What If Pay Equity Comes to Sales Teams?

Posted by Dave Kurlan on Tue, Feb 28, 2023 @ 11:02 AM

pay equity

Today's article is different from most of my other articles because there is no opening analogy, very little data, and a complete lack of humor. It's such a serious article I was ready to delete it before I clicked the publish button. If you don't like the subject, the content or the writing, it's OK.  This needed to be written.

I was watching a local newscast where the anchor did a story about salaries.  It began with a student in his broadcast journalism class asking how much he earned.  He was averse to sharing his salary with the public, but he conducted some research and learned that GenZ'ers share and compare salaries and tend to know how much everyone else is paid.  See this article from George Anders, a LinkedIn Senior Editor, where he shared statistics showing that 81% of Gen Z welcome full candor.  Compare that to just 28% of Boomers.

There are three phases to the salary unveiling process:

  1. Asking how much others are paid. 
  2. Corporate transparency by sharing how much everyone is paid.
  3. The E in Diversity, Equity and Inclusion (DEI) becomes the norm.  Proponents of Equity expect equal outcomes for all - like participation trophies in youth sports long ago replacing the performance awards that are part of professional sports.  This article does a good job of defining pay equity.  While traditional views of Pay Equity typically considered gender and race, that is not what I am addressing in this article. I am talking about what happens when corporate executives listen to voices - any voices - demanding equal pay. They may be whining because they aren't willing to work as hard, because they don't have equal skills, or because they aren't willing to put in the time.  But they want to be paid the same.

I've had this argument with CEOs before and it goes like this:  "What do you mean Bob is not money motivated?  He came to me last week and demanded more money!"  To which I responded, "He wanted you to GIVE him more money.  Money motivated salespeople ask, 'What do I need to do differently to earn more money?'"  Bob wanted welfare.  Money motivated salespeople will do the work if they know what the work entails.

How does a growing movement towards Equity apply to sales compensation?

There are four popular sales compensation plans in use by most companies today:

  1. Weighted towards commission: A lower base salary, based on experience and/or territory, augmented by a generous percentage of either gross revenue or gross margin.  While all salespeople would be paid the same percentage, their salaries might be different and total earnings would be quite different based on overall sales performance.  
  2. Weighted towards salary: A higher base salary, based on experience, territory, and/or size of accounts, augmented by either a small percentage of gross revenue or gross margin, or a pre-determined bonus for meeting and/or exceeding quota.
  3. All salary.  The salary in the plan with the lowest financial risk might vary based on experience, territory or account sizes.
  4. All commission.  There is no base salary in the plan with the highest financial risk, but the opportunity to earn more than other salespeople is considerable based on a "sky's the limit" compensation plan. 

In an effort to appeal to salespeople with varying preferences, some companies offer all four of these plans but most companies offer only one.

According to data from the assessment of more than 2.3 million salespeople by Objective Management Group (OMG), 5% of salespeople are very satisfied with their income and nearly 40% are very unsatisfied with their income. My anecdotal experience with this is my belief that the 5% group is satisfied with a salary that is larger than they expected and the top earners, being extrinsically motivated, always want to earn more!  All told, 27% of salespeople are extrinsically motivated, which could account for as much as half of the 40% who are unsatisfied with their current earnings. The largest percentage of extrinsically motivated salespeople are found in the top 5% of all salespeople.

When it comes to sales compensation, there is already some vague transparency in place as salespeople are keenly aware that the highest performers earn more than the lowest performers.  At some point, companies will be pressured to bring pay equity to sales teams too.  It will happen with publicly traded companies first, while private companies may resist for as long as they can.  The CEOs of privately held companies are more likely to understand the dynamics of rewarding sales performance as many of them served in sales at some point in their career. The CEOs at publicly traded companies, often coming from a financial, operational or a technical background, may be more susceptible to pressure from under-performing salespeople as well as HR and/or legal teams.

