Have your past incentive programs been a disappointment to both you and your salespeople?
Sales incentive programs under perform or fail as a result if elements of the technique are executed improperly. Often, incentive programs fail miserably because of innate complexities either in their recording and reporting systems or in how rewards are won. If you put the salesperson in a position where he or she is forced to assess "To get this, I first have to sell this, plus these and not these and they must include these," you are creating a recipe for confusion, sales frustration and failure. In the end, the incentive program becomes a disincentive!
The monetary values of incentives are often not the critical factor in motivating salespeople to succeed. In my view, the money and the goodies were not primary motivation and not all salespeople are motivated the same way. Consequently, not all incentive programs work. Why is that?
The remedy? There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task it is to administer and account.
From my experience, I'll make the following observations:
1) The 70-30 Rule: Thirty percent of the salespeople make seventy percent of the sales and profits. Too often, sales incentives - perhaps in an effort to be fair - are geared to the entire sales force. Enlightened marketing strategists know that the top thirty percent are already motivated. Simply put, a strategy that's geared to light a fire under the next thirty percent - the next logical group - doubles the business in a more cost efficient manner.
2) Salespeople by nature are like electricity. They naturally take the path of least resistance. That's not to say they are lazy or untoward. In fact, it's just the opposite. Good salespeople look to simplicity to make things happen.
3) Edison may have invented the light bulb, but it never went anywhere until a salesperson understood its benefits and made the first sale… and probably sold a lamp to go with it! Incentive programs don't just sell themselves. Too often, expensive motivational programs are overlooked in the field because representatives either don't understand their value and/or are unsure how to sell them. Many times, good incentive programs are written off as having missed the target, when in reality, they just weren't rolled out and managed properly.
4) Reward: Any reward-value can become an unmotivated, anticlimactic activity if the time span between winning and getting is too long. Successful incentive programs reward immediately! As a rule, the faster the reward is delivered, the greater the enthusiasm for the incentive program.
Although on some levels, salespeople are a complex breed, when it comes to incentives, they are - for the most part - quite predictable. Their nature is to react to excitement or challenge faster than most, and then move on. One way to maximize their natural bent and ensure greater program success is simply to cater to their natural motivators. "Get them their stuff QUICKLY!"
I have noticed huge attrition in the sales division in one of my previous organizations though attractive incentive policies were placed just because of this reason.
5) Recognition: At the risk of making salespeople appear shallow or monolithic (they are not), recognition amongst their peers is still the typical motivator, whether there's an incentive program or not. The rule again, is, there is no such thing as too much recognition! Salespeople by nature gravitate to the limelight much like other performers, and so there should be no shortage of achievement and overachievement recognitions that find their way - in a timely manner - to the public's eye.
Another fact that is frequently overlooked is that recognition, whether part of an incentive or not, is the least expensive means of motivation. In many cases, it's free! Often, shaking the hand of the president in front of the company is all it takes to galvanize the need to overachieve.
The Bottom Line: Manufacturers and Distributors must take greater care when designing motivational incentive programs. Find out what they want, then, give it to them. But make sure to keep it simple, keep it clear, promote it properly, reward immediately, don't try to target everybody, and, recognize, recognize… RECOGNIZE!
Regards
Ram
ADR Group
Services: Infra & Fire Fighting| Property | Education | Product Promotion
Enquire on ram.k.reddy@adrgroup.in for any kind of support on the above services.
7 comments:
Comment from Mr.Ajay K Shad:
Very Nice article. Simple and straight!
Thanks Ram K. Can I invite you for a lecture to my MBA students at Value Education Ahmedabad ?
I have received below Comment yesterday from Mr.Ted Spiller:
There are several reasons, but the biggest is that they are of no real value to the individual. Incentives generally are linked to retention, in fact I'd go so far as to say incentives are always linked to retention, even if only tentatively.
Ask yourself, what is an incentive? A thank you? A bribe? A 'I can't give you a raise, but here's something to keep you happy'?
For an incentive to work it must come from the top, be cascaded through the company, have some mean, aligned to the company's goals and the individual. It must make the individual feel valued. That is why a lot of businesses look to training as an incentive for individuals. If training is linked to both the goals of the business and the personal development of the individual, then both the business and the individual gain. If the training can be shown as part of a development program for individuals to be on, giving them the skillsets needed for the next move up the corporate ladder, then this is seen by the individual as an investment in him/her. This will stimulate loyalty, committment and retention. It will also give the business a pool of trained, experienced and motivated employees ready to fill new positions as they open up above them.
Comment from Mr.Mohan:
Dear sir ,
I agree 100%.
Besides my experience has been that this lead indicator based program is more often abused by the sales personnel right from the highest level in not committing upfront before or at least at the beginning of the term( year, quarter/month)
Hence by default it becomes a reward based on lag indicator.
It will be an interesting study to co relate the time element aspect to find out how many organisations have been able to successfully and meaningfully leverage this program.
I it to be doubt more than 50 %
Received a comment from Mr.Kamlesh yesterday:
this is good topic.
Posted by Tanmoy Sarkar:
Technically it is supposed to incentivize performance (as opposed to retention bonus) and both of which may be quite valued if these are not over-done and is not used as a shade of bribery. I can recall people with opinions that bonus is ultimately the saving, while the monthly inflows go as these come.
The problem with a wrongly-done / secretly-done incentive scheme is that it can begin with a stunted gross, which may make the employee gain a few shades of Zorro. On the edge, the employee tramples corporate governance, dodges risk management and the chaos begins.
I am strongly of the opinion that high performance should be highly rewarded, else soon it spoils performance itself. But as in all matters of management, key is in getting the balance and in getting transperant....Let the specialists design it and let it not be for a position in isolation.
Posted by Werner K. Koch:
Any Incentive scheme has to be strait, honest and easy to understand by the employee. He, the employee is the one who on the end is the beneficiary of the incentive scheme and the value that incentive is representing. Incentive schemes that are to complicated do not work at all. The employee has to deliver what is ask from him within the incentive scheme. Most of the time sales incentive scheme management is not done down to the point and therefore the employee has many doubts.
To create and implement a incentive scheme there to be steps taken that have to be in details and then within a comprehensive training to the sales staff, employee for their correct understanding without any doubts.
Posted by Ted Spiller:
I agree that high performance should be recognised. It should be used as model for other employees, an example to follow and emulate. This would, hopefully, stimulate motivation and improve company efficiency and moral.
It is a difficult balance to achieve and it should be led by the top, be transparent and open for all.
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