The Cost of Poor Quota Setting
By Scott Barton and Matthew Zink
As we have written numerous times on these pages, quota attainment distribution is a critical diagnostic for a goal-based incentive plan. The shape of the distribution and its position relative to target attainment impact both the plan’s motivational capabilities and its ROI.
Consider an example:
- Company A sets a goal for its sales organization to produce $100 million in revenue. It models a normally-distributed, salesperson-attainment scenario to test the impact of pay mix (ratio of base to incentive target pay) and pay rate accelerators on total comp expense.
- Under the “model” scenario the company pays 113% of its incentive budget at 100% attainment, due to its use of accelerated payment rates for salesperson attainment above 100%, and the model scenario placing approximately half of the sales population into accelerators;
- Its compensation cost of sale, or CCOS, is 4.26% — i.e., Company A is spending 4.26% of each dollar of revenue on sales comp under this scenario.
| Scenario |
Revenue |
Comp |
CCOS |
| Normal |
$100M (100%) |
$4.26M (113%) |
4.26% |
- In a wide distribution scenario, the company experiences an increase to the deviation of salesperson quota attainment – i.e., the left and right edges of the distribution curve grow outward.
- While the company generates no more revenue in this scenario, it spends more of its incentive budget, due to more salespeople earning at accelerated payment rates;
- The scenario also produces a less efficient CCOS, given the increased number of salespeople performing at low attainment levels, yet continuing to earn base salary.
| Scenario |
Revenue |
Comp |
CCOS |
| Wide |
$100M (100%) |
$4.50M (125%) |
4.50% |
- In a third scenario the company experiences an upward shift in average performance, such that all salespeople produce 5% more than what the company modeled under the normal scenario.
- Due to its accelerators, the company spends more as a percent of incentive budget than under the normal scenario;
- The higher cost is at a lower effective rate (CCOS) than under the wide scenario, because revenue increased at a higher rate than comp expense.
| Scenario |
Revenue |
Comp |
CCOS |
| Normal – Right Shift |
$105M (105%) |
$4.54M (127%) |
4.32% |
- Finally, a forth scenario, and an unfortunate one, is where the average attainment is 100% of revenue target but the shape is bi-modal. I.e., instead of one, normally-distributed curve there are two – one centered at the lower end of the performance continuum and the other at the upper end. Think of a two-humped camel, or the tale of two cities:
- The lower-performing camp produces relatively-high fixed cost as a percent of revenue due to base salary;
- The higher-performing group produces relatively high variable cost as a percent of revenue due to accelerated payment rates;
- There is no middle group to offset each, extreme group.
| Scenario |
Revenue |
Comp |
CCOS |
| Bi-modal |
$100M (100%) |
$4.68M (134%) |
4.68% |
From a purely budgetary perspective, Company A prefers the normal distribution scenario, which provides the lowest spend rate as a percent of incentive budget and revenue. However, the company’s sales management has a different view. The wide scenario provides more extreme examples of performance, and pay:
- High performers pull down big pay checks and serve as a source of inspiration to average performers;
- Poor-performing reps opt out of the program (or company), saving sales leadership pain and hassle associated with administrative, “performance-management.”
Obviously, for the sales management, the right-shift scenario is preferred – beat the goal and increase the number of salespeople over quota. But beyond some point of goal attainment the sales organization’s success carries both short- and long-term consequences.
Short-term Company A – and this is a real example – is dealing with the fact that its overall corporate growth and profitability in its last fiscal year fell below analysts’ expectations, even though a large portion of its sales organization exceeded 110% of their quota.
How is this possible? Goals defining company success and sales team success are not aligned. Misalignment usually stems from:
- Under-allocation of goal, which is the practice of assigning to the sales team a level of quota that falls short of the corporate goal;
- Excessive use of measures and goals that enable the sales team to earn what they view is sufficient pay, even when their performance on the primary goal of revenue or margin falls short.
Longer term, companies that celebrate sales team success but fail to meet Wall Street’s expectations must take radical steps to get salesperson pay and performance in line with corporate results. Ultimately the sales team must perform more, or earn less.
