Tenure - Could it Possibly Be a Good Thing for your Sales Force?

Posted by Dave Kurlan on Mon, Jul 25, 2011 @ 08:07 AM

  How do you feel about tenure?  Is it ever a good thing?  Is there value in helping people feel secure about their employment stability and financial future?

To a point.  It's good when people feel positive about their situation, allowing them to perform their most brilliant work.  It's bad when their sense of permanence causes them to do as little as possible.  It's good when it makes the company appear stable to those prospective companies who would consider doing business with you.  It's bad when their sense of entitlement causes them to believe that the work that must be done is now beneath them.  And so goes the tenure argument.

What about tenure with salespeople?

I am not aware of any company that awards their salespeople with tenure.  That said, many companies may as well be dishing out tenure with some of the silly things that they do.  Here are ten examples where the company's philosophies have the same effect as tenure:

  1. Salespeople can only be terminated for lying, stealing or cheating;
  2. Quotas are negotiated;
  3. Under performance does not cause a reprimand or termination;
  4. Quotas are only guidelines and are not enforced;
  5. Salespeople who migrate to account management in lieu of new business development are not confronted;
  6. Compensation is salary with little or no bonus or commission;
  7. Management defends and protects bad hiring decisions;
  8. Salespeople are left to their own devices - for better or for worse;
  9. Company is reluctant to develop a true sales culture;
  10. Salespeople are considered family.
Can you think of any additional examples?
By the way, some of you may have become discouraged from leaving comments because my Blog was getting spammed for a couple of months and if you checked the box to be notified of any comments after yours, you would have received the spam too.  That problem has been rectified so you can safely leave comments again.  I apologize for the aggravation!

Topics: Dave Kurlan, sales management, Sales Coaching, sales motivation, sales compensation, complacency

Top 7 Sales Force Compensation Secrets

Posted by Dave Kurlan on Mon, Feb 28, 2011 @ 05:02 AM

sales compensationA reader asked an interesting question about the relationship between sales assessment performance and income. 

"If someone does well on the assessment but never earned more than $100,000, should that set off some red flags since $100,000 is the high water mark of sales success?"

It's a great question.

Sales income is all relative.

  1. For instance, it means different things depending on whether the money was earned by an industry veteran of 30 years in the same territory, or a rookie who never sold anything before.
  2. It means failure if the salesperson came from certain spaces in the technology business yet huge success if the salesperson came from industrial distribution.
  3. It means different things depending on whether the salesperson was in a hunting role - cold calling for new business only - versus an account management role.
  4. It means different things depending on whether it was earned in straight commission versus whether it was earned in salary.
  5. It means different things depending on whether it was a high ticket complex sale with expected revenues of $5 million annually versus a low ticket transactional sale with expected revenue of under $500,000 annually.
  6. The most important factor - it is most relevant when compared with what the other salespeople earned in the company the candidate was employed in.  Was the candidate among the highest, lowest or average performers?  It is all relative!
  7. With all that said, there is one more thing to consider.  How much lower were the candidate's earnings than what you would need the candidate to earn if employed by you?  If you need the candidate to make a jump in earnings of more than 25% in a single year, that might be unrealistic.  The size of the desired jump is a more important consideration than the sum of the best year's earnings.

Topics: sales assessment, Dave Kurlan, sales recruiting, sales management, Sales Candidate, sales compensation

When it Comes to Compensation Sales is Not Like Baseball

Posted by Dave Kurlan on Thu, Dec 09, 2010 @ 05:12 AM

sales compensationRegular readers know that I follow - no - live and die by the Boston Red Sox.  I awoke this morning to discover that they have reached an agreement to sign Carl Crawford for $142 million on the heels of trading for Adrian Gonzalez and reaching an agreement with him for a contract extension worth $157 million.  If you like baseball as much as me and your team signed two of the best players in the world, you would have a little extra bounce at 5:30 AM!

Aside from the excitement of the signings though, the Red Sox committed to $299 million on 2 guys in 4 days!  You won't find that in sales...

