The Sales Compensation Plan from Hell and How to Improve It

Posted by Dave Kurlan on Fri, Sep 17, 2021 @ 11:09 AM

Challenge Yourself with a Puzzle That's All the Same Color - Nerdist

Have you ever attempted to complete a jigsaw puzzle when the entire puzzle is a solid color?  You dump all the pieces on the table and say to yourself, WTF?

 

Have you ever come to a strange intersection and the signs are pointing in every possible direction?  You sit there with drivers leaning on their horns, urging you to move and you're looking at the signs and wondering, WTF?

Frankenstein: Shelley, Mary: 9781512308051: Amazon.com: Books

And the perfect analogy, Frankenstein. The monster was not at all what its creator, Victor Frankenstein had intended or hoped. Victor, a scientist, looked at his creation and said to himself, WTF?  If you are familiar with the book, then you know that at birth his creation was not a monster on the inside but Victor was so horrified by what his creation looked like that his abusive behavior towards the creature forced him to morph into a monster.

Have you ever seen a compensation plan so complicated, so illogical and so detailed that all you could do was stare at it and wonder, WTF?

I did.  This week.  Couldn't make heads or tails of it. There were several sales groups selling different services to different audiences, several roles in each group, different plans for each role, different percentages, some of the compensation was guaranteed but some was variable and had to be earned by achieving quantitative and qualitative goals consisting of variable weighted goals, some of which were based on revenue while others were based on percentage achievement of goal.  The only way to figure it all out was to draw a table on the white board and start filling it in.  When we were done it looked like the monstrosity below:

It was worse than the solid color jigsaw puzzle and crazy street sign!

A good sales compensation plan is one that is so simple that salespeople can look at it and in about twenty seconds, understand exactly what their base salary will be, how much they can earn in commissions, what they must do to earn it, and when they can expect to be paid.  Period.  The plan I saw required two calls and one meeting with half of my team to get to the point where we understood what was in it and how it worked.  It was so complicated that I thought I would have to go back to school to decipher it!

A good sales compensation plan is motivational.  Salespeople must know that if they outperform the budget then there are commissions and bonuses to earn.  This plan was capped with no commissions or bonuses for over-performing the budget.

A good sales compensation plan should guide salespeople's behavior and incentivize them to focus on the things they will be compensated for.  This plan had a weighted variable for retained business but offered almost no incentive to spend any time on retention.

A good sales compensation plan should have a single number.  That number is the average percentage of revenue on which all salespeople in a particular group/role are paid.  This plan had to be reverse engineered to come up with the number of 3.4%.  On average, total comp was 3.4% of revenue.  So that becomes the number salespeople can expect to be paid in commission for over-performing their budget.

Find the number, go for simple, motivational, and behavioral and your salespeople will run with it.  Otherwise, you'll be proud as heck of the monster you created and left wondering why you have so much turnover, sales aren't growing, and what you have to do to fix it.

Topics: Dave Kurlan, Motivation, sales compensation

Great Quotes for Success Found in the Least Likely Place

Posted by Dave Kurlan on Tue, Nov 22, 2016 @ 06:11 AM

Our son was at his baseball practice last weekend and I saw these great messages on the white board.  I couldn't resist snapping some pictures. 

IMG_4211 (2).jpgQuotes3.jpgIMG_4212.jpg

I didn't expect to see these quotes - meant to inspire teenage boys - but I'm so glad that I did.  Let's explore the applications for these quotes as they apply to sales and selling:

"If you never stop you never have to start over."  Isn't that a great message for salespeople that need to make cold calls, get prospects engaged and convert them to meetings?

"Everyone wants to be a beast until it's time to do what beasts do."  Beasts practice and give second and third efforts when a play is over.  Most salespeople want to be great but give up way to soon and don't practice at all.

"All you can control is EFFORT and ATTITUDE.  Give 100% of both and you will see results."  Most salespeople fail because they won't do the things that they are least comfortable doing.  But if they give 100% effort with a good attitude they won't think about things like comfort.

