“All of America trusts us with their bugs, but we can’t get the right message through to our sales force,” the chief marketing and sales officer of a national pest control company recently mused. As an executive, he had cut his marketing teeth at many big consumer products companies. At his current company, he had worked for several years to improve sales productivity and had recently reached the level labeled “sales incentives” where he was charged with motivating the sales force. But there was a problem.
“For a long time we assumed we had a good sales incentive program. But we got all out of balance with profit and growth. We were rewarding for great profit margin, but poor growth,” he says.
President’s Club was a perfect example. Each year the company invites the top ten percent of sales people to President’s Club. It is part reward – usually a trip is involved – and part recognition as peers and upper management get a chance to congratulate the top performers.
But last year at President’s Club amid the festivities, he had already begun to play with measurement, and it wasn’t adding up. He looked at their branch level data and at the reps who were ranked at the top of the list. “What did we get from our top branches in the company? A lot of revenue, but zero growth.”
“So the sales managers are running around wearing the fancy camel jackets that they just earned being the best branches, and they didn’t grow a single customer,” he says. “As a matter of fact, they actually had a net loss of customers because of intense competition. The only reason we kept our margins intact was the company had a pricing action, which was led by upper management and had no involvement from the branch level. They had lot of revenue at a high margin, but the bottom line was they had not grown the business.
“It was then we realized we had a real incentive alignment problem.”
Once this executive turned on the lights – in this case through measurement – the company could see the bugs in their sales compensation program begin to scatter. By aligning the goals of the company – growing new customers – with the incentives for their sales team, the company could drive performance toward its goals.
He is one of the enlightened ones – a business leader who understands the connection between incentive pay and business goals and the power an effective incentive program can have. But too many senior executives worry about the cost without seeing the incredible return on their investment, if their strategic input is included.
How should the C-level get involved with sales compensation?
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