We hope you enjoy this Q1 summary of our new Field Sales Compensation Survey Series. Clicking on the full screen button will make it easier to see some of the statistics (sorry about that).
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While many surveys exist for benchmarking sales compensation pay levels, growth expectations and other important metrics, we find few gather input directly from the plan participants. Field input represents an important component of our consulting work and we encourage our clients to conduct field sensing activities at various points of the year. This month we launched Rate My Sales Comp Plan, an ongoing survey series focused on the perspectives and insights of sales professionals. So far we’ve gathered responses from approximately 1,000 salespeople at over 200 companies.
The early results are somewhat startling. Fully 30% of the respondents answered false when asked whether they understand their incentive plan.
26% disagreed with the statement that their plan contributes to the profitable revenue growth of the organization, or said they didn’t know because the strategy isn’t clear. More than 10% indicated that their comp plan is causing them to think about leaving or are in the process of leaving because of it.
Given the importance of the incentive program, having 30% of the field not understand how they are paid is unsettling at best. Couple that with a quarter of the field feeling like the plan is not aligned with the priorities of the business (or not sure what those priorities are). As plan designers, we have to ask ourselves whether this is a symptom of complexity or communication. Perhaps it is a bit early to be thinking about 2012 just yet. But, it might be time to take the pulse of your field organization before 2011 gets away from us.
One of the most challenging decisions facing sales leadership is whether to move from a commission to a goal-based plan. By commission, we mean the relatively simple approach of sales x payment rate = payment. In a commission plan, payment rate gets the focus – bigger the better for a salesperson. In a goal-based plan, it’s all about the goal or quota: goal achievement = payment. There are derivations of these approaches: variable-rate commission schemes where the payment rate changes based on a goal-achievement threshold. But fundamentally, the commission plan provides a target share of each sale to the rep, where the goal-based plan provides a target payment when the rep has met the required goal.
Two years ago we worked with the sales force of an incumbent local exchange carrier (ILEC). In 2009 the sales organization adopted a quota-based plan after having used a commission plan. The firm’s head of HR said moving to a goal based sales compensation program was relatively simple, and one of the better things they’ve done.
In 2008 the company was struggling. Yet most salespeople earned variable pay based on recurring revenue from previously-done deals. Many in management thought reps viewed their variable pay as an entitlement, and were not sufficiently motivated to grow new business.
The program changes for 2009 included a minimum performance threshold for incentive eligibility, and use of both cumulative and discrete goals for monthly payments, depending on the job role. The new program simplified the calculation methodology by using a standard approach across various performance measures, whereas the previous plan used a variety of calculation rules. In exchange for the threshold, the plan offered higher payouts for over-goal performance.
During 2009 the company operated under bankruptcy protection in one of history’s worst recessions. Yet the sales organization performed admirably, coming in for the year just below the goal. In 2010, management kept the same basic plan structure but increased the goals and minimum performance threshold. The company emerged from bankruptcy in October and finished the year at 107% of plan.
The company’s mood for 2011 is bullish. Management has refined the sales comp plans to place more focus on strategic product sales. A benefit to goal-based plans is management can shift strategic emphasis by changing the quotas and payment rates, without structural changes to the program. This consistency is a welcome change for reps that grew accustomed to constant changes to the plan, and given all organizational changes.
Goal setting and allocation is never easy. “We did a lot of work behind the scenes,” says the head of HR. “But this paid off in making the program appear simple and sensible to the field.” Management restructured the way in which marketing and sales worked together in goal setting by setting up a core team and calendar, with shared accountability for revenue goals across functional groups. This helped the entire process become more transparent – a criterion for effective goal management in the sales organization.
“Managers often fear they’ll lose their best salespeople by making incentive pay contingent on goal achievement. You have to take risks, and work through the fear. If you have solid relationships – salespeople with customers and management with salespeople – fear of losing sales talent is probably overblown.”
The company lost some salespeople during the transition, but most are back. They’re excited about the culture and being a part of what the company now stands for: a high-performing organization. Setting goals at the sales rep level enabled the company to take a big leap forward.
