How should I structure incentives for my sales people?

Should incentives for my sales people be aimed at quick cash in the door or long-term growth?

In the current economic climate, there is little difference between short term and long term.

No one can confidently predict what’s going to happen next month – let alone next year.

Front-end sales incentives designed to stimulate action are a good idea. Sales people should always be rewarded for success, but (and it’s a big BUT) not at the expense and integrity of your company’s value proposition and reputation.

All too frequently I see sales models set-up for quick-wins at the detriment of the customers. How? Commission structures weighted heavily towards the front-end of the transaction, with little if any incentive for the sales person thereafter to make sure the job is done right.

What this does is it encourages sales people to focus on “the sell’ as opposed to the entire customer experience.

Many business development manager (BDM) roles have traditionally followed this path – once the sale has been made, the BDM hands over the client to a client manager, either in the form of an account manager or project manager, to deliver the project, maintain and manage the relationship in an on-going way.

The transition period between BDM and client manager is where many project and client challenges occur.

Anyone who has been involved in project-based selling long enough – sectors such as property, web, design, or agency work – knows all too well that the number one killer of profit in any project is the insidious “scope creep”.

This occurs when the client adds small increments of extra work to a project over time that has not been scoped or paid for by the client. This scenario eats into the project’s timeline and profit. It’s nasty stuff, so enter at your own risk.

Are your clients creepy?

Some key reasons for this can be directly attributed to a sales person rushing their sales process without scoping and costing the project accurately and/or agreeing to the client’s on-the-fly demands verbally, (that is, “sure thing Mr Customer, we can do that no problem, now just sign here…”) to push the deal through and achieve a monthly target and subsequent commissions.

When the sales person leaves, the account manager or project manager is left to manage (perhaps even damage-control) the situation.

This not only sets the project and client relationship up from the onset in a negative tone, it more often than not dis-empowers the client manager. By virtue of the client managers’ willingness to do a good job and please the client – that is, get the project finished on time, maintain a sense of professionalism, or avoid conflict etc – they agree to the customer’s requests.

Once you start agreeing to the customer requests to make out-of-scope tweaks, you invariably set up an (“it’s OK to creep”) precedence – and don’t be surprised if the requests keep coming. Hence, scope creep is born.

Sales people should be encouraged to have an interest in their customers’ long term best interests. A significant amount of client goodwill, and profit, can be preserved when a sales person understands that “the sell” is only the first step in the customer engagement process. Moreover, there have been appropriate measures put in place so the sales person has buy-in to ensure the customer goals are achieved.

This means making sure their company is delivering on the “customer promise” and their expectations are met, if not exceeded.

The sales commission or bonus structure should be weighted accordingly, with a percentage upfront and the balance broken over key milestones – until the clients’ objective/s have been met and/or the project or product delivered.

This guarantees the best of both worlds for the sales people and customers: A healthy incentive for immediate success, and an upside for a job well done.

This is a more holistic approach to selling, and it ensures the end-game (customer) and the value created for them is kept top of mind and is always the purpose of the sale, not the commission.

When your sales people understand this premise, and your business is about being about your customers, their sales increase through goodwill, repeat business, and positive testimony – as does your business success and long term (profitable) growth.