Not only that, but Gonzalez is getting quite a bump. He'll be going from $6 million to $21 million annually.  How would you like to earn just one year's worth - $21 million - in the remaining years of your career?  Forget about the staggering totals for a minute.  Forget that they work part-time.  Forget that they get 4 months off.  Forget that they get endorsement deals, speaking opportunities (good to know that there's one area where I'm probably paid better than they are) and tremendous amounts of media exposure.  Simply consider the bump.  $6M - $21M.  More than triple!

The other day a client asked whether salespeople can make the jump from earning $85K to a position that could pay them $150K.  Sure they can.  But they have to be incredibly motivated to earn the $150K.  What happens with a lot of salespeople is that once they get past the "25% more" mark, or in this case, $106,250, they become complacent - until next year - when they might make another 25% jump to $132,812, become somewhat complacent again, and in year 3, make it to $166,015. 

You might be thinking, "I'll take that - a salesperson that improves by 25% year over year" but this client's questions was, "Can salespeople make the direct jump from $85K to $150K in one year?"

They CAN but most of them don't.  Once most of them have earned significantly more than they have ever earned before (25%), they take that deep breath and relax.  The moment they relax, their pipeline isn't getting filled at the same rate, the opportunities they do have don't move along as quickly as before, and the more difficult opportunities don't get closed.

Relaxing Kills Sales.

Complacency Kills Salespeople.

Sales Managers Who Leave Their Salespeople Alone Kill Sales Organizations.

A Dead Sales Organization Kills the Company.

Anything else you need to know?

Topics: Dave Kurlan, sales management, sales compensation, Adrian Gonzalez, Carl Crawford, Boston Red Sox, Baseball Stars, complacent salespeople

NY Times Articles Hits Then Misses the Mark on Sales

Posted by Dave Kurlan on Thu, Nov 18, 2010 @ 05:11 AM

moneyNo doubt about it now. This has to be my lucky week.   on Tuesday I got to take on the Harvard Business Review,  it was Selling Power and Caliper on Wednesday, and today the New York Times!  I also learned that my Blog, Understanding the Sales Force, has been nominated for the 2010 Top Sales Blog Award.  Of course, my three negative commentaries from this week will assure that I won't win...

On to the New York Times.  They ran this article which gets two sides of the story right...

They wrote that you should let your salespeople earn all the money they can.  Perfect.  They said you shouldn't be concerned if your salespeople earn more than the owners, CEO, management team, etc.  OK!  Their only warning is that you don't tell your spouse...

As always, there is a third side to this story.  The previous compensation strategy works, only if you have very money motivated and very self motivated salespeople.  But only the top 6% fit that description.  Yes, there are many self motivated salespeople and money motivated salespeople  but only the top 6% have both of those attributes and consistently remain that way!  Of course Objective Management Group has the data to back that up!

The problem with the rest of the sales population is that they become complacent, and stop motivating themselves to sell, sell, sell.

You shouldn't limit the income your salespeople can earn although many companies cap their sales compensation programs at salary plus up to x% of salary in commissions.  It is more important that you know who you have working for you. Yesterday I spoke with a couple of executives who it seemed were paying their ineffective (selection problem) salespeople NOT to sell.  High base, probably more than these salespeople required to live on, and their salespeople weren't leaving their houses! If you don't have extremely money and self motivated salespeople on your team, then what combination of salary and commission will keep them motivated enough to continue selling?  In that case, less is more.

Compensation is tricky and one size never fits all.

Topics: Dave Kurlan, sales management, sales compensation, new york times

Sales Force Compensation - X Marks the Spot

Posted by Dave Kurlan on Thu, Jul 15, 2010 @ 05:07 AM

CompGraphSalary or Commission?

Many small businesses can't decide and most companies don't believe they can afford the salespeople they wish to hire.  The biggest variable in this decision is the length of the sales cycle, not the amount of compensation!

Compensation is usually simpler than most companies make it.  Most companies seem to either over compensate or under compensate on salary.  Most companies tend to do the same with commissions.

There are three key points in time with compensation.  They are:

  1. at new salesperson start-up - you must subsidize the new salesperson.
  2. the end of the ramp-up - commissionable revenue has begun to arrive.
  3. at the point of establishment - revenue supports the salesperson.