Joe Glenn has been managing field-based and inbound-phone salespeople for over five years. During that time his company, specializing in communications and computer-services, measured sales performance on a product-unit basis. The approach is common in retail and consumer-sales environments, and can be effective for driving transactional behavior from salespeople. Where the unit-based approach falls short, though, is on goal alignment. That is, the sales organization can exceed its unit goals while the company misses its revenue target. In many such unit-based incentive plans, reps focus on those products they can most easily sell without appreciating the financial consequences to the company.
Changing a sales force’s incentive plan can be dicey stuff, particularly when the company adopts new measures of performance. In Joe’s case, not only did he have to onboard a new measure, but each rep would carry a quota and minimum performance standard.
“We have a very flexible, adaptable sales force, which makes annual changes to the sales comp plans relatively straightforward,” said Joe, who about one year ago started sharing with his sales teams the revenue-plan concept. “They were on board – it made complete sense to them.” New goals and a goal-setting paradigm raise the stakes, however. “Salespeople want to know the goals are reasonable and ultimately, do-able.” Without the benefit of historical data, salespeople didn’t really know whether their revenue-based quotas were in line. Adding to the anxiety the plan featured a 75%-of-quota threshold.
Creating quotas was another issue. Joe’s colleagues in sales operations used the company’s billing system as the source for transactional revenue data, a formable task that didn’t come on line until December. The new incentive plan was slated for rollout the following month. Joe was forced to use a limited set of historical data for setting Q1 quotas.
The company launched its new plans during the final weeks of December 2010. Early into January, salespeople, checking their progress against quota on a daily basis, were becoming concerned. For most reps, their performance was trending well below where they needed to be to reach the threshold, and earn incentive pay.
Rather than waiting until quarter or even month end, Joe took action. He and his operations colleagues dove back into the data in search of assumptions that, given the benefit of hindsight, might be off.
The prospect of adjusting quotas mid-cycle is typically fraught with issues. While in principle Joe believes an organization should stick to its goals, the revenue quotas were new, and he couldn’t risk the organization having a poor Q1 – a likely scenario should the salespeople disengage after perceiving they couldn’t hit the threshold.
“For the quotas to be effective, we had to be open to regular course corrections,” Joe says. “This could not be a ‘set-it-and-forget-it’ approach.” He used a transparent process with company leadership to keep them appraised on the evolving quota-setting methodology. As more data became available, Joe revised his assumptions. This included expectations for optimal business mix at the assignment level, and factoring customer churn into a four-year, revenue-per-unit (RPU) projection for acquisitions, where discounted monthly recurring revenue in the first year gives way to more typical RPU rates in Year 2 of the contract.
Joe also added a feature to the plan threshold by including a relative-ranking threshold by market. Threshold would now be either the 75th percentile performer in each market group, or the absolute approach (75% of individual quota), whichever was lower in the period. This tactic provided a reality check to performance in the greater Kansas City market, where unusually harsh weather hammered field sales efforts.
While January revenue results came in below even the revised plan number, February’s pipeline is strong, and Joe projects a record Q1. His sales teams viewed the revised goals challenging but reasonable, and after shaking off the initial anxiety, set out to beat them. From leadership’s perspective, the additional analysis and revised goals provided a level of granularity that helps each salesperson focus on the right mix of business. Reps are selling smarter, and thinking more long term.
One can argue that if the company hits its revenue plan, which in Joe’s case appears very likely for Q1, the course taken to get there doesn’t really matter. Joe will tell you his approach of staying flexible, transparent and course correcting as he goes has everything to do with a favorable outcome.
Joe Glenn is a director of sales for a communications and computer-services company serving California, Kansas and Missouri.
Recently I exchanged messages with a colleague who was disappointed that her sales compensation design initiative for 2011 got stalled. “All that work and nothing to show for it,” said the director of compensation for a fast-growing, mid-sized software company. “They just weren’t ready to pull the trigger,” she said of senior management on what would have been a major change for a field-based team of technical specialists.
Those of us in the sales compensation profession often take such change requirements for granted. Yet the pay plan governs how salespeople earn a portion of their total cash, cash used for mortgage payments, school tuition, weekly groceries, and the like. While a change to the program might not influence the actual cash earned, the salesperson perceives he or she must now change their daily routine – difficult for anyone, and in particular for a relatively autonomous, confident sales professional.
