Set your pay schemes to suit your sales strategy
Monday, March 23, 2015
For years the tried and trusted method print bosses used to motivate their sales staff was the ‘carrot and stick’ approach: the promise of cold hard cash if certain performance-related targets were hit during a set period of time was a great motivational tool for sales animals, who also knew they would be out the door if they failed.
But times change and for some sales people this rather crude approach to performance-related pay can be incredibly demotivating. Some people don’t like having to continually perform at a high-octane level to secure a decent monthly wage – or indeed keep their job. They much prefer the comfort of a pre-agreed salary. The flipside of this approach, of course, is there’s a danger that people on a fixed salary will become too comfortable and complacent, and won’t be giving it their all every month, because they neither have the fear or the hunger to keep pushing for sales.
So how can business owners strike the right balance when it comes to motivating their sales force and getting the maximum performance out of them and what are the most effective techniques and approaches that should be used to ensure sales people are consistently delivering the goods?
Up until relatively recently the idea of growing sales was far from a priority for the management of the majority of UK printing companies. During the dark days of the recession – and even to some extent through the early shoots of recovery – they were merely happy to retain the company’s existing client base.
Good times return
However, as the economic cycle appears to finally be on an upward trajectory an air of optimism has returned to the market and this in turn is leading companies to think about growing their business rather than just maintaining the status quo, with incentivisation set to play a key role in this next phase of growth for the print industry.
It’s a trend that’s been detected by Phil Pateman, consultancy services director at the BPIF, who reports that from what he sees on the ground things are definitely heading in the right direction.
“My view is that the printing industry is picking up and that owners are now actively considering how to meet their business objectives through the training, motivation and development of their staff. Incentive schemes form an integral part of that process,” explains Pateman.
To aid businesses in this regard Pateman says the BPIF is currently in discussion with BlueGreen Business Development, with a view to the company “delivering workshops or consultancy services for our members”. This offering will include how to incentivise sales teams.
BlueGreen founder Don Turner, who is a management coaching, training and strategic business development expert, says that the issue of incentivisation is an interesting subject, particularly in relation to printing companies who need to employ different “sales animals” depending on what they’re selling, with these people then motivated in different ways.
“The big question in relation to sales people working in the printing industry is what do you want them to do?” says Turner. “In the past printers had big machines that they wanted to run all of the time so they needed them filling. As a result they told their sales team to ‘go out there and fill it’, and they were under huge pressure to do that. For that kind of work you need a certain type of person.
“But now in the printing industry, people are talking about the need to diversify and sell different types of solutions, like cross-media, and you need a different type of person to sell that because it requires a more consultative sell and a different type of skill set. If you want to sell things that need that different skill set the last thing you want to do is give these people a budget and then cane them for not hitting it because you’re just disincentivising them.”
Not all printers are diversifying – some are happy to continue to just churn volume through their presses. It’s therefore important that these businesses in particular find the correct balance between salary and performance related pay – or “compensation” as Nick Devine, founder of The Print Coach describes it – for their sales people.
“A good rule of thumb is 80% guaranteed base salary and 20% performance-related split across three measures,” says Devine. “These measures should be the three most important things you want your sales people to do. For example, it could be hitting a revenue target, a gross margin target or securing a certain number of new business accounts. You should also weight the way that you split the variable compensation, so 50% could be for hitting the revenue target, 30% is based on the margin target and 20% on hitting the new business target.”
For Devine the all-important watchwords are “define the role and then define the goal”. Companies that do this successfully will be able to tailor their compensation method accordingly.
It’s a view shared by Turner who uses motivational profiling questionnaires so that he can ‘map’ sales people to find out what category they fall into.
“Sales people fall into very different categories and depending on what category they’re in depends on whether they would respond to the carrot and stick approach or if this would turn them off,” says Turner. “It’s about managing people properly and making them feel valued.”
He cites the example of a former employee who worked in sales. “She was really struggling to hit her targets, but she was good at what she did so I profiled her using this tool that I use and what I realised was a target and budget wouldn’t excite her. What really motivated her was the idea of helping people. So I took away her budget and I told her to go out and help as many people as possible because people really valued that from her. After that she exceeded all of her targets just because we framed her role to her in a different way, but she didn’t know she’d done this because we kept the figures away from her because that wasn’t her motivation.”
Another top tip for motivating people that Turner has picked up is if you reward people in a more personal way for their efforts it’s incredibly powerful. He goes to great lengths to find out what makes people tick, what interests them and what they want and then he selects personalised gifts.
“So instead of going out and buying everyone a bottle of champagne as a reward if I know someone is really into motorbiking I might buy them a brand new helmet, or if they’re into football I’ll buy them a pair of new football boots,” says Turner.
There are even tools to help managers keep on top of this type of thing these days, such as the recently launched smartphone app Awesome Boss, which aims to help “management engage with and motivate their teams, with a more personal touch”. Users can create a database of their employees’ likes and dislikes, including favourite pastimes, their birth date and even how they take their coffee, and the app sends a text reminder of important dates along with reward ideas to make sure employees feel “recognised, valued and connected”.
Although the app might be taking things a bit far Turner says there’s no greater motivational tool than praise and the great thing is it’s completely free of charge.
“I was running a training course recently and someone said to me ‘I’d be happy to give up one day’s salary a month just to hear someone say thank you’. Praise is such a powerful thing.”
But not everyone is looking for this kind of approval. High-performing sales people, particularly in the area of new business accounts, need to be on performance-related pay because as Devine says “performance-related pay drives performance and drives results – that’s why it’s called ‘performance-related pay’”.
The one tool that possibly underlines this point the best is ‘sales contests’, which pits the individuals in a company’s sales force against one another. “They can be added into the mix at any time and run for any duration,” says Devine. “Sales contests are good if you want to create momentum in a particular area. For example, if you’re launching a new product or service like wide-format print or labels.”
In sales contest each member of staff is awarded X number of points for generating a lead, X number of points for arranging an appointment with a new client and X number of points for securing that new client. At the end of the pre-agreed duration of the contest – Devine advises they run for no more than 90 days because this is about creating “behavioural change quickly” – the points are added up and prizes are awarded to the best performing operators.
It’s a crude approach that can be incredibly effective if the rewards are attractive and it’s applied in the right manner. And when it comes to effectively motivating a sales team that’s the whole point. It really is a case of horses for courses. It you choose the wrong carrot to dangle in front of sales people, or beat them with the wrong stick, you risk alienating them and their performance will drop off accordingly. But if you can find the appropriate degree of compensation to match the performance it’s a compelling combination that will deliver tangible results.