The prospect of earning less doesn’t sit well – with salespeople in particular. Therefore, sales leaders need to ensure the sales compensation program uses measures and goals that align with corporate requirements, and that the resulting performance of the sales team and the company is aligned as well. Other components of the comp plan, including target pay mix levels and payment rate accelerators, help fine tune the pay-and-performance relationship at difference levels of average attainment.
The cost of poor quota setting and alignment can be substantial. In our Company A example, the firm spent about 10% more than the modeled result at 100% average attainment, enough to employ at least four salespeople. Another scenario could have been an average attainment below 100%. This outcome better aligns pay and performance as fewer, highly-leveraged salespeople exceed goal. The cost here, while difficult to measure, can be high as well, as salespeople perceive they can’t meet their income expectations because the company sets its goals too high.
Low-tech Sales for a High-tech World
Two recent news stories provided a lesson on the significance of core selling attributes, a theme often marginalized by the prevalence of social networking and the like.
The WSJ wrote on June 17 how Groupon and similar web-based marketing firms have boosted sales in small businesses. Article
That same week the Journal reported the departure of the Apple Store’s chief Ron Johnson and the phenomenal success he helped create. Article
These stories represent opposite ends of the sales-role-influence continuum, a core attribute of sales compensation design.
Take Groupon. While technology enables the service, the service does not sell itself to many of business owners Groupon targets. So Groupon relies on good old fashion telesales to embed its value proposition in the minds of potential customers, many of whom are too busy running the shop to spend time on the internet.
The Apple Store and its success is quite a different matter. We’ve seen cases in retail where technology affords store personnel real-time data on customer profiles and preferences, and up-to-the-minute sales incentives based on inventory flow and strategic positioning. But spend a few minutes in an Apple Store and you sort of conclude that the stuff sells itself. Sure, Store personnel tend to be knowledgeable, courteous and attentive (all things we complained recently were missing in the RIM store). But aggressive sellers they are not.
Not surprising then that the incentive pay strategy is completely different between these two models. We can’t speak specifically to Groupon but know a few of its competitors offer little base salary with lots of commission upside. Sales reps secure a contract and get paid on a percent of the deal’s revenue. Apple Stores do not pay its personnel commission. A representative told me the focus is on the customer’s overall store experience, and not whether customers hear from a store rep about the latest product or app.
This, my friends, is old-school sales comp design. Take into consideration factors such as brand equity, market share, competition, teamwork and the company culture for deciding how much if any variable comp goes into the total pay mix for the role in question. Groupon may come to dominate the market for localized, deal-of-the-day advertising so that more prospective customers call Groupon than the other way around. For now though, it’s a phone, call list, well-honed message and big, dangling incentive carrot that gets the sales job done.
Territory Impact on Sales Productivity: An Interview with Ken Kramer
Ah . . . . sales comp, quotas and territories. Three important legs of the productivity stool. While sales compensation and quotas share time in the design process spotlight, many salespeople will tell you that their territory assignment has as much, if not more, impact on their success. We recently had the opportunity to catch up with Ken Kramer, Director of Business Development at TerrAlign, a software and services company focused on sales resource optimization. 
Mike: From your perspective, how important is territory management for increasing or maximizing sales productivity?
Ken: While I might be a bit biased, territory management is critical for maximizing sales productivity and revenues. But it might be helpful to first clarify the differences between Territory Management and Territory Alignment or Optimization. I think of Territory Management as the broad umbrella term for all things related to territories – assignment, tracking, definition. Or alternatively Territory Management can specifically relate to the tracking of who owns what and storage of the information in the system of record while integrating to CRM, ERP, ICM and similar systems. Territory Alignment or Optimization is more focused on the design aspect; creating territories to optimize the utilization of the entire sales force. TerrAlign focuses on territory optimization and is the reason for my first statement. To maximize overall sales productivity, each sales rep needs to be leveraged to their fullest capacity. Companies need to provide roughly the same amount of ‘work’ in each territory, while minimizing drive time and maximizing the number of accounts or prospects a rep can service.