No less challenging is the case where leadership requires behavioral change from a team of field professionals thinking of themselves not as salespeople, but rather account managers or some job role other than sales. The utility industry provides a keen example. Take large energy utilities, like Southern California Edison, Pacific Gas and Electric Company, Florida Power & Light or Southern Company. Historically, account managers maintained service-based relationships with large commercial users to cover rate schedules, address service issues as they came up and inform customers about the availability of various voluntary programs and services. There was no “selling,” so to speak. Yet with the advent of customer choice in more recent times, and an ever increasing emphasis on energy efficiency and renewable resources, utility companies started facing many of the same pressures found in competitive industries. This included the need to motivate or change customer behaviors; field sales, or…um, account-management, was an obvious lever for doing so.
Bob Kinert is a 30-year veteran of leading sales and service organizations in the utility industry. He reflects on a campaign at one of the nation’s largest investor owned utilities that hinged on its field account managers convincing customers to adopt discretionary programs, like energy efficiency, and demand response.
“Essentially, these are consultative sales roles: listen to the customer, understand their issues, develop and present the customer with solutions and influence them to take the desired action–help the commercial customer realize they can be more competitive if they change how the manage their energy.”
These non-threatening concepts can meet significant resistance when applied to an industry and culture that views itself as being all about service with little or nothing to do with sales.
“You’ll get an account manager that will say they’re not a sales person,” Bob continues. “Their perception of sales is outdated and not positive.”
The irony is these professionals routinely do many of the things a salesperson has to do under the mantle of service. What’s often lacking though is some of the key sales skills imbedded in the sales process.
In working through the transformation at a prominent Fortune 200 utility in California, Bob focused first on the process and skills enhancement, long before any consideration for changes to the compensation approach.
“We had to get people to realize they’re in a consultative selling role, without alienating them.”
This meant focusing on organizational and individual sales capability as well as change management without overemphasizing goals and outcomes. Good service representatives know how to establish relationships and deliver on customer driven needs, but don’t necessarily follow a structured process for proactively seeking out and capturing every opportunity.
Each step of the transformation, compensation included, is contingent on the cultural shift. And the shift isn’t one sided – i.e., management can’t expect to pull the account managers over to their side while holding their own position.
“Each side has a range in which they are willing to move.” Bob references “Latitude of Acceptance,” a crucial part of the Social Justice Theory (SJT) that deals with people’s change in attitude. “For a lot of managers, the pace of change may be slower than preferred, but for the account managers, a more gradual approach is simpler, less risky.”
Regarding a new, risk-based compensation approach, Bob expected the transition to be a gradual process as well. “We had to see the culture shift first, and then introduce concepts such as market potential, goal-setting logic and goal reasonableness.”
I worked with Bob during this period to help design a new sales compensation program. It was, relative to other engagements, a far more inclusive process with field management, very data driven, and conducted at a much slower pace. Bob’s mantra was, “You have to involve the people who will be impacted by the change in the change process. Sales compensation isn’t something you can craft behind closed doors.” “Go slow to go fast.”
As a result, the utility account managers accepted the change in the approach to compensation, taking it in stride with little fanfare. As anticipated, some veteran account managers embraced and leveraged the compensation opportunity more than others and did quite well. Not surprisingly, new people hired into the organization from the outside with a consultative sales mindset tended to benefit the most of all.
I thought of how the lessons from Bob’s experiences applied to my colleague’s situation at the software firm. She shared with me that leadership kept a tight lid on its plan to introduce the new, at-risk compensation plan, for fear of “spooking the herd.”
“But people found out about it anyway, and what they heard wasn’t always accurate.”
The concern boiled up through field management to the company’s senior leadership. Leadership’s initial reaction to this feedback was, “We’re going to do this, and the reps will just have to accept it.”
So the work on designing a new compensation plan continued right through December. But eventually the leadership believed that flipping a switch to an at-risk compensation plan would alienate the team, and felt the company couldn’t risk this group alienating customers.
“We tried to move too fast, and didn’t involve the field to the extent we should have,” she said in retrospect. “And when we did get their feedback, things like ‘we didn’t sign up for this (sales-like job),’ we dismissed it by saying, ‘get over it.’”
