No Sales Incentives, Please
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We all know that compensation can be used to drive behavior. And for this reason it’s the norm for sales person’s compensation to be anywhere from 5% to 100% commission based.
But what about short term sales incentives? For example, a lavish trip to an exotic location or a shiny new Rolex for a top producer. These kind of competitions can be fun, but do they have a positive effect on your sales team?
Nope, they don’t work. In fact, short term sales incentives are a great way to screw up your sales team.
If you have a sales team that functions, then you probably have a sales culture that is more evolved than (use Cookie Monster voice) “me want money”. An effective sales culture is inclusive of intrinsic motivators like:
- The sales person feels they are adding value to the lives of their clients
- The sales person feels they are growing as an individual
- The sales person feels they are developing recognized industry expertise
- The sales person feels their values are aligned with the company’s activities
When you use a short term reward you are basically saying screw the intrinsic motivators, have a watch instead! In other words, you are changing the answer to the question of WHY we work?
As a sales person, if I believe I am adding value to my clients’ lives then I have a good reason to get up and work hard today. If you throw in a watch, it’s pretty easy to get confused about why I’m working hard. Am I working for my clients? Or for the watch? Do I really even want a watch?
And what happens when the contest is over? If I’m supposed to work hard for the CHANCE to win a watch, what am I supposed to do when the watch is no longer available?
Anything Else Wrong with Short Term Sales Incentives?
Still not convinced that short term sales incentives can play havoc on your sales team? Here are a few other considerations:
- Short term sales incentives cost money. Why not build that into your standard compensation structure and make everyone a bit happier?
- Sales person effort tends to find it’s natural level. Sales people who work super hard this month for a watch tend to slow down in the month following.
- Short term sales incentives lend themselves to pipeline manipulation. You can close lots of deals during the award period, but have an empty pipeline when the contest ends.
- You are encouraging a short term mindset, instead of promoting a long term, client focused environment.
When deciding whether to use short term sales incentives, ask yourself which sales team would you rather lead for the next decade? The one that had a great last quarter? Or one that believes in their company purpose, takes daily action to improve their industry knowledge, and comes to work every day with a client-centric focus?