Are Sales Incentives a Good Thing?


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Should you incentivise your sales staff?

It is widely known that if you want to drive sales you need to incentivise your staff.  Sales men are a mercenary lot and they only respond to cash.

Paying out large sales incentives is the default option.

Yet a few companies that don’t believe in individual incentives.  Instead, they offer a higher basic package and a bonus based on total company profits.

They argue that this approach works far better.

But sales incentives are a given, a management truth

How can you drive performance without them?  The logic behind the improved productivity goes like this:

1. Incentives are a threat

If your pay structure has a heavy incentive weighting then maintaining your standard of living is very stressful.  There are very few of us who work at our best when they are under threat. Remove the threat and performance improves.

2. People cheat

Anybody who has ever looked at individual targets will tell you a horror story (or two) about cheating to hit the target.

3. Business is a team sport

This is true for sales as well as anywhere else.  If you remove the individual incentive then your sales force are far more likely to collaborate with each other, sharing what they know, instead of keeping trade secrets to themselves.

4. Incentives are a management burden

Your management team can either spend their time chairing endless debates about who made which sale or coaching your sales force on how to make more sales.  Which is more valuable?

5. Many incentive schemes have a limit and that limit acts like a break

If a salesman has already hit his sales target for the quarter it is financially sensible for him to stop selling and sit tight until next quarter, not pick up the phone and talk to the next prospect.

6. Most customers don’t like being sold to

They would far rather develop a relationship, feel comfortable with a salesman and then make a purchase. Incentives lead to an almost combative culture, each new sale is a conquest.

7. Your sales department should represent your customers

Arguably, it is in the long-term interests of your organisation for your sales force to be the voice of your customer.  This is unlikely to happen if your sales force see their customers as a meal ticket.

The long game

In the short-term incentives work.  If you absolutely, positively, must drive revenue now, accept no substitute. But the long-term game is a very different thing.

You don’t have to take my word for it.  I’ve never run a sales force in my life, but are sales people really that different to anybody else?

Maybe it is worth a test.

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Saint Francis de Sales

Read another opinion

Image by paullew

Republished with author's permission from original post.

James Lawther
James Lawther is a middle-aged middle manager. To reach this highly elevated position he has worked for many organisations, from supermarkets to tax collectors and has had multiple roles from running a night shift to doing operational research. He gets upset by operations that don't work and mildly apoplectic about poor customer service.


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