The time she and others spent working on a compensation approach that wasn’t implemented could have been used instead on teaching processes and practices paramount to the job role. Compensation is the easy part, once the organization is ready.
Bob Kinert is Principal at Kinert Consulting. You can reach Bob at (916) 337-6929 or bobkinert@comcast.net
If you’re like us, this month has you focused on documentation of new compensation plan rules. This is a thankless yet critical endeavor. Done exceptionally well, clear, complete documentation might put a significant dent in the numbers of queries and disputes coming from the field. Done poorly, communication of sales comp plan changes could put a dent in your company’s sales productivity or contribute to a class-action lawsuit.
We’ve all heard the request, usually from a sales leader, to “get the plan details on one page.” The request is reasonable from a sales manager’s perspective. As a sales rep my attention span lasted about one page, assuming the text font was around 10 points. If I got to Page 2 and didn’t see any dollar signs, I checked out, and trusted the company wasn’t out to screw me.
But tell your company’s legal counsel your aim is to document all the pertinent plan rules using 300 words or less, and they’ll say your setting the company up to be screwed by the sales force.
Can’t we all get along? Indeed, you can meet both needs. Salespeople need a concise summary of what’s changing and what they must do differently to maximize their income. Sales managers need coaching on how to use the new plan to motivate necessary behaviors. Lawyers need a document that leaves no room for misinterpretation of sales credit eligibility.
Sounds easy but consider a story of things going awry. John Jones – not his real name but since this is true story I can’t have you all LinkIn-ing the real guy (and sorry to you real John Jones’s for getting drug into this by chance) – takes a job as a territory rep for a software company. The company’s comp plan is about 20 pages. For me, it’s a good read. But John doesn’t think so and tosses it aside. John understands from his boss his annual sales quota and the list of accounts he’s to target for new business. Unbeknownst to John, one of his target accounts was recently acquired by another firm, headquartered outside of John’s territory, and covered by another territory rep. Cut to the chase. John discovers through some account tracking system that this target account bought a bunch of product, and thus as rep for the account he should earn credit. Well, he didn’t because the other rep worked the target’s HQ contacts for a big deal that just happened to ship the product into John’s territory.
Any reasonable person would conclude John is not eligible for credit, because he did nothing to motivate the sale. But John, like the loving family that went berserk when rich grandpa went on life support, turned his back on reason to focus on the big bucks at stake, and John’s attorney apparently thought the 30-page plan document enough unworthy to pursue a case against the company. I’ll spare you the gory details. Let’s just say you have the power to avoid such nastiness by ensuring your salespeople, sales managers and the company’s legal representatives know what they need to know about the incentive plan.
In this case, John could have gotten by just fine with the documents he actually read – nothing more than a quota sheet and list of target accounts. Once he earned credit, the plan was such that he didn’t need an Excel spreadsheet to calculate the payment. John’s boss should have known from the 30-page document that that accounts with locations outside the HQ’s territory are under the jurisdiction of that region’s sales manager (a peer of John’s boss, in this case). And the company’s legal counsel might have determined – and I’m only speculating here – that the document was not sufficiently clear on the circumstances under which a territory rep does not earn credit for a sale into his/her territory.
Fortunately most of companies we work with do a good job on the 30 pager, meaning that it’s exhaustingly thorough on the conditions for credit eligibility, and ineligibility. Their lawyers review and eventually sign off on the documents, and it stands the test of time, for a while anyway, because it pertains to all plans and programs and gets positioned as the final authority for any plan-related questions.
Unfortunately most companies do a poor job of ensuring their reps know how the plan converts sales credits into variable pay, and managers know how best to manage their people in line with the plan rules. It’s absurd, but way too many sales managers, when asked by a rep, “Can I do this, or how do I get paid on that,” delegate the answer to a document or a phone number or a website.