When pay equity comes to sales teams, top performers will be the group that is most affected.  While it is too early to know whether their incomes will be reduced, they will be compensated equally with the worst performers on the team. If you are a top performer, and you are no longer earning significantly more than the worst performers in the company, what would you do?  Here are some possibilities:

  • Nothing changes.  As long as my total compensation isn't reduced, I don't care.
  • Everything changes.  If I am not compensated fairly for my all-star performance, I'm not going to try as hard or work as hard.  Why bother?
  • I'm leaving. If my performance isn't financially rewarded, I'll move to a company where my performance will be appreciated.
  • I'm retiring.  F**k it.
  • I'm starting my own company. I've thought about this for a long time and this creates the perfect conditions.

There is some anecdotal evidence for how pay equity might play out. 

I've trained sales teams who were paid only a salary but let's look at two different companies, each with different plans.  In one company, their performance in the base year determined their salary for the next year.  That's a plan where salaried salespeople are paid on performance.  Those salespeople responded to training, improved, sold more and were compensated for it.  In another company, performance did not influence future compensation and everyone received the identical 4% raise each year.  Those salespeople did not respond to training, did not increase their sales, and unlike most salespeople I have trained, saw their sales roles as jobs instead of potentially lucrative careers, and lacked the incentive to transition from transactional order takers to consultative sellers.  They said, "Why should I?  What's in it for me?"

I don't pretend to know the degree to which Pay Equity will come to sales teams or when it will begin to occur. I don't know the percentage of companies that will embrace Pay Equity.  I do know that this is a frightening concept. Sales is the economic engine for companies and effective salespeople determine to what degree that engine performs.  From cut-throat competition, to self-limiting beliefs, to dishonest prospects, to economic restrictions, to the inability to reach decision makers, selling is more difficult today than ever before. If it wasn't, then everyone would seek out a career in sales. 

If a transition to pay equity on sales teams becomes reality, it won't affect anyone except top-performing salespeople and the top and bottom lines of the companies they work for.

What do you think?  Share your comments below or in the LinkedIn discussion.

Image copyright 123RF 

Topics: Dave Kurlan, sales performance, sales compensation, pay equity, company profit

New Data: Is Sales Compensation Aligned With Changing Motivational Needs?

Posted by Dave Kurlan on Mon, Oct 31, 2022 @ 06:10 AM


My MacBook Pro is running Monterey version 12.6 and it has been charging to only 80%.  This was driving me crazy so I did some digging and found that the default battery setting is "Optimized" where it says the following:  "To reduce battery aging, your Mac learns from your daily charging routine so it can wait to finish charging past 80% until you need to use it on battery."

I'm not the smartest person when it comes to topics other than sales or baseball, but my take is that when plugged in, it will remain 80% charged until I need it to run on battery, at which time it will obviously begin draining - to less than 80%.  This suggests that it will never charge to 100%!  It's not intuitive and takes some decoding.

When interviewing sales and sales leadership candidates, similar counter-intuitive discussions occur. Many candidates claim that money isn't that important because they love sales - until they claim that the base salary isn't high enough.  For others, even though they may not disclose it, the base salary is completely irrelevant as long as the company won't cap the salesperson's total earnings. We need to decode the topic of compensation so that we can be sure that both the base salary and the total on-plan earnings are acceptable to candidates.

It is very important to make sense of the hidden and unpredictable compensation responses because many salespeople leave the company after a short time because they don't believe earnings are equivalent to the compensation that was promised.

It is crucial to understand that salespeople are motivated primarily by one of two motivational styles and unless you wish to hire only one type of salesperson, there must be two compensation plans that should be tailored accordingly.  Let's discuss this.

