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Sales Incentives that Enable Sales Excellence

15 September 2021

Ricky Cookson

On the road to creating the future of sales and enabling sales excellence, one of the biggest hurdles for organizations is that Sales has become desensitized to change. From reps to managers to sales leaders, current incentives have created a chasm between doing what’s best for the customer and what’s best for Sales. 

Sales rep incentives are centered around individual goals based on one piece of the sales process versus long-term customer success. 

Leaders are compensated by the size of their team and how complicated the sales process is versus actual effectiveness.

Among the top trends in B2B sales, teams need to move away from traditional compensation plans and over-engineered processes and re-incentivize Sales based on the best outcomes for customers and the business. All the way from reps to leaders:

  1. Incentivize sales teams to make the right decisions for their customers.
  2. Compensate sales and sales leadership based on efficacy, not by superficial complexities or team size

 

Customer-First Incentives Enable Sales Excellence

Why are sales incentives such a big hurdle? Well, for one, every salesperson is more concerned with their part of the process than with the customer’s best interest. 

For example, say you have a customer who’s expressed enough interest to qualify as an SQL. An SDR then tries to move them through into SAL as soon as possible and as many as possible because that is what they’re comped on. Regardless if this customer gets past “SAL.”

From there, the customer gets handed off, and the next sales rep’s number one priority is closing the deal even if the relationship is short-term and was never the right fit for the customer.

Therein lies the problem: every rep has tunnel vision for their part of the customer lifecycle. 

An SDR is only concerned if a customer “qualifies” and can be moved to the next phase, and Sales is pressured to close, close, close, even if it means ignoring a few customer needs or account has no expansion opportunities and probably won’t renew in six months.

Now don’t get us wrong, it’s not that Sales Development and Sales don’t care about their customers, but they’re backed into a corner if we continue to incentivize actions that don’t consider the long-term or best interest of customers. 

To create the future of sales that enables sales excellence and orients itself around what’s best for the customer, many Sales organizations and companies will need to re-engineer how they think about compensation. Here’s how.

Incentivize Customer Success, Not Customer Qualification

Incentivizing customer success boils down to putting the customer’s needs and priorities first. We’re talking about re-incentivizing salespeople to make the right decisions for their customers. Not just because they’ve completed “their part of the process.”

Compensation structures don’t always allow salespeople to do what’s in the best interest of their customers. Maybe the rep is one contract short of hitting their quota, so they push someone into the sales process without considering applicability or value. The compensation plan we suggest blocks those negative opportunities. 

Customer applicability, product usage/fit, renewal probability – when these are incentivized, it limits the terrible hand-offs associated with process-oriented incentives.

Instead of prematurely jamming an SQL into an SAL to hit quota, an SDR should spend more time considering the customer’s best interests. Is your product a good fit for the customer? Will your product/service add value to their business?

Ultimately, these questions sum up to, “Is it helpful to the customer or is it helpful to the seller?” When compensation plans are organized with a customer-first mentality, the answer is yes to both. 

Suppose SDRs are also comped on when a deal closes and Sales gets a piece of renewals. In that case, sellers can make decisions based on the customer’s best interest and ultimately the business because you’re creating long-term relationships, not hitting numbers.

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Here’s what this would look like:

Start from the Top: Compensating Sales Leaders on Effectiveness

The problem of volume-based sales compensation bleeds into hiring and compensating leadership as well. When a company hires a sales leader, the typical criteria is to hire the individual based on the size of the team they managed, the complexity of the process, and the growth they secured.

These criteria sound correct; however, many organizations will stave off the leader who managed a smaller team even though that individual was able to lock down the same amount of revenue growth. That is, companies will tend to hire the sales leader who managed a team of 150 people that grew to $100M instead of the person who managed a team of 15 or 20 that did the same thing. 

“Many times in sales, we interpret managing bigger teams as having more and better experience, when the reality is that it’s about the leader’s effectiveness.” – Jake Dunlap

Comparing the individuals in the scenario above, who was more effective? Even though they succeeded in increasing revenue to $100M, the former is most likely compensated more than the latter because of team size. That’s where we often see the problem in leadership compensation: it’s not focused on the whole picture. It focuses on one aspect of experience (i.e., team size) instead of considering the entire narrative of their experience (i.e., team size, effectiveness, and capability).

To mediate the current hiring and compensation structure for leadership, organizations should give equal thought to effectiveness in accordance with team size and complexity. That’s how companies can affect sales excellence in their organization at the highest level in sales.

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Incentivize Sales for Change and Sales Excellence

Today’s sales incentives are out of sync with the customer’s best interest and the sales teams. By basing incentives on volume metrics and process-driven compensation plans, consideration of customer prosperity has slowly dissolved. 

Making customer success the centerpiece of compensation is an incredibly effective and lucrative approach to incentivizing sellers. The sales team enjoys various incentives to help their customers get exactly what they need when they need it. In doing so, they create the type of raving fans and power users they set out to close in the first place.

On the leadership and management level, again, it’s about overall effectiveness in driving results: not the size of teams or how complicated the structure of the team or sales process is. 

If you’re looking for more information on how to incentivize sales the right way to meet company goals, check out our page on organizational alignment.