Neither you nor I will solve this chronic dereliction of duty overnight. It’s a journey, takes a village, and so on. We have only a few more weeks, not counting Thanksgiving week, to finish documenting the plans before primping the dogs and ponies for our “Get Rich 2011” new plan rollout world tour. Before hitting “send” to distribute your final draft to the approval powers, test 1.5 page summary and manager’s talking points with your mom. Seriously. She’s not going to violate your company’s confidential information, she’ll better appreciate what you do all day (my mom always says, “I think Scott does something in finance” – thus I apparently don’t walk my talk), and if she gets it, you can be reasonably assured your sales managers will also. I’m not implying your sales managers have motherly instincts, or that they’re not capable of reacting to test material. It’s just that I’ve found sales managers as testers of content tend to pass on the level of critique that such material deserves. Maybe they don’t want to hurt the comp guy’s feelings for fear of getting thumbs down on a future exception request? Or perhaps they do not want to admit they don’t understand something they think they should? Probably they’re focused on hitting their numbers before year end. Mom has no such agenda. Get her on your calendar. She’ll appreciate the gesture, and you’ll execute that much-needed simplicity check. Two birds with one stone.
Assuming then you’re square with mom, you’ve gotten approval on your docs and decks and are ready to board the tour jet, think about how best to use the feedback you’re likely to receive during the road show. This allows you to ditch those hypothetical Q’s that get used in the back-office production of Q’s and A’s. Frankly, I struggle to come up with good questions during my sleep-deprived, turkey-induced late-November state of mind. And delivering answers on the fly during the road show can come back to haunt you. Explain you’re still working through some of the plan’s finer details, you want feedback, and that sales management can expect to get a full briefing on the complete set of questions and corresponding answers before the plan becomes effective. Remember, you ultimately want your sales managers to answer the questions, versus passing the buck.
I could dedicate an additional 1,100 words to what needs to happen after the plans go live, since this is another area in dire need detail. For now though, having exceeded by 1.5 page limit, I must trust that you are now prepared to or comfortable with mitigating some of the risks inherent in documenting your plans and preparing the people who must use them.
David Stein, founder/CEO of ES Research Group, Inc. and publisher the popular blog “Commentary on Sales Leadership” for leaders of customer-centric enterprises, recently sat down with our own Mike Meisenheimer to discuss trends in sales compensation.
In this column, “Show Me The Money,” David and Mike observe companies having seemingly everything in place for sales success — hot product, well-oiled sales methodology, tools, support, references, technology, training, coaching, leadership. But if the sales compensation approach is poorly designed or managed, salespeople won’t stick around, or the company faces the difficult scenario of having to correct an overpay situation (and then the salespeople won’t stick around).
Mike describes during the interview what are three common symptoms of poorly-managed plans:
“1) Under-merchandising the plan launch. Rather than a robust strategy that involves sales management and engages the field, an email comes from corporate; 2) Limited progress reporting; plan participants don’t receive regular updates on their performance; and 3) Lack of detailed incentive reporting.”
There are good insights to keep in mind as you work over the ensuing weeks to redesign your company’s sales comp plans for 2011.
On July 28th, Scott and I had the opportunity to join Steve De Marco, Vice President of Sales at Xactly Corporation for a web session on motivating 2nd half sales. The session focused on tips and techniques we’ve observed companies use to improve sales results through the last six months of the year. One interesting takeaway was the higher than expected number of people who registered for the discussion given the summer timing. We think this might be a reflection of the fact that within the current economy, sales performance is all over the place. Companies like Apple (www.apple.com) recently reported their best quarter ever while others, such as Goldman Sachs (www.GoldmanSachs.com), experienced a significant drop in earnings from 2009. The session participants were asked to categorize their 2nd half focus and responded to a range of options including “survive,” “make up ground,” “make hay,” and “current course and speed.” Approximately 80% characterized themselves as looking to make up ground or make hay, possibly reflecting cautious optimism moving forward.
The tips and techniques discussion focused on the use of enhanced communication, goal setting and incentives (cash and non-cash) as tools to achieve those second half-priorities. From our perspective the most effective approaches reflect the organization’s strategy, budget limitations, culture and incentive history. Like any incentive discussion, no solution will be perfect and it is about balancing the trade-offs. Similarly, we observe several pitfalls to avoid:
When asked to characterize which approach was most effective in their own experience, 31% percent of the session participants said cash. Somewhat surprising to us was that 30% responded that they did not use any of the techniques.