"The harder you work the harder it is to surrender."  That's a quote about momentum and when the momentum is in your favor you won't want to stop.

We tend to take quotes like these for granted but if we bring them to life, by living the words, great things always happen.

Topics: Dave Kurlan, Motivation, Baseball, salespeople, quotes for sales

What Should You Do When You or Your Company is Disliked in Sales?

Posted by Dave Kurlan on Mon, Apr 11, 2016 @ 06:04 AM

Coke-vs-Pepsi51.jpg

I know.  Everyone loves you. You are just so likable that it's inconceivable that you could be disliked.  As usual, I see things a bit differently and I'll prove that there is someone that not only dislikes you, but might even hate you.  For example, my company, Objective Management Group (OMG), is universally hated by an entire vertical!   I'll share that with you, but first I must ask you a question.  If you are in territory sales, is there a competitor salesperson gunning for you?  Have you taken business away from anyone?  Do they hate you?  Is there a competitor who is all smoke and mirrors, who can't deliver on what they promise, who still manages to win business at your expense?  Do you hate them?  Do you sell a product or service that can help a company do more with fewer employees?  Do those employees hate you?  It wasn't that long ago when Apple hated Microsoft and Microsoft hated Apple.  Allow me to provide a few examples and then I'll share how to deal with the hate.

One of OMG's products is our legendary, accurate and predictive Sales Candidate Assessment.  Everyone from the CEO down through sales leadership and HR love this tool, but internal recruiters hate it and recruiting firms hate us!  Internal recruiters hate us because they have to work harder to find sales candidates who will be recommended.  It's their job, so they deal with us.  After all, only 7% of all salespeople are elite, and just an additional 16% who qualify as strong.  That means that 77% of the candidates they find suck, usually aren't recommended, and our assessment exposes that.  

For recruiting firms, the hate is even worse.  Their profit depends on a company quickly falling in love with a candidate and when one of their clients wants to use OMG's Sales Candidate Assessment, it is not only more difficult, but it takes much longer for them to find the right candidate. That eats into their profit and they absolutely hate that!  One way that recruiting firms deal with this is when they attempt to discredit our assessment.  As you can imagine, that kind of hate isn't much fun because it puts clients right in the middle of that battle.

Over the years, the creative people in our entrepreneurial and innovative economy have been responsible for developing products (think internet-related) and services (think outsourcing) that eliminate jobs.  The employees who are most vulnerable to having their jobs eliminated absolutely hate the companies and their salespeople who provide those services.

Speaking of entrepreneurs, one of the best sites is EvanCarmichael.com and last week, Evan hosted a video interview with me when we talked about assessments, selling, presenting and differentiating.  It was a fun and fast-paced interview and you can see it here.

So what can you do when you there are groups of people who hate you?  Introduce the issue yourself.  You'll need to wait until you have uncovered their compelling reason to buy and then you can ask a question like this one, "An ideal solution is going to eliminate some jobs, and while that will save the company money, how will you deal with the pushback that you're going to get?" or, "A solution that will solve the problem we are talking about will cause this group over here to be quite upset.  How will you deal with the protests you are going to get from them?"

Here are some additional resources.

This article on how to ask questions so that customers buy and you don't have to sell was named one of the top 10 sales blog posts of the month.

This article that I wrote for the SellingPower blog explains how to sidestep price issues so that you can sell value!

Topics: sales assessment, Dave Kurlan, competition, Motivation, Apple, objective management group, selling power, microsoft

Top 20 Reasons Why Sales Managers Suck at Coaching

Posted by Dave Kurlan on Thu, Apr 04, 2013 @ 13:04 PM

20 Reasons for Ineffective Sales Management CoachingThe latest interview between Jonathan Farrington, CEO of TopSalesWorld, and me is available here.

We discussed why only 17% of all sales managers are effective at coaching and the conversation was very enlightening.

