The idea of using incentives to drive business behavior is not new. This occurs in all areas of the business, but is most evident in sales, where compensation is tied to performance.
This is the most basic type of incentive, and is used to obtain people who sell to a living person for sale. However, other incentives may make the behavior more complex than simply selling.
An incentive is different from a commission. Ideally, it is a reward for doing something different – something that benefits both the business and the individual, who is an employee, whether it is an employee, reseller, distributor or consultant. Ideally, that incentive compensation can be managed through the same system as other forms of compensation, such as commission.
Such incentives are fast becoming an integral part of the sales rep’s compensation plans. This is partly due to the increased ease of management of such schemes, thanks to modern compensation management software. However, this is also because managers are beginning to identify the methods that need to be sold so that customers can realize more control of the sales process.
Building on sales practices that confront this new reality is far more useful and effective than giving your sales a lecture and hoping to change them on their own.
If the way you’re compensating for sales isn’t achieving the results you want – in terms of closed deals, customer loyalty, or margins – think about creating new incentives in your COMP program. There are five particularly useful areas for creating incentives.
1. Customer Experience
New business is great, but business can be even more attractive with long-term customers. This means that the experience that the sales representative creates during the sales process should reflect what the customer wants, and that sales representative must build rapport with the customer.
If closing a contract comes through a collision process, it is possible that the client will investigate other options when the contract ends.
Increasing sales reps to do a major job of laying groundwork for future sales is difficult. One way to build this into your compensation process is to use a form of customer feedback collection during the sales process. Another way is to collect feedback at the end of every sale, whether it is won or lost.
Ask questions that will explain how the sales process helped or hindered the development of a good buying experience and accelerated a good customer relationship. Sales reps who are successful at this should be rewarded – you can’t reward retro responses for a long customer life, but you can reward them for helping to build them.
2. Discovering new markets and regions
Have you identified new opportunities for your business – new market segments, new geographic areas, or any other previously untapped but attractive area? good! Now, what are you doing to encourage sales after those opportunities?
We often assume that sales will be excited about new areas and markets, but if sales reps are succeeding and building numbers, there is little motivation to change what they are doing. You can directly assign them for new opportunities, in which case they will have to struggle for a while until they have mastered their new field.
Another option: place a reward on deals made in those new segments or territories. It turns those sales into a burden or a diversion opportunity – and sales reps who may have regional knowledge can apply it.
3. Using the tools given
It is great to invest in technology for your sales and marketing teams – as long as they actually use it. In many organizations – nearly a quarter, according to a recent survey by KallidasCloud – the adoption percentage is less than 50 percent. One in 10 organizations reported not adopting technology solutions; In those cases, ROI calculations were very easy: their return was zero.
One of the first uses of incentives in compensation was feedback on the issue. Many companies use technology adoption as a negative reinforcement: failing to file a deal in CRM or using some other named technology, and you will not make any commission on the deal.
A more productive approach might be to use technology to use carrots more than sticks. Reward people for using it rather than punishing them for not using it. You can also use gamification techniques – scoreboards, badges, etc. to get competition for Honors based on their usage.
4. Selling Right Product Mix
If you sell a complex mix of products or services, you’ve probably done some bundle deals that make it easier for a sales representative to offer a solution – and it’s easier for you to protect margins.