| In most companies, the sales force is the most loved | | | | package handling companies. The sales rep had |
| and simultaneously feared organization in the company. | | | | promised that BigCo would move all of their shipping to |
| Often perceived as the corporate "breadwinners," any | | | | this carrier and hand wrote this clause into their |
| attempt to change the behavior or process of the | | | | contract, and the SVP was thrilled that this deal would |
| sales force is met with skepticism and trepidation. | | | | put sales well ahead of its quarterly revenue metric. |
| "You just can't risk upsetting the sales force! Do you | | | | The operations exec, who had just signed a multi-year |
| know how much revenue is at stake here?" | | | | deal with their current carrier, and recently completed a |
| Any initiative or strategy that might change the way | | | | nine month project to optimize BigCo's logistics |
| sales works, or perhaps more closely track what it is | | | | operation, was stunned. He did some analysis on the |
| the sales forces actually does is perceived as a threat | | | | costs of switching carriers and revamping the systems |
| in all levels of a sales organization. New systems or | | | | and processes he had just put in place, and even with |
| processes mean only one thing to sales: a learning | | | | the million or so of revenue generated by the sale, the |
| curve that means less time to sell, which in turn leads | | | | entire deal would result in the company losing two to |
| to lower commissions. Therein lies the simple answer | | | | three times as much. On their next meeting, the |
| to all change management challenges when dealing | | | | operations guy tore up the contract in front of the |
| with a sales force: commissions. | | | | sales SVP, to dumbfounded silence. Even with the |
| Arguing that commissions are the key lever to | | | | reams of figures showing how detrimental the deal |
| influence sales may seem to imply that salespeople | | | | was to the company as a whole, he still spent quite a |
| are a bunch of money grubbing capitalists, forsaking all | | | | bit of time on the sales forces' "Top Ten Most |
| else in pursuit of the almighty dollar. This however is | | | | Wanted" list. |
| largely untrue, rather the sales force is one of the few | | | | The moral of this story is that sales comp must be |
| areas in most corporations where a very simple | | | | analyzed from a holistic perspective. What is good for |
| metric, and corresponding lever exist to manipulate | | | | sales may not be good for the company, and the |
| behavior. Commissions are both a key part of | | | | implementation of new systems or new business |
| compensation, but also a hard, numeric metric to | | | | processes is the perfect time to perform this analysis |
| indicate how well a particular person has performed. If | | | | and determine an appropriate commission model. |
| Jane received higher commissions than I did, there's a | | | | Make no mistake that this is difficult work, but once |
| very strong case that can be made that Jane is a | | | | completed, getting the sales force to change is as |
| better salesperson than I. | | | | easy as sending out an email detailing the new |
| Whereas many positions have complex evaluations, | | | | commission model. Old behaviors, which were not |
| peer reviews and other "soft" analysis, in sales, you | | | | profitable to the company as a whole should not be |
| either made the sale or you did not. At the end of the | | | | highly compensated (if at all), and profitable deals, |
| day, a customer needs to cut a check to pay for the | | | | which use the systems and processes correctly |
| sale, so you know exactly what that sale brought in to | | | | should be the most valuable to the salesperson. As |
| the company's top line. | | | | soon as reps realize the new plan is there to stay, |
| At their most simple level, commissions give the | | | | more "good" deals will begin appearing almost |
| salesperson a "piece of the action" they generate, and | | | | overnight. |
| encourage a beneficial behavior: selling more products. | | | | The magic here is the simplicity of implementing the |
| This is where some level of sophistication enters the | | | | change. Existing motivational structures such as |
| process. Rarely does a company simply give a | | | | compensation, bonus programs and free trips to an |
| salesperson a fixed percentage of each sale, rather | | | | exotic location are already in place, the new |
| higher margin deals usually receive a higher | | | | commission model simply changes the focus from |
| commission, or new product sales are rewarded more | | | | what is good for sales to what is good for the |
| than sales of an older product to an existing customer. | | | | company as a whole. If a new CRM system is |
| Combining your commission model with your process | | | | deemed as good for the company, the commission |
| improvement strategy is where the magic happens. If | | | | model should provide compensation if a deal is |
| your sales force is consistently selling products in a | | | | correctly entered into the new system, and reduced |
| manner that creates extra labor and sunk costs on | | | | commission (or no commission) if the systems and |
| the backend, change your commission model to | | | | processes are not used. If you want to get even more |
| encourage sales that follow the new and improved | | | | rigorous, you could track the time required for back |
| process, and generate higher profit on the bottom line | | | | office processing of a sale, and deduct compensation |
| rather than big dollars on the top line. All it takes for the | | | | for difficult to process (more costly) deals. |
| new commission model to be wholeheartedly | | | | Despite all the dire predictions on sales acceptance of |
| embraced is for one salesperson to get a higher | | | | a new system or process change, like any other |
| commission using the new model, or for a hard line rep | | | | employee most salespeople want to be high |
| to lose his ticket to the annual sales meeting in Hawaii | | | | performers (if they do not, they should be shown the |
| before word will spread that the company is serious | | | | door, but that is a topic for another time). If you add |
| about change. | | | | systems and overhead without showing any benefit, in |
| I'll never forget a discussion I had with an Operations | | | | the form of commissions, your company will join the |
| Exec at a large office equipment company, which I'll | | | | litany of those complaining about and fearing their sales |
| call BigCo for the purposes of this article. He had | | | | forces. If your commission model is designed to |
| recently assumed the new role, and was telling me of | | | | reward use of tools that benefit the company as a |
| his first experience with Sales leadership. A SVP had | | | | whole, not only will your sales force rapidly accept the |
| come into his office the prior week and proudly | | | | new systems and processes, but will be bringing in |
| announced that one of the sales reps was closing a | | | | new business that provides the highest margin for the |
| multi-million dollar deal with one of the large overnight | | | | entire company. |