Salespeople that are motivated by money are extrinsically motivated.  Salespeople who are motivated by something other than money are intrinsically motivated.  While neither is better or worse, the largest percentage of extrinsically motivated salespeople are in the top 5% of all salespeople.  A small percentage of salespeople are altruistically motivated and simply want to be of service. Generally speaking, that is the department they belong in - the Customer Service department.  The largest percentage of altruistically motivated salespeople are found in the bottom 10% of all salespeople.

The majority of both extrinsic and intrinsic salespeople are motivated and you can continue to motivate them, but compensation plans for each group should be appropriately tailored.  Intrinsically motivated salespeople don't want less money, they want more security from their base salary.  Extrinsically motivated salespeople don't need a larger base salary, they want the ability to maximize their earnings without a cap.

The most recent data from Objective Management Group (OMG) shows that only 23% of all salespeople are extrinsically motivated, down from 25% in 2017 and from 59% in 2005. Ironically, while most compensation plans are geared towards this group, the largest percentage of salespeople are intrinsic!

While the motivational style represents how salespeople are motivated, the motivational score tells us the degree to which salespeople are motivated.  The score varies slightly around the world as it is 93% in Latin America, 82% in Europe, 89% is Asia, 83% in Oceana, 95% in Africa, and 88% in the United States.

The score also varies by years of sales experience where, for the most part, years of sales experience correlates to age demographics.  For example, those with fewer than 3 years of sales experience are also those we expect to be younger salespeople where 84% of that group is motivated.  Surprisingly, that jumps to 89% for salespeople with more than 5 years of sales experience and holds steady through 30 years of sales experience. 

One other Competency score that changes based on experience/age is Commitment to sales success.  Only 56% of the salespeople with fewer than 3 years of experience are committed, but that jumps to 64% for those with 5-10 years of experience, 67% for those with 10-20 years of experience and up to 69% for those with 20-30 years of experience.

Why are the oldest and most experienced salespeople more committed?  If you have hired younger salespeople, you already know how unlikely they are to stick around for more than 1-2 years and how few of them succeed!

If you look at Commitment and Motivation by sales proficiency or percentile, Commitment and Motivation become even clearer.  100% of the top 10% of all salespeople are both committed and motivated.  Compare that to the bottom 10% where only 13% are committed and only 20% are motivated.  The top 10% are 606% more committed and motivated than the bottom 10%!  When we look at the weakest 50%, we learn that only 39% are committed and 76% are motivated.  As you can probably guess, motivation won't get the job done when a salesperson is not committed to sales success.

Understanding how a salesperson is motivated is the key to aligning your compensation plan, but knowing a salesperson's level of Commitment is one of the key competencies to predict sales performance and success.

Motivation and Commitment are two of the 21 Sales Core Competencies measured by OMG so when you use OMG's Sales Candidate Assessments these two important findings are no longer a hidden secret. 

You can see the average scores for all salespeople, the top 10% and the bottom 10% and you can also see the scores for your industry and even your company's sales team.

Free sample.

Free trial.

Contact Us to Get Started with our Help.

Get Started on your Own.

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Topics: sales assessment, Dave Kurlan, Motivation, sales commitment, sales compensation, OMG Assessment

The Sales Compensation Plan from Hell and How to Improve It

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

One Color Jigsaw Puzzles | Zazzle

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

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

Posted by Dave Kurlan on Tue, Sep 12, 2017 @ 21:09 PM

Image Copyright iStock Photos

In the summer of 2017, under the cover of a solar eclipse, Objective Management Group (OMG) added and began testing for Altruistic Motivation as one of 3 types of Sales Motivation.  Sales Motivation is one of the 21 Sales Core Competencies OMG measures. Prior to 2017, OMG had been measuring only Extrinsic and Intrinsic Motivation in its Sales Force Evaluations and Sales Candidate Assessments.  

I reviewed the data and in the table below you'll see that extrinsic motivation is most prevalent in the top group of salespeople while altruistic motivation is most prevalent in the lowest group of salespeople.  You'll also see the correlation between overall sales motivation and performance. 