In my experience, the most effective compensation plan is one that slides.  It begins with 100% salary for time period #1.  Commissions kick in during time period #2 and salary can be reduced.  Commissions replace salary during time period #3.

If you were to graph this compensation, it would look just like the picture above.  If you prefer  to maintain some or all of the salary and stay away from straight commission that would be fine.  If you feel that it is necessary to provide more commission for new versus existing business, that is fine too.  And if you want to provide salary for managing existing business and commission for generating new business, that is fine too.  In most cases, especially where margins are tight and variable, commissions should be paid on the margin rather than revenue.

The most important point is that in most cases, the compensation program should look different at the beginning than it does at the end.

Topics: Dave Kurlan, sales compensation, compensating salespeople, sales commissions

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

Posted by Dave Kurlan on Mon, Jun 07, 2010 @ 09:06 AM

Money MotivationA Sales VP and his CEO were in the conference room and each time the CEO brought up a problem, we asked the Sales VP to elaborate.  Each time he began with, "Well I'm a sales guy so I know this stuff..."

Yes and No.

Yes, he's a sales guy.  But no, he doesn't know this stuff.  If he knew this stuff the problems and challenges in their organization wouldn't exist and the two of them wouldn't be sitting in front of us in the conference room.  This isn't at all unusual either. 

Most Sales VP's, Directors and Managers have egos so large that they can't ask for or readily accept the help that most of them so desperately need.  Most CEO's don't expect their Sales Leaders to be trainers, they expect them to arrange for the training.  Most CEO's don't expect their Sales Leaders to be experts in Sales Force Evaluation and Sales Candidate Selection.  They expect their Sales Leaders to identify the tools that will help them.  Most CEO's DO expect their Sales Leaders to implement sales processes, create realistic metrics, hold their salespeople accountable and coach them to be more effective.  And most Sales Leaders just aren't very effective at this.

I just looked at the data on about 50,000 sales managers that have been assessed by Objective Management Group and on average, sales managers have only:

  • 37% of the attributes required to be effective coaching coaching salespeople;
  • 58% of the attributes required to be effective holding salespeople accountable. 
  • 47% of the attributes required for developing people.

So it's clear that they need the help but most of them say the same thing -- "I'm a sales guy - I know this stuff..."  Yeah right.  Most of them know what their salespeople must achieve for results but beyond that, don't have the skills, strategies, tactics, experience, and understanding to help all of them do that consistently and effectively.

Another thing Sales Leaders don't know very well is compensation.  Only 20% of the sales managers in our database know what motivates their salespeople and only 42% of the sales managers are even personally motivated to earn more money!

My guest on last week's episode of Meet the Sales Experts was Sales Compensation expert Dick Dauphanais.  You need to listen to every word of this show but a few of the things that Dick said that I thought should be included here are:

  • "Well designed compensation plans have a life expectancy of 3-5 years max."
  • "Take people off of commission during aberration (economy in the tank) years."
  • "You need to understand the difference between pay and recognition based compensation plans."

If you're a CEO, communicate to your Sales Leaders that they are supposed to get help and you expect them to.

If you are a Sales Leader, get your ego out of the way and ask for the help you need.  That's why we are here!  Don't be embarrassed, think about how you'll look when you're smashing past the goals!

 

Topics: Dave Kurlan, sales management functions, sales motivation, sales compensation, dick dauphanais

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

A Career in Sales is No Place for a....

Posted by Dave Kurlan on Mon, Nov 24, 2008 @ 21:11 PM

If you interview thousands of salespeople like I have, one of the first things you'll learn is that not one of them ever considered sales as a future career when they were in school.  They went to school for engineering, music, computer sciences, geography, history, English, and even accounting.  None of them went to school for Sales.

While mothers who wanted their sons to be doctors and fathers who wanted their daughters to have a career had some influence in their kids' future, today I observed first-hand another of the possible reasons for this phenomenon.

