Too many managers throw together sales contests and compensation plans without the thought and planning necessary. Too many launch repetitive routines rather than effective sales contests, and too many discover their sales performance management weaknesses too late.
Effective competitions require strategic thought, lead-time thinking, and a complete understanding of sales compensation plans – if they are to work. You make a good start when you plan to avoid these six big sales performance management mistakes.
1. Intangible Targets
Reps cannot reach sales targets until they can see them. Sales targets must have dimension, texture, color, and size. But, if sales targets are too easily reached, the bar sits too low. Your sales performance management metrics require you to present sales target tasks that will increase productivity and revenue.
Short and small targets do not inspire. Once representatives master easy targets, they feel entitled. And, once entitlement becomes expectation, there is no push or pull left to the sales contest.
2. Invisible Sales Targets
It is also true that, if the targets are too stretched, they only create confusion and frustration. It is one thing to raise the bar on performance; it is another to position sales targets at an unattainable distance. Reps must feel they have a chance to meet and exceed. Representatives must feel able as well as challenged. They have to believe they have what it takes to win. If winning is beyond their means and methods, your sales reps will fail you and themselves.
3. Uninspiring Incentives
Employees have an uncanny knack for quickly calculating the value of an compensation incentive. A $10 gift card means an hour’s pay to reps who make $9/hour; it insults rainmakers who know they pocket $25-$40/hour. Sales performance management wants to balance the size of the reward and the potential earnings. So, communicate any small rewards as a piece of a larger picture.
4. Inadequate Recognition
You can hold rewards in your hand, but you take recognition to heart. Effective sales contests only work consistently, productively, and profitably it they work in a culture of promotion. Tossing awards at sales contest participants or slipping them into paycheck envelops wastes resources, time, and purpose. Reps have a systemic need for praise and glory. Applause and recognition carry more weight than cash or gift certificates. Your sales performance management metrics require need to know your players and their needs.
For example, motives, interests, and talents are individual. But, you can respond in kind to feedback from Boomers, Generation X and Y, Millennials, and every sub-group represented. Study the individuals and the groups and enlist their help in identifying just what sales compensation plans drive them. Makes sure that applause, reputation, and street cred are part of the deal.
5. Misspent Money
Sales performance management spends and misspends monstrous amounts of money on compensation plans – misdirected in purpose and strategy. Advertising, media, and sales compensation are distinctive lines of pursuit, cost, and metrics. Each line deserves its own strategic planning, budget, accountability, and outcomes.
6. Mismanaged performance
Sales commissions are neither entitlement nor reward; they are earned pay. Commissioned sales people know that the more revenue they bring in, the more money you make. If you cap the commission during sales30 competitions, sales reps are sharp enough to manage their own performance short of your personal goals. Your sales performance management duty is to drive employees to excel – not to coast.
Effective stuff contests and strategic sales compensation plans are not taught in business schools. Managing effective contests takes study, strategy, and organization. It is not a solitary project and succeeds in response to your willingness and ability to take ownership. Leadership is accountability, experienced, and ability to identify, assess, and rectify.
Sales performance management related links:
- 2013 Strategic Compensation Survey Report by Deloitte Consulting
- Three Tips to Design a Compensation Plan How to set commissions that motivate your team by Suzanne Paling, Entrepreneour
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