A recorded version of the event will be available on the Xactly website (www.xactlycorp.com) in the coming days.
Creating A Highly Performing, Customer-Centric Sales Force Through Appreciative Inquiry
It’s a brilliant, sunny day. Imagine one of the world’s top golfers is on the 9th tee of one of the great golf courses. It’s a dogleg left to the green, with nothing but trees on the horizon and bunkers sprinkled down the fairway. While most people in this position would obsess about how to avoid the trees and bunkers, this pro commits to the exact opposite. In fact, he doesn’t see the trees at all and instead focuses on one single goal: to hit the perfect shot that will land directly on the green. Rather than figuring out what not to do, he visualizes the positive outcome – and consistently hits his target. He has created positive change – a major contributor to his status as one of the best around.
This idea of positive visualization is just one component of a powerful program called Appreciative Inquiry. This process has increased revenue growth and profitability for all types of companies, from boutique firms to Fortune 500s.
Appreciative Inquiry has its most dynamic results within a company’s sales force. When a company focuses on positive change within its sales team, it creates and maintains the competitive edge to satisfy its customers’ ever-changing needs.
Appreciative Inquiry has proven successful in revitalizing companies across the board. I’ve consulted with major companies on both sides of the Atlantic to apply the Appreciative Inquiry approach, dramatically improving customer delight and company profitability.
Sales people, by nature, are an enthusiastic and positive breed. When they create the future they want to see — based on what they do well at the moment — it opens up new and exciting opportunities. It will also get them thinking about the type and quality of those companies they want as customers.
This revolutionary methodology can be effective in nurturing a highly performing, customer-centric sales team. Customers are more satisfied, the company’s bottom line is improved, and the sales force is much happier and more focused.
David Cooperrider, Professor of Organizational Behavior at Case Western Reserve University, was a pioneer in developing Appreciative Inquiry in the mid-1980s. It works by involving all employees and customers, and other important external stakeholders, in a collaborative setting. The term “appreciative” derives from the group assessing what it looks like, when it’s operating at its best, and determining its desired future. The term “inquiry” is achieved through asking questions around employees’ most successful experiences, resulting in a positive dialogue that eventually helps to transform the organization.
Many Fortune 500 companies use Appreciative Inquiry as a platform for engendering positive and successful change. Those known for their strong sales forces include John Deere, Bank of America and Hunter Douglas.
In today’s competitive business environment, Appreciative Inquiry is one of the most powerful, strategic ways to achieve greater sales, greater customer satisfaction and increased customer retention and growth. It’s a catalyst for positive change and is much more engaging and effective than the traditional sales approach. Under the traditional sales model, the sales team is often governed from the top down, sometimes with little or no interaction between top management and the actual team.
Typically, top management will decide what the process will be and this is passed down through various managers to the sales team. But by the time it reaches the team, the sales plan is diluted, not clearly communicated – and not owned by the sales team. What follows is often less-than-expected revenue growth and profits.
This can lead to a problems-based management approach that focuses on researching and analyzing problems rather than emphasizing extraordinary sales experiences. Negativity doesn’t encourage sales and profitability – a positive approach does.
Appreciative Inquiry offers an entirely different methodology. It is a strengths-based approach that will unleash a sales force’s true potential. It puts the customer first, leading to very high levels of customer satisfaction and profitable revenues per customer.
“About two years ago, we recognized that becoming even more client-focused was critical to our continued success”, says Steve McDonnell, formally of Mercer Human Resource Consulting’s Human Capital Product business. “We didn’t want to launch just another initiative. We truly wanted to transform our culture so ‘client-centric’ really meant something to everyone. We began using the AI approach in everything from business planning to innovation teams and achieved exactly what we set out to do. Five clients wrote us this month alone, thanked us for our outstanding service, and complimented us on how client-focused we are. Those results are even better than we envisioned at the beginning.”
The use of Appreciative Inquiry for a sales team creates a highly collaborative customer-focused environment. Top management actively engages in a success-oriented dialogue directly with sales teams on a regular basis. Together they visualize and “create” a future that incorporates all their aspirations for a truly customer-centric organization.
