Checking the articles that are downloaded monthly from this website, the consistent winner is the article titled “Sales Compensation Systems That Work”. It’s safe to say that sales compensation is a hot topic. The problem is most people downloading this article will be disappointed because most executives and business owners are constantly seeking that “silver bullet” compensation package that drives successful results. There is no silver bullet in “Sales Compensation Systems That Work”. Rather, there is a frank discussion on creating a compensation system that works for the sales personalities you hire, the market base you are chasing, and the systems in place that measure and compensate sales performance.
But there’s a larger challenge to the compensation issue. It’s the fact that executives have become more and more distant from the sales function. The downside to this is the executive has no idea of how to value their salespeople. Asking for only “bottom line results”, and paying for bottom line results, executives take much for granted when it comes to selling. For example:
- How hard it is today to get in the door of any place- with the tech barriers of voicemail and email. Ask yourself this question: How easy do you make it for salespeople to call on your business?
- After finally getting in the door, it takes many, many “no’s” before anyone says “yes”.
- How much time- and panache- it takes to smooth the customer over factory mistakes- essentially reselling what was already sold.
- Keeping competition out of existing accounts. It’s a myth that there is no work required to keep an existing account. The fact that your salesperson wrested the account away from a competitor to begin with proves the customer is willing to change. What’s to prevent them from changing again?
- Fixing damaged customer relationships due to late deliveries. Essentially, holding the deal together at least until checks start coming in.
- Losing orders because of unrealistic pricing policies. People at the home office seem to know how to sell value better than a salesperson, but when they come out to the field on a joint call with the salesperson, they themselves cave in to pricing pressures from the customer.
- Losing orders because of a general lack of factory responsiveness or operating urgency.
- Selling products that don’t reflect customer closeness. Outdated features, or not incorporating features that the competition offers.
- Assisting in collecting monies due.
- Providing marketing information, including market trends, competitive analysis, and over-the-horizon trends. Pursuing new market opportunities.
- Training customers.
- Training channel partners.
- Participating in trade shows and local seminars.
- Filling out non-profitable paperwork such as expenses for the IRS.
Not one of these functions adds as a direct measure to the bottom line. Not one. But, is there value in these functions? Absolutely. The challenge is how to measure and compensate accordingly. Should we bother measuring? Think about this: You go out with some friends to a fine restaurant. Your spouse complains that the meal was not up to par, or whatever. The waiter immediately tears up the check- the meal is on the house. In a business, the bean counters can immediately calculate the amount of money “lost” due to that gesture. But how do you measure the return of the goodwill earned? You can’t. You just know it’s the right thing to do. Some things that are the right thing to do can’t -and shouldn’t- be measured.