By Mark Donnolo
Several years ago, I spent the day with Tony from Philly, riding along on his sales calls to various warehouses. I learned several things:
- In certain warehouses in Philly, managers keep revolvers behind their desks. In plain sight.
- Tony was much more enthusiastic about his upcoming “vay-cay” than his sales job.
- Tony was a lap-dog.
In Tony’s sales role, he didn’t actually do any selling. His day-to-day goals weren’t about growing customer revenue or volume – or even really hitting his quota. He was simply doing what he had been groomed to do over 20 years: operations with a sprinkling of customer relationship time.
His sales leaders were frustrated. “They’re not out hunting down new business. Why don’t they have the drive to get out and find some new volume?” the SVP of sales asked me.
But, according to his sales compensation plan, Tony was doing exactly what he was paid to do: he was measured on shipping volume (which changed little from year to year) and customer contact time. For Tony and most of the other reps, customer contact time included a brief conversation with the distribution manager, time in the warehouse measuring boxes, and time in the parking lot filling out the call report. Not exactly sales.
It was a classic example of a sales compensation program that didn’t drive behavior to achieve the actual sales goals. The truth of the matter was that, if the company’s strategy was to find new business, they had the wrong breed of dog.
Organizations change, as do sales strategies. Sales roles either evolve with the strategies or fail. Below is a list of five sales roles and the type of compensation plan that motivates each. (When describing sales roles and personalities, we prefer the canine model to the more common hunter/farmer metaphor.)
- Dobermans. Dobermans are always on the prowl for new opportunities. There are at least two types: the competitive Dobermans who are going after next big new account sale, and long-term business developer Dobermans. The Doberman is motivated by financial rewards and responds to significant pay at risk. But with that pay at risk comes substantial upside potential because a Doberman sees himself as a high performer. Many Dobermans will glance at their salary, focus on their target incentive, and base their lifestyle on the upside. In organizations with good sales compensation plans, it’s not uncommon for a Doberman to make more cash compensation in a given year than his boss or even the president of the company. If he sees his earnings as capped, he’ll probably be prospecting for his next job with an organization that will give him the earnings opportunity.
- Retrievers. Retrievers are bred as companions in the hunt. They are typically responsible for retaining the base of current customer revenue and – more importantly – for finding new growth within the current customer. The Retriever is typically motivated by money and will work diligently to hit her quota. With Retrievers, we don’t want to make the incentive out of balance and produce overly aggressive behavior. We want to weight the incentive to make it motivational enough to drive relationship management and development.
- Collies. Collies are the ultimate lap dogs and the customer’s best friend. Collies are great business retainers because of their depth of customer understanding and level of service. The downside of all this friendliness is that Collies often lack the perspective to see a new opportunity even if it passes before their noses. Sales compensation for a Collie typically focuses on retaining the business and growing it to a moderate degree. Collies will have a significant percentage of base pay with nominal pay at risk to promote long-term relationship development. The caution on compensating the Collie is to make sure incentives drive behavior and that an abundance of base pay does not diminish its hunger.
- Pointers. Pointers source new opportunities. A Pointer may be a new business developer or even an inside salesperson. Incentives for the Pointer are typically focused on creating opportunities in volume and quality. Depending upon the lead development cycle, incentives for the Pointer may be aggressive or conservative to promote the right behaviors.
- Service Dogs. The Service Dog works with Dobermans and Retrievers to provide depth on product applications or serve the needs of a specific industry that are beyond the capabilities of the general seller. Sales compensation for the service dog is driven by a combination of factors, including whether he holds a unique quota or plays an overlay role with other sales resources. The Service Dog’s incentive will be a significant portion of total compensation if he holds a unique quota, or a smaller portion of total compensation if he has an overlay role with a general rep to motivate him to perform without distracting him from the details of his work.
When trying to determine if your sales compensation plan really motivates your team, remember: One size does not fit all. Each sales role should have its own goals, performance measures, and compensation plan. Make sure your roles align with each major revenue growth source – whether you’re trying to find new business (Doberman) or grow an existing client (Retriever). Assess your current talent and decide if you need to develop your talent or source new talent. And finally, design a compensation plan that motivates each sales role to achieve its specific goals.
Mark Donnolo is managing partner of SalesGlobe and author of The Innovative Sale: Unleash Your Creativity for Better Customer Solutions and Extraordinary Results and What Your CEO Needs to Know About Sales Compensation.