With motivation data correlating so perfectly with Sales Percentile, the most important question to ask is, what does it mean?

Recently there have been several articles that suggest we should eliminate commission salespeople and begin paying everyone a salary.  That would REALLY appeal to the bottom 10% with 73% of them being either intrinsic or altruistic.  The majority of the bottom 10%, especially the 35% who are altruistically motivated, should be in customer service.  Customer service doesn't pay as well but that is the role in which they could become top performers by being of service to others.

What do you suppose would happen to the performance of the top 23% if faced with being paid the exact same amount as under performing colleagues?  Say goodbye to their quota crashing performance!

Looking forward, our biggest challenge is that most millennials tend to be intrinsically motivated.  Read this terrific article and look at the data comparing millennials to top salespeople.  While overall motivation is nearly identical in all four groups, millennials have an average Sales Percentile of just 52, placing most of them in the category of weak salespeople where the overwhelming majority are intrinsically motivated.  It's not a stretch to draw the conclusion that the majority of salespeople in the weak category could be millennials.

The best way to incentivize salespeople will continue to be an ongoing topic of discussion.  Those who think that a prospect's interests are best served when salespeople are not on commission are misguided. The reality is that the top two groups of salespeople don't act in a way that makes prospects feel like they are being sold something.  People buy from them because they build relationships, are consultative, listen and ask great questions, and understand the problems that need to be solved.  Weaker salespeople are transactional, rely on presentations and demos, and appear to be more interested in making a sale than solving a problem.  Most of the experts who weigh in on this matter have it backwards.  Like all of the inbound writers who several years ago predicted that sales was dead and inbound was king, this idea is nothing more than fake news.

Salespeople who are intrinsically motivated would prefer to be compensated with a salary and perhaps a bonus for performance while extrinsically motivated salespeople would prefer the plan that offered the sky as the limit.

The biggest change for companies is the need to understand how to motivate intrinsics.  Traditional sales motivators like commissions, competition, contests, and awards do not motivate intrinsics. They want to be part of something bigger than themselves, would like to change the world, want to achieve mastery, sell because they love it, and do it for personal satisfaction.  How can you motivate them and more specifically, how can you motivate them to become better as a group than their current state of weak?

Topics: Dave Kurlan, sales motivation, sales compensation, commission sales, sales assessments, altruistic motivation

How to Change a Crappy Sales Compensation Plan to a Better One

Posted by Dave Kurlan on Thu, Nov 03, 2016 @ 07:11 AM


Image Copyright 123RF Stock Photo

Nearly every company gets to the point where they must realign territories, accounts or roles.  While doing that is always challenging, perhaps the biggest issue is how salespeople will respond to the impact this change has on their total compensation.  That problem is the biggest reason why it is so important to create an effective compensation plan.

Let's take John, who is being paid a $75,000 base salary and earns commissions of 10% on the revenue generated in the territory.  If the territory generates $1 million in sales, John gets $100,000 in commissions and his total compensation is $175,000.  It's also important to note that John spends most of his time on 20 great accounts and has little time leftover for the other accounts in the territory and he no longer prospects for new business.  The company has decided to split the territory, hoping that a new salesperson will hunt for new business and John will have time to do the same.  As part of this change, John will lose 10 accounts, worth $500,000 in revenue, to the new salesperson and initially, his total comp will be reduced by $50,000!  John will not be a happy camper.  How could this have been avoided?

First, this is simply an example - one example - and not the only way to create a sales compensation plan.  However, this example will illustrate the most important component to be changed.

For the sake of argument, let's assume that the following compensation plan was given to John when he started selling at this company.  To make it simple, let's retain John's $75,000 base salary but explain that the salary pays him to manage and service his existing and future accounts. In addition to his base salary, he will earn 20% on the gross profit of new business (first year) he generates with new customers and 20% of the gross profit on the growth of his existing customers.  So if he has $1 million in existing business and grows it by 20% to $1.2 million, and the company's gross profit is 30%,  his commission on existing customers is $12,000.

