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Incentivising sales people

Incentivising sales people

 

 

This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in October 2016 and is posted here by their kind permission

 

 

How do you keep sales people motivated when clients aren’t spending?

 

 

Salespeople are by nature risk takers. Their success or failure, and significant parts of their income if they are commission earners, are in their hands. Sales is one of the very few job categories where performance is instantly measurable, and usually linked to rewards and threats. So what happens when outside factors reduce demand?  How do you keep them motivated and rewarded when customers reduce spending?

Being fair is important. If you have reduced forecasts because of the economic climate it follows that you are expecting your salespeople to make less sales. By then continuing to incentivize your sales team based on the original quotas you will be condemning at least some of them to reduced income and failure to make target, however hard they sell. You are likely to build resentment and damage motivation which is the last thing you want to do in a reduced market. Consider reducing quotas in proportion to your reduction of forecast, even if that means that some salespeople will earn more for selling less. Listen to their concerns and suggestions, provide training and coaching where it will improve performance.

Categories

Different categories of salespeople will react differently to tough times. The stars typically have a very strong inner motivation and self-belief and will often see tough times as a challenge. They should be assisted to innovate, to attack the cash cows of weaker competitors and increase the range of products bought by customers. Increased incentives for exceptional performance may make financial sense right now.  Increased turnover will more than pay for the additional expense. Non-commission incentives like luxury weekends for the family may have more value than the equivalent cash.

The core salespeople are likely to be anxious, especially if they are commission earners. Commission is a part of their income and they face the possibility of earning less and consequent financial pressures. How they are performing is very visible and accordingly they are often first to feel threats to their jobs. Do not assume that pressure will drive them to new levels of achievement. This works for some but others will get desperate and try too hard; buyers avoid buying from desperate salespeople. The downturn will not last forever and you will need a core of good salespeople when the inevitable good times arrive, so work to ensure that they maintain their pride and sell at least somewhere near their target. Be careful about threatening their jobs.

Support

Sales support becomes more crucial than ever. Cutbacks on sales aids, marketing or technical sales support will produce negative returns. By contrast money spent on creating increased sales performance is likely to be a good investment in bad times. A big motivator for salespeople is to feel needed and supported. Supplement this by simple additional incentives for good performance, like attendance at a sales conference or dinner with the CEO. Deal sympathetically with real financial difficulties from reduced commission. You do not want your salespeople moonlighting or worse.

The generally underperforming group of salespeople, the laggards are perhaps the most difficult group to incentivise in tough times. Some of these will be normally average to good salespeople going through a bad patch. Treat them as you would the core group, and give them every support to break out of the doldrums. The genuine underperformers will be dragging down the whole group and opening the sales team to increased criticism and pressure.  Start by retaining them and ensuring appropriate support but you may have to redeploy some of the worst to keep the averages acceptable.

While considering how to manage all these incentives you should be aware that a special focus on the salespeople, however justified can cause resentment in other employees. Consider how to motivate and support them as well. In a downturn you want all your people motivated and doing the best they can.

© copyright Entrepreneur Media SA (Pty) Ltd. All rights reserved. No part of this article may be reproduced, stored in a retrieval system or transmitted in any form without prior permission of Entrepreneur Media (Pty) Ltd.  Permission is only deemed valid if approval is in writing.

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