The Appreciative Inquiry process encourages the sales team to describe their most outstanding sales experiences and the steps they took to achieve full customer satisfaction. It involves questions like, what are some examples of terrific sales experiences. What exactly did you do well? How did you please the customer? What enabled you to create full customer satisfaction, and how did you measure that satisfaction? Jim Long, Worldwide Director of AIG GLOBAL BENEFITS says “Even asking clients what they needed to be successful at their jobs opened up a more fulfilling relationship with them and our sales force. It helped us build even more knowledge and trust with clients than before”.
The sales team needs to begin by thinking about what an incredible customer-centric sales force looks like – and what has to happen to make that a reality. They need to be made proud of their accomplishments in achieving customer satisfaction and imbue in them a sense of pride about their successes.
Much like the pro golfer envisioning the perfect drive, Appreciative Inquiry also calls for the team to visualize the achievements of a highly performing sales force. This could be manifested in larger orders, positive responses from customers and customer referrals from “ideal customers” in targeted markets. Using this data, a reinvigorated sales strategy is developed. It’s a win-win for everyone involved.
The process of Appreciative Inquiry can create an effective sales process that is good for the company, good for the team – and good for customer value and satisfaction.
The collective data gathered by the sales force and management during this process of Appreciative Inquiry can be broken down into five missions:
By utilizing Appreciative Inquiry, my clients have revamped their sales strategy to one that always puts the customer first. The sales force focuses on listening to clients and coming up with ways to continually meet and exceed their needs. The outcome is win-win. Appreciative Inquiry will not only infuse a new energy between sales professional and customer, but also a renewed connection between sales professional and senior management.
The result? Senior management will shift its focus from policing procedures to enabling success by being an active part of the sales process. This may mean going on sales calls with team members and working directly with the team to give feedback and support. That way, they will be mentoring, not managing.
The results of the Appreciative Inquiry process have also produced an additional positive side effect for sales teams — – increased referrals from satisfied customers. In some instances, the sales team becomes comfortable enough to carefully ask their current customers for any qualified leads who might be interested in their products or services. The result is an increased, customer base — without the use of cold calling.
Few people like to cold call. And no wonder — the typical success rate is between 1 and 3 percent. On the other hand, when we know how to ask for referrals in a way that is non-threatening to customers and is comfortable for us, the success rate jumps to the 50 to 90 percent range.
If sales professionals can effectively and strategically leverage their customer networks, they won’t have to make another cold call ever again.
Appreciative Inquiry is a dynamic tool to effect positive change within a sales force, inspiring them to visualize the positive and realize the full potential of high customer satisfaction. It will improve relations with a company’s most profitable customers, while gaining new customers along the way. Like the success that a top golf pro has experienced, these sales forces will become the engines that drive customer delight and profitable revenue growth in the modern business world.
About the author:
Andrew Crawford is President and CEO of Crawford Consulting International. He has more than 25 years of experience in business development, global and strategic client account management, and sales and marketing management in the international consulting environment.
For more information, contact Crawford Consulting International at (415) 595-4620, or visit www.crawfordcg.com
Have you heard the one about the newly-hired sales compensation manager who has beenasked to transition the company’s far-flung, decentralized sales compensation program to a more centrally manged global umbrella? We’ve heard multiple versions of this scenario, some mildly humorous, some tragic. Moving a world-wide, decentralized sales compensation structure to one that’s truly global can be a career-defining (positive or negative) event.
If you find yourself in a similar predicament, we have a few tips to offer.
First, let’s get on the same page with what we mean by global. Various approaches span a continuum. On one extreme, the organization has centralized its sales compensation governance, oversight and administration functions, with local (e.g., regional) management responsible for representing regional requirements during the design process. On the other extreme, regional management has significant autonomy over the design and management of its plans, with corporate playing a support or audit role. About 1/3 of the global companies we’ve surveyed use a largely a centralized approach. As you’d expect, the trend is toward greater centralization.
While many regional leaders support the trend on the basis it leads to greater efficiency and, ideally, profitability, sales compensation can be a touchy subject. Generally, sales managers have a lot vested in the existing program, as it’s a key lever for motivating their teams. Assume, then, that your regional leadership isn’t quite ready to hand over the keys to their sales comp program.