Mike: Are there any examples you can share where companies have been able to quantify the impact?
Ken: Our research, as well as that from other organizations, typically shows companies increasing revenues 5-15% without increasing headcount. At the same time, they are able to reduce travel related sales costs up to 15%. The results are incredibly strategic, typically producing ROI’s that are so big, they verge on unbelievable. But, for companies doing millions of dollars in revenue, even a small increase in productivity can have a very significant impact.
Mike: Are there some guiding principles for organizations that want to evaluate the effectiveness of their current alignment approach?
Ken: From an evaluation perspective, I’d recommend companies focus on a few things. They might vary based on company and industry, but should include metrics related to work, opportunity, and revenue. Ideally, you want to understand if each rep is making the same number of calls or producing a proportional amount of revenue for the number of accounts they are servicing.
As an example, one guideline we see in life sciences or consumer goods is to target 32-35 hours of work per week. This allows for vacation or sick time, training, or other non-selling time. When we talk about work or workload, we consider this to include the number of calls, duration of those calls and drive time to get to each call. In high tech, companies typically look for a relatively similar number of prospect companies across territories that meet a particular profile. We also recommend that variables used for balancing territories reflect those measures in sales comp plans; that is, design the territories around what you’re also paying for.
Mike: What are the characteristics of the most effective approaches versus ones that didn’t work so well?
Ken: Where possible, build the territories based on a workload factor. It will lead to better territories where customers will be better served for a longer period of time. Don’t build territories around reps, they often don’t last as long your customers. Also, build territories from the ground up, if you start at top and go down, the ability to create balanced territories is greatly reduced.
Mike: How has technology impacted the process?
Ken: While we have been applying technology to this issue for over 20 years, technology solutions for territory design are nowhere near as well-known, as say CRM or ERP. However, technology has had a major impact on territory optimization. Previously, and in many organizations today, alignment decisions are largely based one or two factors – neither of which is particularly desirable; 1) gut feel or 2) that’s way the it’s always been done. The truth of the matter is that sales managers have largely driven the process based on what they think makes sense, an effort to not upset the over performers and their memory from when they were in the field.
Not too long ago, sales managers would generate complex spreadsheets and attempt to create some degree equity across the territories. Then generic mapping tools arrived so they could plot accounts and visualize things. Both tools helped, but didn’t reflect the combination of variables and algorithms that could balance each territory, allowing for a consistent workload across the team while minimizing drive time.
As an aside, our organization provides consulting in this area. I remember one field session in particular. As we worked to adjust and finalize the alignments I observed the field managers taking on a new perspective and focusing on alignments that would benefit both their teams and the company as a whole. The managers realized they could communicate the changes to their teams and recognized the potential benefits of a more systematic approach. Prior to that, I had mostly experienced sales managers in a land grab because they knew quotas wouldn’t keep up with
opportunity, so the more the better. Also, by involving field managers and providing them an integrated tool to make changes, Sales Ops doesn’t become a bottleneck. So, the technology helps to change thinking, validates (or negates) gut feel and provides better results in a shorter time
period.
Mike: What lessons learned can you share around the connection between territory alignment and compensation planning and goal setting?
Ken: Compensation can be a touchy subject. While reps wait for their Territory, Quota and Comp Plan to be distributed at the sales kick off meetings it is easy to complain about their territory assignments – what accounts they’re going to lose or how little opportunity exists. Most reps expect their quota to be similar to their colleagues, so they can commiserate about that. And, they dissect their Comp Plan, figuring out how to ‘beat’ it. What they often miss is that regardless of the comp plan design, the tie between their quota and territory is what will have the greatest impact on if and how much they will exceed their target. A territory in the rural Midwest could have the same amount of workload as one in New Jersey, but significantly less opportunity, so the quota better reflect that.
As I mentioned earlier, comp plans and territories need to share common measures and these should also drive the quota setting process. Quotas should reflect the opportunity per territory. The impact of unbalanced territories on quota attainment distribution and the cost of incentive comp can be disastrous for a company. Most comp plans have accelerators that far outweigh any decelerators associated with below quota performance. When reps outperform their goal, the related expense is significantly higher than what a company ‘saves’ when a rep misses.
