I had a great conversation with a CEO today where we were discussing the merits of refining their compensation plan. It seems the CEO was disgruntled over the fact that his salespeople were comfortable making six-figure incomes, but they weren’t pushing to really knock it out of the park. Maybe you have witnessed the same thing.
These salespeople tend to sell roughly the same amount each month to maintain a certain standard of living, but don’t put that extra effort in to make more. In some cases when this happens, you may know that they could make significantly more if they just focused a bit more. Unfortunately, they take their foot off the gas when they get in their comfort zone. Does this sound familiar?
The CEO is correct that we might be able to influence behaviors with a reconstructed compensation plan. But, then again, we might not. We just can’t know without knowing the salespeople’s underlying motivations. I know it seems obvious that people who work in heavily commissioned jobs would be extremely money motivated. Well, I am here to tell you that it is just not necessarily the case.
Sniff out comfort zones
Everyone has a certain pay ceiling. It seems most business owners don’t, but most everyone else seems to. What I mean is that there is a zone in which a salesperson is comfortable. Maybe they could never conceive that they could make more. Maybe they don’t believe that they deserve to be paid more for what they do (this is a subconscious thought, not conscious). Or, maybe they are uncertain that if they put forth additional effort that the payoff will be worth it — wondering whether or not the juice is worth the squeeze.
Whatever thoughts lurk beneath the surface, they may conspire to derail even the most well thought out commission plan. And, if you aren’t in touch with what REALLY motivates the individual, you may walk away confused and miffed if the well-constructed, newly minted compensation plan doesn’t change behavior. The problem is likely more complex than that, and likely requires a more comprehensive approach.
If the goal is to get salespeople to sell more —which one would naturally think the salespeople would want to do— here is how to tackle it. Take a more inclusive approach, considering these elements:
1. Find out first what really motivates the individual.
Make sure the sales manager gets intimate with the salespeople and understands what they are working for. What gets them out of bed in the morning? Why do they even work as hard as they do to close business? A simple way to do this is through conducting a goal setting program. More often than not, we find that salespeople lack clear, tangible goals. Those that do have goals may lack a specific plan of how they will reach them. If you can help the individual salespeople identify their goals, you can then help them create a plan to reach those goals. That plan will most certainly include appropriate activities to produce more opportunities to close more business.
2. Focus on accountability to the right activities.
Rather than just constructing a compensation plan that rewards more sales, focus more on holding the salespeople accountable to those behaviors that will produce more sales and thus more income (to help them reach their goals). Frequently we see company leaders rely solely on the plan to form behavior. Most salespeople need a bit more reminding than the paycheck to do what is necessary to excel. The sales manager is instrumental in holding individuals accountable to the activities and behaviors that will produce results. The commission earned is merely a lagging indicator rewarding results. Make sure that you are holding your managers responsible for holding their salespeople accountable to specific and measurable behaviors and activities.
3. Incent appropriately.
Finally, construct a compensation plan that will reward the outcome of doing the right activities. Be sure to construct it in such a way that the company goals are met. If it is important to generate brand new clients as opposed to just selling to the same old clients, then be sure to incent appropriately. Distinguish between the two. If you are frustrated that the salespeople only work the leads that the company’s marketing efforts produce and don’t generate their own, then incent more aggressively for those leads generated and closed by the individual’s own efforts.
Remember that salespeople frequently have their own hang-ups about what they can and cannot achieve. Rather than just assuming results will follow when you sweeten the pot with added incentives, be sure to have all three components in place: goal setting, accountability to activities, and appropriate incentives.
What do you think about beefing up commissions? Do you have other thoughts on breaking salespeople out of their comfort zones? Let us know in the comments.