Later, if you decide to take accounts away or reduce the size of the territory, it has a far less significant impact on earnings.

I am also a proponent of a sliding base/commission plan.  You can read about my concept here.

I also wrote these articles about sales compensation:

Get Sales Compensation Right to Recruit Winning Salespeople

Do We Have Sales Compensation All Wrong?

Sales Compensation and Stupid Human Tricks

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

A Different Look at Sales Compensation

Compensation - the Unchanging Role

Does Changing Compensation Increase Sales?

Sales Compensation - Exceptions to the Rule

When it Comes to Compensation Sales is Not Like Baseball

Sales Candidates, Sales Compensation and the Number of Resumes

Compensation Stupidity Again?

Top 7 Sales Force Compensation Secrets

How Wrong are Company Methods to Rank and Compensate Salespeople?

Dunkin Dunuts - Time to Make Sales Compensation and Sales Competencies Work 

Topics: Dave Kurlan, sales compensation, sales commissions, dunkin donuts

Which Thoughts Affect How Successful You Will be in Sales?

Posted by Dave Kurlan on Mon, Jun 27, 2016 @ 08:06 AM


I finished reading Game 7 - Ron Darling's book on the final game of the 1986 World Series, and I'm half way through Shoe Dog - Nike creator Phil Knight's memoir.  They're similar books because each devotes so much ink and analysis as to how their own thinking and beliefs - both positive and negative - shaped their actions and outcomes.  Read them and imagine sales instead of baseball and entrepreneurship, and both books will help shape the ideal thought process to support selling!  I highly recommend both books.  I wrote a lot about beliefs in selling in both Mindless Selling and my best-seller, Baseline Selling.  As a matter of fact, when Objective Management Group (OMG) measures this, only 45% of the sales population have 80% or more of the possible supportive sales beliefs and only 6% (elite territory) have better than 87% of the possible supportive sales beliefs!

We're half way through 2016 and I've posted 60 more articles to my Blog.  I used to measure the effectiveness of an article by the number of reads, but these days, that's more a measure of whether the title or first sentence successfully got a reader to click through.  Today, I think a better measure of an article's overall impact is the number of LinkedIn shares it receives.  As I usually do every six months, I listed the top ten articles from January through June ranked by LinkedIn shares.  Chances are that you didn't read them all so here goes:

#1 - Breaking News - More Salespeople Suck Than Ever Before

#2 - Must Read - This Email Proves How Poorly the Bottom 74% of Salespeople Perform

#3 - Learn How We Discovered They Had the Wrong Salespeople

#4 - The 5 Questions That Get Prospects to Buy so You Don't Have to Sell

#5 - How Boomers and Millennials Differ in Sales

#6 - Sales Coaching and the Challenges of Different Types of Salespeople

#7 - What do you Blame When Salespeople Don't Schedule Enough New Meetings?

#8 - What Percentage of Sales Managers Have the Necessary Coaching Skills?

#9 - How Wrong are Company Methods to Rank and Compensate Salespeople? 

#10 - Why Uncovering Pain Doesn't Close the Sale with a CEO and the 3 Conditions You Do Need

While those were the most shared, there are a couple that should have been shared more often but weren't:

The 3 Most Important Questions about Sales Process

It's Coming Sooner Than You Think - 5 Keys to Prepare Your Sales Force for the Recession

Topics: Dave Kurlan, sales process, Sales Coaching, Top Performer, sales performance, self-limiting sales beliefs, sales compensation, linkedin, uncovering pain, phil knight, nike, ron darling

Are These the Best Roles for Shy People in Sales?

Posted by Dave Kurlan on Thu, May 12, 2016 @ 06:05 AM

I received an email inviting me to review and share an infographic on shy people in sales.  Being an introvert myself, I thought it would be interesting to check it out and see if it resonated.  When I finally got around to reading it, I was surprised by several things I read...and I'm sure you'll be surprised too...