Mike: Have you observed any trends or shifts in how companies approach this topic given the recent economic environment (e.g., entering the downturn, dealing the trough and now what appears to be a period of higher growth expectations)?
Ken: Change is a trigger for products and services like ours. The recent downturn forced many companies to figure out how to do more with less. We recently worked with several companies charged with reducing headcount, but determined to maintain revenues and effectively service their customers. Aligning territories to allow each rep to visit the most number of accounts is critical to this effort. Growth, which we prefer to see our clients enjoy, also forces the issue of how to realign territories – and how to do it in a way that the sales team doesn’t feel penalized. Regardless of the change, companies want to minimize the level of disruption – the number accounts being reassigned from one rep to another. Our technology can do that while also balancing the new territories and making them geographically compact. One other point worth mentioning; when things are good companies are less conscious about ”optimization” than when headcount is being cut. We encourage our customers and prospects to continually focus on how to get the most from their sales headcount.
Mike: Any final thoughts on what companies should be thinking about as they go into the 2012 planning process?
Ken: Customer segmentation, sales force sizing, territory alignment, compensation plans and quota setting all part of the sales planning process – a new year represents an opportunity to revisit each piece of your sales coverage model and support programs. Typically, the companies that come out of a downturn in the best shape are those that used their resources more effectively and invested while others pulled back. Much like any other year, it’s critical to do the analysis, set the company strategy and then put your sales team in place to execute. There are a lot of pieces to consider, but also an awful lot of upside when done well.
Ken can be reached at kramer@terralign.com
Putting the Cart before the Horse?
Effective Sales Compensation Starts with the Sales Role
Over the years in our work on sales compensation we’ve engaged with companies of all sizes. One of the more instructive aspects is the way in which a small firm, as it grows, formalizes its sales roles and uses this structure as a competitive advantage. Many firms we encounter are loose on this approach, giving salespeople the autonomy to focus where they see fit, or directing salespeople in ways that conflict with how they’re paid.
A similar issue comes when the company has no formal approach for profiling sales job roles after an acquisition. Either the acquired job stays in its legacy plan and is “off the radar” from a governance perspective, or the job gets slotted into a plan without any formal analysis to ensure alignment.
In either case the sales compensation approach does not align with the job role. Salespeople complain they’re being asked to focus on account development, new products or profitability while the sales compensation plan doesn’t adequately reward for these initiatives. In addition to salespersons’ perspectives are those of sales management. If the rank order of salesperson contribution, as perceived by sales management, doesn’t align with the ranking of salesperson earnings, then there’s a disconnect between job role and comp plan.
At core is a lack of role profiling and ensuring the compensation approach aligns with the role profile.
Components of the Role Profile
Many firms rely on a narrative job description and generic leveling matrix. Read the descriptions for a number of different job titles and they start to all sound the same. Problem is these descriptions lack key components of the sales role.
More thorough is a role profile that targets priorities of the job, including:
- What’s the degree of market maturity into which the salesperson selling – e.g.: mature; high-growth?
- On what is the salesperson’s knowledge oriented – e.g.: accounts; products; technical solutions; partner relationship? To what degree is the solution a stand-alone versus configured?
- What are the buying patterns and overall segment characteristics of the targeted customers – e.g.: sporadic; aligned with budget cycles?
- What percent of the sales time is on new versus current accounts? What percent of current account focus is on maintaining current business?
- To what extent must the role team with other sales and support roles?
- Where is the role to focus during the sales process – e.g.: prospect; persuade; fulfill?
- What’s the length of the sales cycle? What’s the timing of revenue recognition following the sale?
Should-be, As-is and Multi-Source Inputs
Those responsible for profiling the roles should construct a template using the factors above. The next step is to complete a “should-be” version based on the coverage model and strategic intent for each job. We are often asked to assess the gap between this ideal profile and how incumbents currently execute — “as-is.” For the as-is profiling, consider multiple inputs, including incumbent surveys, management surveys and interviews, team interviews and focus groups, and observation. The observation track can be particularly insightful.
