Six Ways Companies Promote Sales Failure

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Every day I learn about field-tested sales tactics. Some are innovative and effective. Others–well, I just have to ask “and how’s that working for you?” If you’re like me, and would rather avoid pain by learning from someone else’s difficult experience, pull up a chair while I share the latest 2007 Sales winners of the We-Have-Met-The-Enemy-And-It-Is-Us Awards.

#1. Create commission incentives that reward the wrong results.

This winner comes from a software company that used a declining commission reward for increased revenue levels. Here’s the schedule from the company plan:



Up to $60 K revenue = 6% commission
$60 K to $100 K = 4% commission
$100 K + = 3% commission

I know. You’ve already done the math, and realize that a $50K deal will net a salesperson $200 more than if he sells a $70K deal. I can hear a salesperson saying to a customer “I know you want to spend $70,000, but Christmas is coming up—can you make it $50,000 so I can buy my kids a Wii?” When I asked the company’s VP of Sales about this possible absurdity, she remarked “Our view is that ‘it takes a village’ to close larger-sized deals. We pay less commission to reflect that.” Translation: A CXO at her company doesn’t want salespeople driving a later model Lexus than he does.

Solution: If meeting quarterly revenue objectives is important to your business strategy, buy the salesperson a Lexus–and park if for him, if you have to! Whatever your strategy, build your sales incentives around achieving it.

#2. Provide no-value “special offers” for prospective clients
This company broke sales rapport by offering purchase incentives that were plainly hollow. The company compounded their misery by insisting their sales force push the incentive to every prospect each month—even though the monthly deadlines were asynchronous with the customer’s buying pattern. Customers resisted, and the more astute salespeople covertly abandoned the promotion. The company committed what author Tony Parinello calls a “reload.” Shoot yourself in the foot, reload, then shoot yourself in the other foot.

Solution: Listen to your customer and to your sales force. If customers aren’t buying the promotion, there’s a reason for it.

#3. Measure and manage unproductive sales activities.
Holding steadfast to the simplistic view that sales is a “numbers game,” this company rated salespeople on how many prospecting calls they made and how many software demonstrations they provided to prospects. Since efficiency wasn’t part of the measurement, it’s worth pausing a moment to think about what behavior they encouraged—and got—from their sales team: indiscriminate prospecting. Jennifer’s numbers looked great because she averaged 70 calls a day last month. Steve was a bum because he averaged 38. Steve’s revenue is 3% lower. But who is working smarter?



Solution: Measure and manage efficiency. Ask yourself whether you want to reward more activity, or better activity.

#4. Maintain a long, agonizing “exit strategy” for under-performing salespeople
Under the guise of a “Performance Improvement Plan,” this company mandated underperforming sales people hold monthly meetings with a manager so they could receive instruction on how to improve. What’s absent from the process? For one, mining value from the salesperson’s point of view. The “Plan” didn’t require a manager to collect or share insight regarding the difficulties the salesperson was experiencing. And there was a lot of it—the company churned almost 30% of its sales force every year. When I asked a sales manager if any sales person ever became productive after being on “Plan,” the answer was, “Well . . . no.” The duration of the documented “Plan” was four months.

Solution: If your company has no resources to elevate the performance of the bottom of your sales staff, make the exit short and sweet. Also, remember that you can learn as much from your underperformers as they can learn from you. Ask yourself “what was missed in the hiring process? Did we provide the right sales support? How can we avoid making similar mistakes again.”

#5. Disconnect your new account capture team from your installed account team
This company took “silo” to a new dysfunctional height because management felt that New Account reps would become “complacent” if they received an annuity for renewals. When a software subscriber failed to renew, the account was considered “lapsed,” which meant that after four months, it reverted to a “new account” status for sales credit purposes. You’ve probably already figured it out—this company’s new account sales team craved “lapsed” accounts, because they were easier to sell to than cold call leads. In fact, New Accounts regularly monitored subscriber activity for such upcoming “low hanging sales fruit.” You can be sure that no New Account salesperson ever called Inside Sales to share information.

Solution: Encourage your sales force to sell to valuable customers, not just to many customers. Employee complacency is a risk that’s not limited to salespeople. When salespeople can reap rewards for establishing long-term relationships, they will not only seek better prospects, they will support them better.

#6 Build rapport-breaking statements right into your sales scripts.
This company found a way make alienation scalable. When asked for a reference, telemarketers were scripted to advise a prospect that they were obligated to protect their client’s time and they couldn’t provide reference information. Most of those calls went to the “not interested” branch on the process flow chart. A typical prospect comment: “I’m sorry, my other line is ringing. In any case, please don’t call back.”



Solution: Take your sales scripts on a trial run before you distribute them to your national sales team. Bring your best nay-sayers into the conference room and write everything that could go wrong on the white board. Most important, ask yourself “how will our communication be perceived?”

3 COMMENTS

  1. Great blog, Andy! I think I’ve seen every one of these practices in my career, at one point or another.

    Your examples show that for whenever you promote one objective via a rewards scheme, you might get unintended consequences. Managers would be well advised to analyze the impact of too much focus on an incentive, which could harm customer relationships or profitability.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  2. Bob: Mis-measurement is part of the problem, as you’ve pointed out. The other issue is that many times companies lose sight of a strategic goal in favor of a short-term objective. Every We-have-met-the-enemy . . .” winner fell victim to that way of thinking. It’s easy for it to happen.

    Case in point: In #2 above, management pushed the sales force to sell a worthless promotion because they forgot what the promotion was to achieve in the first place. Had they not lost sight of that, the promotion would have been pulled, possibly for a more productive marketing activity. The question to ask is “Why did we undertake this initiative?” If the reasons are still valid, consider changing the tactics.

  3. #1 seems very unusual, I’ve seen a similar system lots of times but it usually works

    Up to $60k – 6%
    Sales between $60-$100k – 4%
    Sales over $100k – 3%

    So say you do $80k one month it would be:

    First $60k at 6% = $3.6k
    Next $20k at 4% = $800

    Total: $4.4k

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