What You Must Know Before Changing the Sales Compensation Plan
A new year is almost here! The end of the year is when many leaders tend to consider transforming their sales compensation plan since a new year equals making a fresh start. If you are a leader contemplating changes, I would suggest that a real purpose be at the core of any new compensation plan. The plan should be designed to incent individuals to perform the way leadership desires in support of the company’s goals.
But to effectively do that one must understand the concepts of motivation.
From the Merriam Webster dictionary, the word motivate is defined as: to provide with a motive: impel.
There is a common belief that salespeople are in sales because they are money motivated. Yes, many enjoy the idea that they can get compensated based on their own performance, but our data does not support that all or even most salespeople are motivated by money.
Money motivates some but does not others. Some are provoked by the satisfaction of doing a job well, others are not. Some are just propelled to be the best they can be, and the rewards may come along. And still other successful salespeople are motivated by the knowledge that their work matters for the customers they serve.
The trick is to avoid motivating to the masses. To be a master of motivation, know what inspires each individual and provide the purpose for them to individually excel.
No Motivation Needed?
Sadly, the data also suggests that many managers have this belief: “I don’t need to know what motivates my people.” This is likely caused by a majority of sales managers being promoted based on the fact that they were strong salespeople and were/are highly independently motivated. So, they bring the deep-seated belief that salespeople should just go do it and don’t need motivation or inspiration. I have seen this thought process fail time and time again.
It leaves a lot of sales performance to chance for one. Also, when there is too much reliance on compensation plan financial rewards to inspire the right behavior, leaders will grow frustrated because salespeople don’t maximize profit with each opportunity, or they become perfectly comfortable negotiating for a better price internally rather than selling value to the client. Too frequently, salespeople are interested in discounting to keep the deal, so to speak.
Discounting Over Selling Value
If you have team members that suffer from this affliction, you may want to review our Sales Success Snippet video library. Several talk about this very situation. Since we know that only 18% of sellers are extrinsically motivated, meaning money, rewards, and recognition, then leaders must understand fully the ways individuals on their team will be inspired to truly motivate them.
Two highly important questions regarding leaders of sales teams arise from this line of thought:
1) “Do I know what motivates each of my salespeople?”
2) “Is my compensation plan structured to motivate them?”
In other words, do we have the right people for the plan?
Finding the Answers
Unless you have a VERY close relationship with your salespeople, they will likely not tell you the truth about what motivates them. They will say what they think you want to hear. You must conduct a thorough PERSONAL goal planning session with your folks to identify why they come to work and how you can tap into helping them excel in their sales role so they can reach their personal goals. You may be interested in our Sales Action Planning Playbook which provides a process to use.
Additionally, to fully understand how to incent and motivate your team with expert precision, use an objective sales force evaluation process such as the tools we use to understand their level of motivation and what motivates them. At Boost Profits, we use the Objective Management Group battery of assessments because they are the most accurate and precise tools on the market that are designed to be predictive and valid for salespeople.
Finally, it is valuable to take a look at your company culture and your compensation plan as it relates to the way you are hiring. Do you know whether or not they will be motivated by the current plan?
If you need help or have questions about doing any of this, reach out to me. We’re here to help.