Long ago I spent six weeks with over 30 field sales representatives from Alliant Foodservice (later acquired by U.S. Foodservice), visiting customer accounts in territories around the U.S. Using the templates my colleagues and I performed as-is profiling for over 100 field sales personnel, and inputs from surveys and management focus groups, we observed seven distinct profiles for a single job title. Relative to the “should-be” profile, we assessed coverage gaps and other deficiencies – information critical to training, cross-role coordination and change management. Typical of what we’ve observed in similar assignments, the reps were critical of their as-is execution and saw significant opportunity for refinement. However, they were not likely to start executing on a new role profile until first being heard and perceiving their input helped shape the future-state approach.
Aligning Sales Compensation
Aim to design a sales compensation plan for each unique job role. Start with the target total cash amount. Profiling often identifies an increase in the job’s strategic content, from where management had thought it was previously. This shift requires an increase in base salary. Use market pay surveys appropriate for your industry as an input for appropriate target total cash levels.
Pay mix, the proportion of target cash that is both base salary and target incentive, should align with the job’s relative influence over persuasion on deals. Many factors for determining the appropriate mix tie directly to components of the job profile. For example, jobs focused on more complex segments of customers tend to command higher base salaries in the pay mix.
Performance measures and pay mechanics must align with each profile as well. Suppose the account manager role earns variable pay according to revenue quota achievement, yet the role profile indicates the job’s primary responsibility is to penetrate the account base with new products. Therefore we’d expect the plan to include an account penetration measure, with pay mechanics geared toward the sales cycle and deal’s revenue flow.
Managers often attempt to design and apply sales compensation programs on unfocused or misdirected job roles, believing the plan will focus and guide behavior accordingly. This puts the cart before the horse. Formal role profiling is a critical step in the evolution of a sales organization and the foundation for sales compensation effectiveness.
Mid-Year Program Evaluation
An effective mid-year incentive program evaluation should answer three key questions:
- What should we measure?
- Where do we get the data?
- How do we use the information?
But what’s the best way to construct a repeatable and objective mid-year evaluation framework for your incentive program? As Scott covered back on April 25th, there are four important measures of a well-functioning incentive plan:
- Pay Distribution
- Performance Distribution
- Return on Compensation Investment
- Sales Time Allocation
But is that enough? We’ve talked a lot about the importance of articulating and documenting your incentive compensation philosophy and creating principles to facilitate the decision process. Design principles can take many forms and cover a variety of dimensions based on your specific situation. Sample categories include financial, operational and cultural. Your design principles
should also play a role in evaluating the program. Each principle should be accompanied by a set of measurement standards. Let’s say you’ve established a principle around the motivational impact of the pay opportunity and sales goals. The standards in support of this principle might include:
- Each performance measure contributes to >20% of the job’s targeted incentive
- Each performance measure has >70% participation rate
- At least 10% of the role’s incumbents are high performers
- High performers earn >3+ times that earned by average performers
If we’ve agreed on these standards in advance then we can identify and collect the data and then use it to evaluate how well the program is working:
| Standard | Inputs |
| Each measure contributes to >20% of the job’s targeted incentive |
|
| Each measure has >70% participation rate |
|
| At least 10% of the job’s incumbents are high performers |
|
| High performers earn >3+ times that earned by average performers |
|
Other design principles and their accompanying standards might go beyond the four key measures. Here are some additional examples of areas that might be covered:
- Quota quality
- Correlation of credit and role influence
- Plan eligibility and participant plan assignment
- Correlation of transaction credit with actual revenue
- Use and ROI for SPIFFs and contests
- Consistency in thresholds, accelerators and other mechanics
- Payment timing and accuracy
- Number of disputes and response time
As part of the plan design process, we suggest a formal work step to define the evaluation standards. During this step, the Design Team should review each principle and document
the corresponding standards. The data requirements can then be identified and a process established/tool created for ongoing tracking. There might also be a set of measures you
include from year-to-year. As an example, you might want to track the distribution of incentive pay even if there wasn’t a specific change priority this year.