The infographic shows that introverts make up 57% of the population, but it doesn't say what percentage of the sales population is introverted...a striking omission.  I've written about introverts and extroverts before and this is one of the better articles.

They list 5 traits which, according to industry experts, typically make a good salesperson.  They include:

  1. self awareness
  2. assertiveness
  3. optimism
  4. empathy
  5. problem solving skills

They must have talked to the wrong experts because these personality traits are not predictive of sales success! Since the top tier of the infographic listed dimensions from the Myers-Briggs personality assessment, it shouldn't be a surprise that personality traits were used.  But why?  What's most important to know about personality traits is that both good and bad salespeople have them!

If you want to read about sales specific qualities of top salespeople, refer to these two articles:  Article 1 and Article 2.

Getting back to the infographic, it provides examples of sales careers that would be good for introverts.  Really?  If an introvert is suitable for sales, then why only certain types of sales positions?  The most absurd part of this infographic is the income they attached to each sales position.  They used a government website for the income research. It must have been as old as the research on the traits of successful salespeople - only worse!  The salary research must have been from 40 years ago!  Their top category, sales engineer, had a median salary of $96,000.  Today, that's close to the average compensation for salesperson across all industries.  Entry-level salespeople earn, on average, close to $70,000, but most of the salaries listed on the infographic were under $50,000!

I love a good infographic, even though most of the time the info part is made up!  They actually performed research for this one, but in my opinion, used bad sources.  Too bad.  It could have been really useful!

How about a shy millennial?  I don't have any data on that combination, but there is a very short video on managing salespeople who are millennials on the Selling Power YouTube channel.

Topics: Dave Kurlan, sales compensation, personality traits of successful salespeople, introverts in sales

How Wrong are Company Methods to Rank and Compensate Salespeople?

Posted by Dave Kurlan on Tue, Feb 23, 2016 @ 06:02 AM


When report cards and grades are available, measuring the academic success of your child or grandchild is a lot easier than it is to measure sales success.  School grades go up and we say, "Great effort!"  School grades go down and we say, "Oh-oh, something is seriously wrong here!"   Academic grades are a reflection of test scores, completed homework and class participation. Sales grades are another story altogether and that is where most companies make terrible, horrible, awful mistakes.  Do you think you know what those mistakes are?

When we evaluate sales forces, the most predictable event during the review is when the executives question why their "best salesperson" appears to be so weak on his or her evaluation.  After all, at most companies, salespeople discover how "good" they are by looking at two numbers:

  • Sales for the current period
  • Commissions for the current period

Do you ever wonder when, if ever, those two numbers are measures of actual performance?  Let's take Ken, who inherited a $3 million territory 3 years ago and now has his territory humming along at $3.1 million.  By all accounts, he generates the most revenue and earns the highest commissions in the company and when measured that way, he's doing the best job.  But is he really?

For comparison, let's look at Bob, who started his new territory from scratch 18 months ago.  It's only producing $750K, the lowest sales number in the company, and his commissions are only a quarter of Ken's.  When measured that way, he is the worst salesperson in the company.  But is he really?

I hate measuring performance by looking at revenue and commissions because it's almost always about as accurate as a salesperson's resume and those are mostly fiction.  Neither of these two guys are being paid what they are worth and neither of them deserve the "grades" they are getting.

The reality is that Bob went from 0 to $750K in 18 months - 700% better growth than their top salesperson, Ken, who grew his inherited territory by only $100K over 36 months.  On the other hand, Bob worked hard, found and closed new business, and got paid significantly less money than Ken.  Ken didn't work hard at all, didn't find any new business, and got negligible growth from a couple of big accounts.