It only takes 15 minutes to listen to the entire Podcast and you won't be disappointed.

So why aren't more sales managers effective at coaching salespeople?  Here are my top 19 reasons and I left #20 open so that you could add your two-cents worth.

  1. Ego - They know that they know everything.
  2. Modeling - They did not report to a sales manager who was effective at coaching.
  3. Skills - They have not been trained in the fine art and science of sales coaching.
  4. DNA - They don't have the DNA to support effective sales coaching.
  5. Trust - Salespeople don't trust their intentions.
  6. Respect - Salespeople don't respect their talent.
  7. Relationship - They don't have a strong enough relationship with their salespeople.
  8. Time - They don't invest enough time in coaching.
  9. Selling Skills - They never developed the kind of selling skills that would allow them to role-play all of the various scenarios that are bound to come up.
  10. Resistance - Their salespeople are resistant to coaching.
  11. Self-Centered - It's all about them, not their salespeople.
  12. Misguided - They believe sales management is about closing deals for their salespeople.
  13. Expectations - They didn't know that coaching is 50% of the sales manager's role.
  14. Role Confusion - They spend too much time selling their own and the house accounts.
  15. Ignorance - They don't know what they don't know.
  16. Stink - Their company hasn't made this a requirement.
  17. Motivation - They don't have the incentive (compensation) to justify the effort.
  18. Tired - Coaching is too boring for them to do it consistently.
  19. Priority - They have more important things to do.
  20. Please contribute your own #20.

If you would like to master the art and science of sales coaching, join me on May 14-15 in Boston for our highly-acclaimed Sales Leadership Intensive.

Topics: Dave Kurlan, sales management, Sales Coaching, Motivation, topsalesworld, jonathan farrington

Time and Territory Management for Salespeople

Posted by Dave Kurlan on Tue, Oct 04, 2011 @ 06:10 AM

time territoryAside from requests for Motivational training, Time and Territory management training is one of the most inappropriate requests I receive each week. And I've been getting requests like that for more than 25 years!

Time and Territory management is what sales managers and VP's ask for when they:

  • don't know what to ask for, 
  • don't know how to identify the real problem,
  • don't know how to fix the real problem,
  • are fearful of being exposed or shown up, 
  • feel threatened, 
  • are not tough enough to demand resources from management, 
  • are not strong enough to get their salespeople focused on key selling activities.

I could teach territory management in 5 minutes.  It comes down to 5 things:

  • knowing which customers/clients/opportunities of a certain target, vertical, or niche are in the territory
  • scheduling days, weeks and time in the territory by the geography of the territory
  • forecasting where the business will come from within the territory to meet plan
  • making the best use of time with opportunities/accounts that are mostly likely to produce revenue
  • leveraging the best accounts in the territory
Time management is even simpler and  I could teach that in 5 minutes too.  It comes down to these 6 things:
  • scheduling - in the calendar - time to hunt/prospect for new business each day
  • scheduling meetings and calls AROUND the hunting time 
  • assuring that meetings in specific geographies are combined on the same day(s)
  • prioritizing tasks as A's (must be done today), B's (should be done today) and C's (could be done another day).
  • Remaining faithful, disciplined, focused and consistent to the calendar/plan and task list
  • Identifying tasks (like CRM entry, call reports, etc.) that get procrastinated (left off, put-off, forgotten, incomplete) and scheduling time for them in the calendar.
So what should Sales VP's and sales managers be asking for instead?
  • Sales Force Evaluation - this identifies all of the specific issues that need to be addressed.  No guess work, just everything one needs to know about their systems, processes, strategies, people, selection, pipeline, growth potential, training requirements, reasons for under-performance, effectiveness and more.
  • Sales Management Development - sales coaching, sales motivation, sales selection, sales accountability, pipeline management, mentoring, sales environment/culture
  • Sales Training and Development - sales process, sales methodology, sales approach, sales tools, sales expectations, sales tips, best practices, sales core competencies, role-play, relationship development, strategic account management, etc.
  • Coaching - bringing their own skills to the next level
When salespeople under perform, sales forces fail to meet their goals.  For many sales leaders, rather than identify the real cause of the problem, it's simply easier to ask for motivation, time, and/or territory training.  That's all well and good but none of those three topics, regardless of who is presenting them, ever address or solve the real problem.

