Your organization’s not the only thing with a brand; your salespeople have one, too. Countless published content discusses salespeople as if they’re one breed – the thick-skinned, competitive, aggressive type. Sure, your team may share some of these qualities, but its “brand” can be misleading, because salespeople aren’t all the same. And that’s exactly the sort of thing that should be addressed when you’re trying to motivate them – at least according to the research of Darden professor and researcher Thomas Steenburgh and University of Houston professor Michael Ahearne.
Steenburgh and Ahearne conducted a series of experiments and then published their research in “Motivating Salespeople: What Really Works,” in the July-August 2012 edition of the Harvard Business Review. In the piece, they divide salespeople into three categories: laggards, core performers and stars. Then they offer advice for best motivating each of these groups, particularly when it comes to compensation. Here are some of the techniques they suggest:
Core performers comprise the largest group on company sales teams. This isn’t necessarily a good thing since, according to Steenburgh and Ahearne, company managers often ignore these types of salespeople. After all, sales managers are often former sales stars themselves and therefore don’t identify as easily with core performers, or so the research says. The results? Less communication with the group and less consideration of them for promotions or accolades. Steenburgh warns, though, that this warrants change, since core performers “are the most likely to move the needle if given the appropriate set of incentives.”
Ahearne determined that what is most appropriate is a tiered incentive system. He conducted an experiment to prove that tiers act as stepping-stones to help core performers reach higher sales levels. The incentive structure in his experiment worked like this:
- Tier 1: Set sales target at an amount met easily by core performers.
- Tier 2: Set sales target at an amount reached by a smaller percentage of core performers.
- Tier 3: Set sales target at an amount typically reached by star sales performers.
Ahearne saw that the core group performed best when presented with all three tiers, as opposed to just Tiers 1 and 3 – hence the proof of stepping-stones for greater success. He also learned that such tiers do not have the same effect on the laggard or star groups.
For any laggards on your team, motivation is all about pacing incentives. Steenburgh examined field data from a Fortune 500 company and found he could predict that laggards would fall in performance if quarterly bonuses were replaced with annual bonuses. The laggards’ revenues would actually dip by approximately 10 percent. (It’s worth noting that core and star performers also generated lower sales numbers.) Steenburgh concluded that periodic incentives are more helpful to keep laggards on track, while they simply maintain the performances of core performers and stars.
When it comes to stars, motivation means ending commission caps. Steenburgh says that “capping sales commissions just when star sales employees are on a roll encourages them to call it quits once their targets are met.” Therefore, he suggests that companies provide overachievement commissions, or rates that kick in after sales targets are satisfied. Such incentives may keep stars in the game longer, which Steenburgh explains is important because the fourth quarter is often when customers are most likely to buy.
Translating the Research
If you’re thinking of implementing these techniques, it might be most helpful to start with identifying the make-up of your own team. Calculating each employee’s sales performance against sales targets and searching for patterns can help you to do that. Then when you are ready to move forward, Steenburgh suggests doing so slowly; focus on smaller segments of your company’s compensation plan first and design a pilot program for each segment from there.
The idea of different salespeople requiring different motivation can also translate to contests. In fact, we talk to clients regularly about their challenge running competitions, and they often ask us about this. A common question is: How do you keep a contest interesting for everyone if top performers always win? Like most things, it depends.
For a competition focused on taking a new product to market, a single contest for all can work, as it creates buzz around the office that customers want this product, which in turn motivates everyone to sell it. Our clients at the Detroit Pistons drove $500,000 in sales with a contest like this around a new ticket package, achieving their 6-month sales goal in only 6 weeks.
For other types of sales competitions, e.g., those focused on activities (make more calls), new pipeline creation or just closing sales, we suggest clients don’t run one-size-fits-all contests. Instead, they should run three different contests simultaneously with one that only includes the top performers, or stars, another that only includes the core group and a third that only includes the bottom group, or laggards. This way each contest allows participants to feel like they are in the game; they’ll duke it out with each other, motivating everyone to increase performance.