Tip #1: Build the case for change. Just because your company has a global head of sales, possibly a newly defined role, doesn’t mean that by default the sales comp program should be global. Sure, it can be frustrating and exhausting to create an inventory of the various sales comp plans used throughout the company. But this could be a function of poor recordkeeping. What does the company hope to achieve by having a more centralized approach? How will it measure progress toward that goal? What are the benefits realized by the regional management?
What we’ve seen as the common drivers include:
To the extent the business case appears to regional management as a ploy to lessen their autonomy, expect resistance. You’re in for a much smoother ride if the organization has decided to undergo some big-bang event, like a major business acquisition or technology implementation. Sales performance management (SPM) system implementations, like Varicent or Callidus, can do the trick. Regional heads must pay to play. Watch the regional leaders’ eyes grow wide during the demonstrations of fancy dashboards and reports. Far be it for us to promote putting the cart before the proverbial horse, but in a world of spreadsheets, untimely data and manual adjustments, the promise of these systems can put wind in your sails.
Sure, the global head of sales or CEO can pick up the phone and say to the regional leadership, “here’s what we’re going to do.” Yet, part of your job is figuring out how to move such mountains without having to rely on the executives. Not that you’re going to drive this global mandate solo. No, you’re going to get the regions to do the heavy lifting.
Tip #2: Form a Global Sales Comp Task Force. Just don’t say what the real task is. Position it instead as a sharing of best practices. Most sales leaders we work around love to talk about sales compensation. Funny thing is, two minutes into the discussion, they’re picking apart their own programs. And for the one or two that think their region’s program is without fault? Let them think they represent best practice. The point here is to have your regional leadership perceive they own some of the solution. And this is as it should be. These are smart men and women, with years of experience managing and motivating salespeople. Tap their expertise.
Your role in all of this is to convene the group, help set the agenda, move the discussion from strategy to tactics, and keep the meeting on track. Demonstrate your expertise by providing pertinent data on sales compensation trends, and using a proven framework to facilitate the discussion.
This isn’t easy. If you’ve not slogged through such meetings, beware of the frequent rat holes the discussion can fall into. Language barriers and dialects add to the fun. After three hours, the regional leadership may feel cleansed and rejuvenated, but you have nothing but pages of seemingly disconnected minutia. Get help from a professional sales comp meeting facilitator if you suspect you need it.
Tip #3: Become one of them. I keenly remember the conversation with a regional business leader who picked me up at the Frankfort airport early into one my one of my first global comp assignments. “Wow, we’ve never had someone from corporate compensation come visit us.” I didn’t know whether to be flattered or threatened.
One of the most satisfying aspects of working with the sales organization is, well, actually working with the sales organization. We find sales leadership, their managers and salespeople to be inherently positive, confident and curious. That’s their job. Have you ever attended a national sales meeting? It’s all good.
Yet, spend some time, one-on-one, with a salesperson and you’ll discover that all is not thumbs up and high fives. Pay, because a meaningful chuck of it not guaranteed, is usually an issue. Sales leaders hear about the exceptional cases — the woman who expected to earn €20,000 on a deal for which she didn’t receive credit. But sales organizations have a way of filtering the daily line frustrations through layers of sales management and cultural bravado.
In the conversation I referenced a moment ago, with the regional business leader, I understood later, over bratwurst and a liter-sized pilsner, that he was appreciative of my initiative to understand his operating environment. And this is what it takes to appreciate the differences across your company’s global business. Many factors, like job role execution, legal and labor practices, management philosophy, administrative requirements, and culture and competitive practices, can vary significantly across regions and influence the effectiveness of a particular sales compensation approach. Good salespeople understand all this because they care deeply about what influences their variable pay.
You may choose to gather this information through surveys and a few phone calls. We think it’s more cost effective to make the gesture and spend the time in the local market.
Be especially coordinated with the local management during the communication and change-management phase of any new program implementation. Consistent messaging only works at a high level. You need to customize and localize the message to clearly explain to salespeople the reasons for and details of change, what the company expects of them and how they can be successful under the new plan.
For more tips on going global, check out these other insights:
http://www.compensatingthesalesforce.com/downloads/WaW_141943_EP.pdf
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