Changing Behaviors One Dollar at a Time
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You just cant risk upsetting the sales force! Do you know how much revenue is at stake here?, the oft-heard refrain goes.
Any initiative or strategy that might change the way sales works, or perhaps more closely track what it actually does is perceived as a threat. New systems or processes mean only one thing to sales: a learning curve that engenders less time to sell, which in turn leads to lower commissions. Therein lies the simple answer to all change-management challenges when dealing with a sales force: Commissions.
Arguing that commissions are the key lever to influence sales may seem to imply that salespeople are a bunch of money grubbing capitalists forsaking all else in pursuit of the almighty dollar. This is largely untrue. Rather, the sales force is one of the few areas in most corporations where a very simple metric acts as a lever to manipulate behavior.
Commissions are both a key part of compensation, but also a hard, numeric metric that indicates how well a particular person is performing. If Jane consistently receives higher commissions than I do then theres a very strong case that Jane is a better salesperson.
Whereas many positions have complex evaluations, peer reviews and other soft analyses, in sales you either make the sale or you don't. At the end of the day, a customer needs to cut a check so you know exactly what that salesperson contributed to the companys top and bottom line.
At their most simple level, commissions give the salesperson a piece of the action they generate, and encourage a beneficial behavior: selling more products. This is where some level of sophistication enters the process. Rarely does a company simply give a salesperson a fixed percentage of each sale, rather higher margin deals usually receive a higher commission, or new product sales are rewarded more than sales of an older product to an existing customer.
Sales and Process Improvement
Combining your commission model with your process improvement strategy is where the magic happens. If your sales force is consistently selling products in a manner that creates extra labor and sunk costs on the backend, change your commission model to encourage sales that follow the improved process, and generate higher profit on the bottom line rather than just big dollars on the top line.
All it takes for the new commission model to be wholeheartedly embraced is for one salesperson to get a higher commission using the new model. Or for a skeptical rep to lose his or her ticket to the annual sales meeting in Hawaii. After this happens, word will spread the company is serious about change.
Sales comp must be analyzed from a holistic perspective. What is good for sales may not be good for the company, and the implementation of new systems or new business processes is the perfect time to perform this analysis and determine an appropriate commission model.
Make no mistakethis is difficult work. But, once completed, getting the sales force to change is as easy as sending out an email detailing the new commission model. Old behaviors, which were not profitable to the company as a whole should not be highly compensated. Profitable deals, which use the systems and processes correctly, should be the most valuable to the salesperson.The magic here is the simplicity of implementing the change. Existing motivational structures such as compensation, bonus programs and free trips to an exotic location are already in place. The new commission model simply changes the focus from what is good for sales to what is good for the company as a whole.
If a new CRM system is deemed good for the company, the commission model should provide compensation if a deal is correctly entered into the new system, and reduced commission (or no commission) if the systems and processes are not used. If you want to get even more rigorous, you could track the time required for back office processing of a sale and deduct compensation for difficult-to-process, and hence, more costly deals.
Despite all the dire predictions on sales' acceptance of a new system or process change, like any other employee most salespeople want to be high performers, and if they do not, they should be shown the door.
If your commission model is designed to reward the use of tools that benefit the entire company, not only will your sales force rapidly accept the new systems and processes, but they will bring in new business that provides the highest margin.
Patrick Gray is the founder and President of Prevoyance Group, located in Harrison, NY. Prevoyance Group provides strategic IT consulting services. Past clients include Gillette, Pitney Bowes, OfficeMax and several other Fortune 500 and 1000 companies. Patrick can be reached at email@example.com.