Topics: sales culture, Dave Kurlan, sales management, Sales Coaching, Motivation, time management

What's the Difference Between Sales Commitment and Motivation?

Posted by Dave Kurlan on Thu, Sep 08, 2011 @ 09:09 AM

motivationA better question might be, "Which is more important in sales - commitment or motivation?"

Let's discuss the difference first.

Commitment is the willingness to do whatever is required to succeed in sales, at reaching quota, achieving goals and closing a particular deal or account.  Whatever it takes (ethically).  It's not, whatever it takes "as long as I'm comfortable" or "as long as it's not too difficult" or "as long as it's not too scary".  Unconditional commitment.  The more difficult the challenge, the stronger the resolve must be.  How many of your salespeople have that kind of commitment?  Do you really know or just think you know?  That's one of the important findings we measure at Objective Management Group.  Not general commitment for success in life as measured in nearly every other assessment; commitment to succeed at selling!

Motivation is the incentive to do what is required in sales.  It is why someone will show up, day after day, for this difficult, sometimes demotivating, always humbling challenge.  Whether it is the rewards, recognition, money, satisfaction, revenge, things, or mastery, what is it that's powerful enough to make people thoroughly emmerse themselves in selling each day.  Sales Motivation is another one of the important findings we measure.  Not vanilla motivation or drive as measured in nearly every other assessment; the motivation to sell!

Now that you understand the difference between Commitment and Motivation, which is more important?  Can you have one without the other?  Let's investigate.

When a salesperson is motivated but lacking commitment we have the carrot but no stick.  The salesperson has reason but without resolve.  A dreamer who will become discouraged.

When a salesperson is committed but lacking motivation we have the stick, but no carrot.  A machine that will break down and lose effectiveness over time.

It should be obvious that we need both - sales specific commitment and motivation - along with Desire - How badly the individual wants to succeed in sales. (Yes, we measure that too!)

While selling skills and supporting strengths are an important part of the success equation, nothing is more important than Commitment, Desire and Motivation.  (Here's one more article on Desire and one more on  Motivation.)

 

Topics: Dave Kurlan, sales force evaluation, Motivation, sales candidates, desire, commitment, sales selection, sales assessments

Some Salespeople Possess This Non Stop Sales Motivator

Posted by Dave Kurlan on Mon, Jul 11, 2011 @ 06:07 AM

motivationMore than three months ago, I posted this article about Money Motivated Salespeople Being a Dying Breed.

I wrote that Objective Management Group would be retiring the Money Motivated finding in its assessments, to be replaced with three findings:

  1. Total Motivation
  2. Extrinsic Motivation
  3. Intrinsic Motivation
I described the important distinctions between numbers 2 and 3 and provided examples.
Last month, I was working with two of Objective Management Group's partners, Paul Lushin of Lushin and Associates, and Steve Taback of TEM Associates, along with their teams of sales development experts.  They brought it to my attention that we may have missed a subtle but important example of Intrinsic Motivation: people who are out to prove something - either to others or themselves.  They were right.
Those out to prove it to someone, dead or alive, a group of someones, or some very specific someones, may be even more motivated than those who we have always recognized as extremely money motivated.  Ironically, at the start of my sales career and during the early years of my sales development and assessment businesses, proof was my primary form of motivation!
People with something to prove may be out to prove it to themselves, you, their colleagues, those who said they couldn't sell, those who would like to see them fail, or those who might be threatened by their success. Some might even be trying to provide something to someone who has passed and won't ever be able to say to them, "Well, you did it and I'm proud of you!"  That last example is the double edged sword.  While it provides eternal sales motivation, the individual on that mission may be somewhat messed up....
Do you have anyone on your sales force that isn't motivated by the usual methods but may something to prove?