Our local Chamber of Commerce participates in the Schools/Business Partnership, a good cause to which my company contributes each year. Today the Chamber sent an email asking business people to speak at a local high school and discuss the career paths that they took and why their career might be a good choice for the students to pursue.  Here is the list of careers for which they solicited speakers:

Careers/Majors:

 

  • Accounting/Finance
  • Architecture
  • Art/Music/Film
  • Biochemistry
  • Biology
  • Business
  • -Business Administration
  • -Business Management
  • -Business/Hotel/Restaurant Management
  • -Marketing

  • Chemistry
  • Child Development
  • Communications
  • Computer Science
  • Construction Management
  • Criminal Justice
  • Culinary Arts
  • Education
  • -Early Childhood Education
  • -Elementary Education
  • -English
  • Engineering
  • -Computer Engineering
  • - Electrical Engineering
  • Exercise Science
  • Nursing
  • Pharmacy
  • Physician's Assistant
  • Physics
  • Pre-Law
  • Pre-Med
  • Psychology
  • Sports Medicine

 

I must be losing my vision because regardless of the number of times I looked, I still didn't see Sales on the list.  So here we are, late into 2008, and the profession is still so disrespected that they don't even want to expose high school kids to the opportunity to earn more than most of the careers listed above.

(c) Copyright 2008 Dave Kurlan

Topics: sales, sales recruiting, selling, Salesforce, Sales Candidate, sales career, sales compensation, sales profession, salespeople

What Really Creates Sales Excellence?

Posted by Dave Kurlan on Thu, Nov 13, 2008 @ 21:11 PM

If you are like me, you're receiving email invitations to attend webinars at the rate of 10 to 20 per day.  And you're getting the exact same invitations every single day from the exact same companies.  And some of them promise the solution to all of your sales problems - sales excellence solutions.  Take a look at the invitations I received today alone!

  • IDC - Sales Advisory Service (they provide research reports and hold seminars where they report on their research and provide sales enablement advice)
  • Savo Group (their tag line is "never sell alone" - they tap into your sales teams' knowledge and make it available on demand)
  • Xactly (they have online applications that optimize compensation and incentives)
  • Landslide (they have the best sales workstyle management application so that your salespeople follow your process and enter the appropriate sales cycle information to produce the reports you need to see)
  • Avitage (they provide central storage for and an application for taking the visual and audio nuggets and putting just the right message together so that your salespeople deliver the email/web message that you want them to)

I may not have their messaging the way they want it but it's my sense of what they do. But their webinar announcements all promise to improve sales effectiveness.  Can they?  Do they?  What do you think of when you hear that you can increase or improve sales effectiveness?

What they can't do is make your salespeople any more competent, although Savo and Avitage might disagree.  They can't make your salespeople any more motivated although Xactly might disagree.  And they can't make them any more effective, although Landslide might disagree.

All of these applications are systems which optimize and improve efficiencies, standardization, attention to details, access to information, and how to use the information you get. They don't train and develop your salespeople and the only way to make them better is through evaluation, training and development.  Evaluation identifies all of the people, systems and strategy issues that need to be addressed.  Training is the process by which skills are transferred while development is the process by which their strengths are developed and weaknesses overcome. If you train and develop your people and then utilize these services then yes, you'll improve sales excellence.  These application are far more effective when you've already worked with a sales force development expert, developed a sales process and developed your salespeople.  Then these applications can be aligned with true best practices, as opposed to the practices in place prior to development.

I can tell you first hand how good Landslide is - I use it and recommend it to all of my clients.

I can tell you first hand how insightful Lee Levitt, the  IDC Sales Advisory practice Director, is. I have met Lee and read his articles.

I met Jim Burns from Avitage and saw his demo but haven't used the application yet.

I spoke with someone from Savo Group and saw their demo but haven't used the application yet.

And I haven't met or spoken with anyone from Xactly yet.

What really creates sales excellence?  No one thing - ever. A combination of things - always.

(c) Copyright 2008 Dave Kurlan

Topics: sales competencies, sales assessment, sales process, sales training, selling, Salesforce, Sales Force, sales excellence, sales evaluation, sales compensation, sales system, Xactly, Avitage, Savo, IDC, sales effectiveness, Landslide

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Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog earned a medal for the Top Sales & Marketing Blog award for six 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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