Why aren't salespeople being measured on their effort, behaviors that grow the business, and relative success.  What's relative?  Relative to expectations.   The only problem is that expectations are often wrong, too low, or too high.  For instance, just last week a client said that after 9 months, 5 of their 6 most recent hires, all recommended by OMG's Sales Candidate Assessment, were ranked in the bottom 5 out of 30.  That didn't sound right, so we dug into the data, pushed back and asked questions.  We learned that these 5 all inherited seriously underperforming territories that were ranked in the bottom 5 before they even began.  On top of that, their sales cycle is 9-12 months, so it would take at least a year for their efforts to even begin to pay dividends and we were still 3 months short of that.   Expectations must be realistic!

So how can a company measure sales performance when they can't see beyond revenue ranked by salesperson?

If that's a measure that a company insists on using, it could be filtered a bit.  They could use revenue from new accounts.  That puts everyone on level playing field and in that model, Bob would be considered more successful than Ken.  Candidly, I wouldn't even want Ken working as a salesperson for me.  I might be OK with him as a lower paid account manager, but I want Bob.  Send me Bob.  I want Bob.  More Bobs.

Are your salespeople being paid on the effort they put forth to grow your company?  Are you compensating them for the right activities and behaviors?  Are you overpaying account managers and undercompensating hunters?

How about the low-paid inside sales team that spends all day making calls and scheduling meetings for the high-paid account executives?  Is that balance appropriate?  I concede that there is a skill gap between the two roles, but without those inside reps, those account executives meet a lot fewer new prospects.

Let's get sales compensation right once and for all and stop looking at account managers with great territories as your best salespeople.  They aren't.

Topics: Dave Kurlan, sales performance, sales compensation

Closing Sales, Process, Hauntings, Training & More

Posted by Dave Kurlan on Mon, Mar 23, 2015 @ 06:03 AM


Photo Credit: Psychic Library

Today I will explore the least-read articles I have ever written.  That's right.  The least read.  It's very fashionable - and a best practice - to continue promoting the most-read, most-liked, most-favorited, most-shared, most-tweeted and most-commented articles; but I don't think anyone has gathered up their worst work and said, "Look at this!"  It's actually not my worst writing.  It's all every bit as good, and in some cases, better than my best articles.  Sometimes crappy articles spread like wildfire and the good stuff comes out on a day when people aren't paying attention.  So here are the 10 best articles I ever wrote that hardly anyone noticed.

Closing Sales - The Fine Line Between Patience and Pressure  August 2007

The Impact of Sales Training  October 2006

Great Sales Opportunities That Don't Close March 2010

Salespeople - Can Their Work Ethic Be as Good as BB King's?  March 2007

How to be Memorable - Things to Do When You are Selling Yourself  August 2009

What Do Sales Managers Do with Their Time?  May 2007

My Sales Process, Strategies and Tactics in Your Voice  October 2010

But I'm a Sales Guy! The Story of Motivation and Compensation June 2007

Top 14 Requirements to Perform a Sales Force Makeover April 2009 

Hauntings and Salespeople  November 2006

Topics: Dave Kurlan, sales process, sales training, sales motivation, Sales Tactics, Closing Sales, sales compensation, sales opportunities, bb king, how to be memorable, time management for sales managers, sales methodologies

Sales Compensation and Stupid Human Tricks

Posted by Dave Kurlan on Thu, Feb 12, 2015 @ 07:02 AM


Copyright: 123RF Stock Photo

OK, so we'll begin with something more along the lines of stupid pet tricks before we get to stupid human tricks.  There is a great TED talk about two monkeys that were unfairly compensated.  This is a must-see video!  With compensation - fair or unfair - in mind, I reviewed this year's 2015 Sales Compensation Survey Highlights by the Alexander Group and Sales Compensation Solutions.

The first finding that I noticed - we have seen this particular data point in nearly every white paper, report, survey, analysis, study and anecdotal story - is that only 50% of all reps made quota last year.  In surveys like this, a small number of large companies were involved and very often, when the companies are this large, the findings don't apply equally to your company and mine.  However, in this case, it's fair to say that this particular finding accurately represents the state of salespeople and quotas across the board.