Topics: Dave Kurlan, sales management, Sales Force, Motivation, sales assessments

Are You Looking for Salespeople with Entrepreneurial Spirit?

Posted by Dave Kurlan on Wed, May 26, 2010 @ 08:05 AM

lemonade standWe were at a party that many entrepreneurs happened to attend as well.  I found it interesting that the Architect, Commercial Insurance agent, Commercial Mechanical contractor, Building Materials Coatings provider, Estate Planner, and Financial Planner that I spoke with all brought up their businesses at some point during our conversations.  Some talked about their businesses more than others but the one thing that they all had in common was a love - a passion - for their business, for finding new customers and clients, taking care of their customers and clients, and they all breath it 24/7.

During the recruiting process, many of our clients say that they want salespeople with entrepreneurial spirit.  Fine.  But what is it that they are really looking for?  Do they really want someone who is entrepreneurial - someone who will leave to start their own business?  Or do they want someone who lives and breaths their business 24/7 and brings it up whenever they have an opportunity to do so?  Is it reasonable to expect your salespeople to live and breath your business?  To bring it up wherever they go?  With whomever they meet?  Should it be part of the job description?  Would it be authentic?  Would it help?

You can demand that your salespeople behave in this manner but you won't get the same results that these entrepreneurs get.  You can't fake passion.  You can't fake love.  You can't fake wanting to talk about what you do.  And not all of your salespeople love what they do.  Does that mean that you have the wrong salespeople? 

There are some things you can expect your salespeople to bring to the table, like good sales DNA, selling skills and sales competencies.  There are some things you can teach - like skills, your product, your business and your market.  But there are some things that are intangibles - you can't teach them or replicate them and sometimes you can't even identify them.  Entrepreneurial Passion is one of them.

There is a trade off.  While most salespeople don't have Entrepreneurial Passion, most Entrepreneurs aren't very good salespeople. They lack the DNA, skills and competencies necessary to consistently outsell their competitors, but they (sometimes) compensate for it with their 24/7 passion.  Can you have both?  Yes - entrepreneurs can be trained to sell effectively!  And there are some salespeople who actually have this love of what they are selling.  The key is to be able to successfully attract, identify, on board and retain those rare salespeople.

 

Topics: Dave Kurlan, Sales Force, Motivation, sales candidates, hiring salespeople, love of business, love of selling, passion for selling, entrepreneurial spirit

Now How Can You Motivate Your Salespeople?

Posted by Dave Kurlan on Wed, Feb 24, 2010 @ 07:02 AM

While reviewing the recent sales assessment data compared with the same data from before the recession, two changes jump out at me.

The first is Excuse Making.  While the 74% who under achieve have always been big excuse makers compared to the over achieving 6% and the achieving 20%, there has been a marked increase in Excuse Making in the past 18 months.  Salespeople are pointing fingers outwardly rather than at themselves, a dangerous trend.  Until salespeople (and sales managers) take responsibility for their results, they won't change what they're doing.  Until they say, "I wasn't effective enough", they won't ask the follow up question, "What could I have done differently to get a better outcome?".

The second is Money Motivated. Has the criticism of Wall Street and the myriad of people who were living above their means caused salespeople to feel embarrassed about their desire to earn more money?  Nothing has changed with the elite 6% and the achieving 20%. But the under performing 74%, as a group, have become money indifferent!  If you can't motivate your B and C players in the most challenging times by having them set goals so that they can earn more money, then how can you motivate them?

You can always rely on recognition, competition, incentives (contests), promotions, and challenges.  But are they powerful enough to replace the ability to earn enough money to get more stuff, property and travel?  Have salespeople actually become a group of people who will sell because it's the right thing to do?

What are your thoughts?  We'll continue this discussion on today's (2-24-10) Noon ET episode of Meet the Sales Experts with my guest, Bill Eckstrom, founder and President of EcSell Institute.

