Pay Your Reps More & Get More Sales … I Think Not!
It’s simple. You want to increase sales performance for your business so all you have to do is pay your sales reps more. Pay more, get more sales. Right? Well, not really…
by Tim Knight, CMO, CloudApps.
A really important part of any sales team is the so-called comp plan – the sales compensation plan.
The plan describes, in the clearest possible way for a sales rep, what will be earned from what is sold. A well-structured comp plan is the connector between the goals of the business and the actions required to deliver it.
This plan is the number #1 thing that influences the behaviour of your sales teams. If you decide to pay double for selling red widgets, then, you’ve guessed it, your teams will focus on trying to sell red widgets.
Simple to understand, the comp plan has for a long time been seen as the only way to motivate a sales team. Which is strange, because when you start to dig into the science of behavioural motivation it quickly becomes apparent that money is not the only (or in fact even the strongest) motivator that we should be appealing to.
Creating a sense of purpose is one of the most powerful ways to motivate. It will even work for someone that is seemingly only motivated by money. Successful sales leaders know this and use this knowledge to coach their teams to do the right things at the right time. They give the team purpose. Modern sales leaders work tirelessly to coach their team to success.
Let’s take a step back. The amount you pay your sales reps has one simple role. The amount you pay is simply what it takes to get them to engage with the job in the first place. It is not a daily motivator in its own right.
When one of your sales reps does something special or outstanding, do you use money again to reward them? It is more likely you use a peer recognition approach, such as the presentation of a trophy, to reward this behaviour. Does being recognised on stage with a trophy possess the same motivational drive as money? Dan Pink argues it possesses much, much more.
Dan Pink in his RSA lecture is quite clear that in certain situations money does work. For example, if a task contains a high level of fairly simple, mechanical tasks, then money does work. Pay more and you will get a greater mechanical output.
However, Pink then goes on to say “once the task called for even rudimentary cognitive skill a larger reward actually led to poorer performance.”
Successful selling requires a high degree of cognitive ability. You need to be tenacious, not take no for an answer, and get results.
In addition, your top sales performers will innovate around your sales process. Modern sales leaders learn from this innovation and then coach their core players to work the same way. You need to be able to uncover this innovation and recognise and reward people for working this way. That’s not done with money.
As Pink calls out, we are actually driven forward by three motivational factors – Autonomy, Mastery & Purpose:
- Autonomy– self-direction is critical in the workplace today. We like to be trusted to be able to work out the best way to solve a problem. Give your reps this space and time combined with your guidance and watch them grow.
- Mastery– We like to increase our proficiency at what we do. We will be keener to repeat a complex task if we are able to become better at it. This involves coaching not beating your sales reps and is the secret in the battle to attract and retain the top talent.
- Purpose– If you can align and connect an employee’s activities to the organisation’s greater objectives then they will be engaged, supportive and will drive towards them. Don’t just set a “destination” objective (i.e. closed revenue), but set, track & coach clear KPIs across the sales journey to increase sales performance.
So, if you are motivating your team by money alone and using the stick method, then it would seem that you are missing the biggest trick to rapidly accelerating your team’s sales performance.
Want to learn more about effective sales incentives?
Try reading our latest article: “Effective Sales Incentives – Measure & Motivate the Sales Journey NOT just the Destination“