The second finding that I noticed is that 60% of the companies will make mid-year adjustments to their quota.  In which direction do you suppose those quota adjustments will go?  The median quota was $2 Million USD.  Let's attempt to determine what the thinking was behind these quota adjustments:

Executive 1: "We will set the quota at $2M this year."
Executive 2, six months later: "Well, reps aren't hitting their quota.  Should we train our sales managers to become more effective at coaching their salespeople, train the salespeople better, evaluate the sales force to find out what's preventing them from being more successful, or all three?"
Executive 1: "Or we could simply lower their quota to show what great managers we are - they'll love us!"
Executive 2: "Yes!  That would be so much easier - we can complete that in an hour.  It could take months for those other 3 suggestions to kick-in!"

I have favorite blogs and newsletters too.  One of my favorites bloggers is Dr. William Campbell Douglass, a renegade MD who exposes the ties, lies and buys that take place between Big Pharma and our government.  I am borrowing a line from this article of his because the line describes what occurred in my imaginary, but very real discussion above.  Dr. Douglass said, "It’s like watching a lunatic argue with himself, and lose."

How else can you explain how quotas are set, missed and adjusted as often as the Boston Red Sox go from worst to first to worst and the New England Patriots go to the Super Bowl?  [Sorry - I had to get a sports analogy in there somehow.]

The Sales Compensation Survey also indicated that 64% of companies plan to increase base pay.  What should you do when your salespeople complain that their commissions aren't high enough?  That's right - they raise the base pay.  If you've been reading my blog since 2006 then you know how I feel about base pay versus commission.  It's not one size fits all and base pay is important to salespeople who are intrinsically motivated while commissions are important to salespeople who are extrinsically motivated.  If you have a plan that offers commissions, there is never, ever a reason to increase the base pay.  If commissioned salespeople want more money, all they have to do is sell more!  Even the CFO's of these companies should be able to figure that one out!  But the more likely scenario is that the same brilliant, large company Sales Leaders who were involved in the "set it, miss it, adjust it" quota goof, gave in to the demands of their large company entitlement-minded salespeople who would leave if they didn't get their raises.  I'm sorry, do they want their salespeople to fail?

The survey findings are good and important - the authors did a great job collecting and reporting on the information and I have nothing but praise for what they produced.  My issues are with the idiots who are running the companies that participated in the surveys!

In most cases, if these companies did a better job on selection - and that goes right to the Sales Leadership roles - all of their salespeople would hit and surpass quota, quota would go up each year, base pay would decrease, commissions would increase, and everybody would be thrilled.  Speaking of selection, there are a two upcoming events you might want to attend:

On February 19, I'll be presenting an online webinar hosted by TAB - The Alternative Board - on how to find, attract, assess, interview, select, hire and retain your next salesperson.  Register here.

On February 26, I will conduct a guided tour of the Magic in Objective Management Group's (OMG) Sales Candidate Assessments.  Register here.

The latest issue of Top Sales World's magazine is available here.  Be sure to check out my article on the best practices for onboarding new salespeople.

And from the "I can't believe it file", I was recently named to 3 more Top 100 lists:

Did you notice that each of these lists are related to Social Selling?  I'm flattered to be on their lists, but I don't consider myself an influencer in Social Selling as much as a participant and protagonist!  When I am influencing relative to social selling, it's usually that we need to spend more time on actual selling and less time pretending to be selling.  

Topics: Dave Kurlan, sales compensation, sales commissions, social selling, Top Sales World

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Best-Selling Author, Keynote Speaker and Sales Thought Leader,  Dave Kurlan's Understanding the Sales Force Blog earned awards for the Top Sales & Marketing Blog for eleven consecutive years and of the more than 2,000 articles Dave has published, many of the articles have also earned awards.

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