(c) Copyright 2010 Dave Kurlan

Topics: Dave Kurlan, sales management, Sales Force, Motivation, motivating salespeople, sales force motivation

What We Think about Sales Motivation is All Wrong

Posted by Dave Kurlan on Wed, Sep 16, 2009 @ 14:09 PM

Arno was kind enough to point my attention to this great video presentation from Dan Pink on the science of motivation. 

Dan uses science, examples and case histories to tell us that almost everything we thought about motivation is wrong....or is it?

He never mentioned sales, selling, the sales force and salespeople specifically, but we do know that he said this:

"When the focus and goal are clear - incentives work great."  

That condition is certainly in play for incentive programs, contests, rewards and awards.  And it's in play for many compensation plans too.  But are the focus and goal always clear?  When salespeople take our assessments, one of the questions asks by how much they exceeded or missed their quota or goal.  The data shows that a significant percentage of salespeople don't have a goal or a quota!  He also said:

"When you don't want the worker focused, and you want them thinking on the periphery, then incentives don't work."

That condition is certainly in play for new companies and start-ups who are finding their way, finding a market, finding partners, and have no existing revenue stream.  A salary is the appropriate way to compensate the first salespeople on board in this scenario.

If we look at the data from the 450,000 salespeople who have been assessed by Objective Management Group, the percentage of findings which show lack of money motivation (especially among higher income earners) has been increasing each year.  It's not that they aren't money-motivated anymore, as much as they aren't as money-motivated as they were earlier in their career, when their money-motivation got them to their current income level.

The bottom line for your salespeople is that everyone is different.  Everyone is motivated by different things and for those who are clearly motivated by money, and where you have a clear goal and focus for them, their compensation should and must be commission-based.  When you have people who are motivated more by recognition, awards, competition, time-off, public service, or philanthropy, your compensation program should be flexible enough to compensate them in an appropriate manner too.

If you found this article helpful, you might find these articles on the subject of sales motivation helpful too:

 

The Future of Selling - Understanding This Crucial Sales Competency is More Important Than Ever

How Coyotes are at the Heart of Sales Motivation

Sales Warfare: Love to Win or Hate to Lose? 

7 New Ways to Motivate Salespeople Through 20 Old Hurdles

How Do Sales Professionals Stay Motivated?

Getting Reluctant Salespeople to Fill Their Empty Pipelines

How the Right Sales Leader Can Turn Around Sales Performance

Can the Right Music Motivate and Improve Sales Performance?

Basketball and the Difference Between Sales Studs and Sales Duds

The #1 Top Key to Keeping Salespeople Motivated Revealed Here

A Different Look at Sales Compensation

A Different Look at Sales Compensation

Are Women in Sales Less Trainable?

Sales Team Morale is Overrated

How to Use Playlists to be More Effective at Selling

Great Sales Management Advice from Football's Greatest

How Many of Your Salespeople are Receiving Welfare?

Hiring Salespeople Who Are Not Money Motivated - The Offer 

The Difference Between Sales Commitment and Motivation

But I'm a Sales Guy - The Story of Motivation and Compensation

Now How Can You Motivate Your Salespeople? 

5 Ways to Motivate Your Salespeople

Cultural Differences with a Sales Force Evaluation

The Challenge of Developing Sales Engineers

Motivating Your Unmotivated Salespeople

Motivation and the Sales Force

10 Factors for Getting Salespeople to Over Achieve

Sales Complacency

Money Motivated Salespeople

Compensation - The Unchanging Role

Why You Should Care That Sales Motivation Data Correlates Perfectly With Sales Performance

 

Topics: Motivation, dan pink, sales compensation, money motivated salespeople, sales incentives

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About Dave

Best-Selling Author, Keynote Speaker and Sales Thought Leader,  Dave Kurlan's Understanding the Sales Force Blog has earned medals for the Top Sales & Marketing Blog award for nine consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave

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