Cash or caché? When it comes to the sales team, it’s not always money that motivates
One thing that preoccupies sales managers and directors is the sales bonus scheme. As former frontline salespeople, they know that the incentive plan drives the sales team’s behaviour.
But there is much to consider: the basic/commission percentage; the type of sales activity; quota setting; territory planning; the size of bonuses and “accelerators” and when they kick in; the product/service mix; pricing; negotiation leeway, and so on.
Furthermore, today’s salespeople have to get to grips with an online world which is increasingly where their customers are. As a result, incentives are likely to shift away from the number of cold calls to smart work on the computer.
Glassolutions, a £110m building materials firm, is demonstrating the benefit of rethinking sales reward. Sales director Matthew Curtis’s team have to work across the supply chain on often complex projects.
“We offer a good basic salary of 80 per cent that attracts the right calibre of people and 20 per cent for bonuses to encourage the right behaviours,” he says. “They are set an individual territory target, a target to manage the profitability of that target, both with bonuses, and there is a team performance bonus.”
The high basic is unusual – 60/40 is a more common split in business-to-business sales – but it reflects the amount of time Curtis’s sales teams spend with influencers and the complexity of the products they are selling. While Curtis would like to push the bonus more, he’s pretty happy with last year’s results – 20 per cent growth in new accounts.
Meanwhile, energy firm E.ON has introduced a sales academy to enable sales people to gain accreditation for their training. Such academies were popular back in the 1980s and a number of firms have revived them, realising that career development is once again an important part of the sales reward package.
A recent Harvard Business School study suggests peer recognition can be just as important to sales supremos as cash. Researchers found a significant number of sales people at a US software firm were closing deals at the end of the year to make the high achievers award which carried no cash benefit, rather than carrying them over to the next quarter. Some were giving up as much as $30,000 (£19,000) in commission to be top dog.