The notion of design principles and their accompanying standards might be all well and interesting, but what if you don’t want to wait until the next design cycle? The four key measures are a good start, followed by a working session to review the beginning of year expectations. Was senior management looking to increase teamwork? Improve margins? Launch a new
product? With these expectations in hand you can then determine what metrics and data might be available for testing.
Whether the evaluation framework is established well in advance or at review time, a few metrics
used are better than a lot not used. Be sure data used is credible. And remember the evaluation supports both strategic and tactical decision-making.
Incentive Program Governance
Welcome to June! School’s out (or almost out), barbecues, hanging out by the lake, and . . . . incentive program governance. This is the time of year when many incentive plan designers ask themselves whether the current governance model makes the most sense given the organization structure, evolving business priorities and culture. In this installment of NewSigma’s Sales Incentive Practices Series, Scott discusses the standards, roles and other elements of effective program governance.
The Inside Word on Inside Sales
What Makes This Group of Sellers Unique?
It used to be that inside sales was commonly seen as a lower-tier channel relative to field sales. Inside reps could touch more accounts than their field counterparts in a given period, at a lower cost, making them well suited for covering lower-value customer segments.
With changes to customer buying habits, inside sales is playing a larger, more prominent role. Indeed, a client recently confirmed this notion, sharing that he bought a $600k enterprise software application after researching options and receiving some over-the-shoulder support from the software company’s inside sales rep. “If I can buy a $60k Audi without ever speaking to a salesperson, (it) seemed logical I could buy a software app without all the in-your-face, dog-and-pony shows.”
As prominence of the function increases, so too does the complexity and questions on how best to attract, retain and motivate inside sales team members. We look at three aspects.
Culture and the Social Network
Generational nuances come up more frequently with inside sales forces because these roles are typically the first rung on the sales career ladder. Inside sales is a tough environment, and the fate less certain than a field sales role. There’s no loyalty. Field sales is a career; reps increase their comp by staying in the role and being better at it; inside reps look for a job promotion instead.
For the manger, culture can work for you or against you. Ring the bell, free pizza in the lunch room, public expressions or recognition and success – all less viable in a field sales environment; but skepticism and disappointment travel like wildfire in a call center. Such conversations used to occur over cube walls, in the hallways or at the water cooler. Today’s younger inside sales reps are more likely to stay in their cubes, texting and emailing as a way to stay connected to peers both inside and outside the firm. These factors make it harder for the call-center manager to leverage the positive aspects of an inside team.
Steve DeMarco is VP of Sales for Xactly Corporation, and a long-time manager of inside sales resources. Recently Steve spoke at the American Association of Inside Sales Professionals (AAISP) Conference, where much of the discussion was around how best to motivate “Gen Y” employees that fill the majority of inside sales seats.
Steve says, “Given all the sports and related activities that kids now participate in from an early age, today’s younger workers can be dedicated but expect structure and formal training for advancement, much more so than earlier generations.”
And Baby Boomers are entering or returning to inside sales at rates not seen in years, given the recession’s hit to retirement incomes. “Everyone gets along,” Steve says of the two generations working side by side, “but management has to appreciate that what motivates one group won’t necessarily work for the other.”
Role Design: Inbound or Outbound
There are significant differences between inbound and outbound roles. Of the two, inbound is more difficult to benchmark for determining competitive pay rates because the pay mix – the split between base salary and target incentive – is not consistent across firms using inside roles. More challenging is the confusion many inside incumbents have around the inside role – is it sales? Service? Firms that haven’t nailed the culture, performance expectations and skill requirements will struggle.
We think of outbound sales roles as being similar to field sales but typically more transactional and data driven. Issues pertain to account ownership and handoffs when both field and inside sales work on the same accounts and opportunities, or lower-value accounts migrate from inside sales to field coverage. In these cases the sales credit mechanism must align with each job role’s point of influence.
