729 to speak directly to me or one of our team members about the program.
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Donald is the host of the popular sales podcast,"The Sales Evangelist". He is the founder of The Sales Evangelist Consulting Firm where he helps small companies develop killer sales process to scale their business and increase growth.
Donald is also an award-winning speaker, sales trainer, and coach. He's a big fan of traveling, South Florida staycations and high-quality family time. Donald has a belief that “anyone” can sell if they have the desire and receives the proper training.