Why Incentives Work in Sales

IncentivesI’ve had the opportunity to work in several sales organizations since I began my career, and I’ve hear a lot of different philosophies on this topic. For the sake of clarity, I’m defining incentive as “any kind of reward offered in exchange for meeting specific expectations.” Some organizations were a lot of fun and had really simple opportunities, some offered big prizes, and others offered nothing outside of the commission earned from the sale.

By far, the most prevalent attitude is “commission is the incentive.” I can see where this stems from – the same place as “sales people give themselves a raise.” It’s a performance based job, and you are expected to perform to earn your money. I get that, and being in sales, I 100% agree to be rewarded when I work through commission for exactly how much I sell (be it more or less than expected). Still, being in a commission only incentive role leave the balance up to chance when determining how much effort is worth the reward. There is no fun involved, not opportunity to make up for the 60 people that will tell me “NO” before I get to a yes.

Incentives play to the typical mentality of the salesperson. Think of those that you know – what kind of people are they? Knowing many, I see a few major trends.  The first is that many could probably be diagnosed with ADD/ ADHD – they are fun oriented and have a lot of trouble sitting in one place doing tedious tasks. Usually they are very social and want to be involved in whatever is going on. The second is the competitiveness – most sales people like to win and seek out opportunities to do so. This doesn’t mean they are aggressive and sore losers, but they enjoy the challenge of going head to head with someone at a similar level and coming out on top. This plays largely to a need to be recognized for the accomplishments they’ve achieved. And finally, while Millennials are largely credited for the need of instant-gratification, I see this trait span across generations when it comes to sales.

Looking a little deeper, consider what incentives can play to these traits:

  • A contest – done correctly, it puts a spin on the day to day to make it more interesting, allows the group to interact with each other, and gives each person an opportunity to earn the “winner” title and reap the spoils.
  • An if/then time prize (for example, leaving the office early if numbers are on track) – it gives the sales person the opportunity to forgo a particular task and assert that they succeeded.
  • A Prize – usually announced office wide with everyone working to get there first, it’s head to head competition that gives instant gratification to those who won and shows who had what it took to meet the challenge.
  • A Group Reward – let’s everyone work together toward a common goal and then have time to socialize together without any pressure.

These rewards can be big or small, costly or not. A half day off to someone who’s reached 120% of quota does no harm to the company and gives recognition where it’s due. A catered lunch/outing for the team in exchange for hitting a high number should leave the company with the larger return for the deal, and reps ready to come back and do it again next quarter/period/month, etc.

At the end of the day, incentives work because sales is a difficult profession. It takes a certain kind of person to work longer hours, get told no constantly, build and manage relationships, keep a positive disposition, and be told that’s all what they are getting paid for. Adding incentives makes it more fun and mixes it up, provides a lot of visibility, and lends to tipping the positive scales in order to keep the life of a salesperson more balanced. In the end, it’s keeps it worth it.

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