Pay for Performance
Measuring performance for the inside sales role is problematic. In call routing schemes managers can struggle to identify which rep influenced a buying decision. Call routing and marketing campaigns influence overall sales opportunity for inbound roles, and have an impact on the customer experience – “my cable is down and you’re trying to sell me phone service?!”
Call centers have a tendency to overload reps with metrics. Frequent spiff programs can conflict with, or dilute from, the core incentive plan. Management has to filter out what are important-but-not-critical measures from those that link to profitable revenue growth. Inbound roles do well with incentive credit schemes that retire quota at a rate that’s proportionate to the product’s or service’s strategic value, with a minimum customer-service score serving as the qualifier for incentive eligibility. And quota must, for the inside role, adjust with fluctuations in call volume.
As we’ve said on these pages many times before, sales is, or should be, service. Salespeople able to demonstrate this approach do well, particularly in the inside sales environment, where words, tone and timing account for everything.
Dinner and a Movie
Adding to our List of Favorite Sales-Themed Movies
Ah, Friday night. Maybe you shut down early, pick up some Chinese food (though here in SF we have to distinguish between Hunan and Mandarin) and stream a good sales flick. We keep a running list of our favorite movies that speak to the madness of the sales profession. If you’re a salesperson, manage salespeople, or in some other way find the profession entertaining, we suspect you keep a similar list or at least enjoy a sales-themed movie on occasion. We’re happy to recommend one for your list.
Let’s first get something straight: this is not a movie review. My Friday night viewing standards are low, given the alternative to a Friday-night-dinner-movie-kids-asleep scenario is being stuck at O’Hare, or worse.
Now then, “Love and Other Drugs” represents a good dinner-and-a-movie piece because it’s a love story, though considerably spicier than your average Julia Roberts flick, and showcases primal sales behavior. Jake Gyllenhaal’s character is a heartless Pfizer sales rep with some unsavory tricks up his sleeve, that is, until Anne Hathaway’s Maggie makes a strong bid for his attention. We can only imagine the legal wrangling between Pfizer and the movie’s producers. Perhaps the subject’s period was enough long ago – when you could still buy a new 911 for under $50k – so that any unflattering depiction of Viagra or its sale force is moot.
There are three general types of sales-themed flicks: light-and-foolhardy; dark-and-serious; and serious-yet-ultimately-uplifting. Depending on your meal and mood, we’ve tried to cover all three categories with our top-pick list, in no particular order:
- Glenngary Glen Ross: “Put that coffee down – coffee is for closers”
- Boiler Room: Ben’s profanity-laden pep talk is second only to Alec’s above
- Fargo: William H. Macy didn’t go to Club that year
- Wall Street: Charlie Sheen plays a grownup
- The Big Kahuna: don’t let the cover art fool you – dark and serious
- Thank You for Not Smoking: “We don’t sell Tic Tacs, we sell cigarettes. And they’re cool, available, and *addictive*. The job is almost done for us.”
- Tin Men: some great dialog….and a government probe!
- Clerks: retail at its best
- Tommy Boy: “That guy may not call us”
- Working Girl: Talk about self motivated – she wasn’t even eligible for the comp plan!
Upon reflection it’s the dark-and-serious genre that dominates the list. Avoid many of these movies if you’re considering a career in sales, or are skeptical of salespeople.
But any one of these movies illustrates the stuff that makes salespeople tick: passion, tenacity, guts, desperation. If you work around salespeople and find them a little hard to understand, you might consider watching these as part of your sales sensitivity training.
Or just decent entertainment. As for the dinner portion of the equation, we’ll leave that to Part II of this series.
Time to Make A Change?
Summer is almost here. And as sure as the seasons change, sales compensation designers are already starting to think about next year’s potential changes. Whether it’s time for a wholesale realignment or minor update, a myriad of factors can impact the success of your redesign effort. In this installment of NewSigma’s Sales Compensation Practices Series, Elliot Scott and I discuss the lessons learned from companies that have successfully (and not so successfully) managed a major change within their organizations. We hope you enjoy it.
Who’s Minding the Store?
Tales and Tribulations in Retail Shopping
One of my first jobs was a shoe salesman in a mall store. What motivated me? It wasn’t the money – horrible. It wasn’t the job content. I could have cared less about shoes. Rather it was a way to make a little money while I socialized with friends staffing other retail shops in the mall. This was long before Facebook. What else was I to do? I took the job because the chain’s district manager sold me on the idea that I could make a lot of money selling shoes. Didn’t hurt that he arrived to our lunch meeting in a new BMW. His proposition didn’t pan out. I lasted about six months.
Don't Try This at Home
Why do I share this unfortunate chapter from my past? We get that life is difficult for the retail store sales clerk. It’s tough for their employers, too, with turnover at many stores ranging from 200 to 300 percent. Is this a reasonable cost of doing business, or a decent tradeoff for low prices or convenience? Maybe so for some environments, but not businesses that require motivated, knowledgeable and courteous sales staff.
Take this scenario. Wednesday afternoon Mike and I are killing time at the Philadelphia airport and come across a Blackberry store. Prominently displayed is a new Playbook, RIM’s answer to Apple’s iPad. Mike is a dedicated Blackberry user and appears particularly interested. We start fiddling with the thing, and can’t, after about two minutes of trying, get to a web page. All we see on the screen are photos taken by other shoppers/travelers. By the looks on their faces, they, too, struggled to get the Playbook “playing.”
We strolled to the other side of the store, where another Playbook sat perched on a stand. This one had what looked like a browser on its screen. We try in vain to locate a search or address window. All we get is a “Windows Live” login screen. There’s a seemingly useful menu bar that sporadically appears on the screen’s header but when pulled down disappears. Ever get a contact lense stuck behind your eye ball? “This sucks,” we say, and walk off.
Our experience with the Playbook was short lived. The store clerk seemed unconcerned. Maybe she thinks the device sells itself (it doesn’t), or that we already own iPads (we don’t). Whatever the case, she may have been able to salvage the situation…and did not. I expect that in situations where the product could use a little help to capture hearts and minds that someone is there to sell it. Playbook needs, in its current form, a few good salespeople.
I’m loathe to use “best practice” examples, because of the “yeah, but” responses these examples might elicit. But here it goes.
I don’t mean to pick on airport vendors, but a little kindness goes a long way. After all, most people in airports are grumpy, and they have plenty of options for food, drink and general time-killing. Take this sandwich shop in DEN. I use its name, Paradise Bakery, to promote its business. Recently I walk up to the counter and am blown away by how friendly, efficient and seemingly grateful the guy on the other side is for my business. “Yeah, but he’s probably the owner.” Good call. Though I observed he wasn’t the lone friendly guy in an otherwise surely operation. If anything he was setting a good example for the others.
Take another example: the now defunct WaMu. Management there, in the bank’s hay day, concluded that losing a newly-hired-and-trained teller after six or eight months wasn’t good business. The bank had spent all this money to make their branches look like an employee breakout room at EBay (lots of open space with colorful, creatively shaped chairs and little tables). So why have the cool branch experience ruined by a service representative who could give a flip? “Yeah, but WaMu got seized by the Feds – its management is being prosecuted.” True. But let’s separate the unsavory lending practices from the solid execution on the retail floor. WaMu determined it could increase engagement and reduce turnover by paying more and demonstrating to tellers that this tough, first occupational step could lead to a meaningful career.
When the news arrived hard and fast that WaMu would cease to exist, I’m sure many of the tellers felt like I did a few weeks into my shoe-salesman career – this isn’t turning out the way I expected. But many of these folks did continue on a path toward a meaningful career in banking, with Chase or another institution admirable of WaMu’s practices in this area.
Takeaway? In an increasingly electronic, mobile, Facebook-Google-Amazon-Groupon marketplace, face-to-face customer experiences matter more than ever. As a business person, who do you want facing off with the customer? We’ll take the knowledgeable, engaged salesperson every time. Sure, they cost a little more, but it’s a cost of doing business.
RIM Playbook, R.I.P.
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