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In this episode of the CPSA Recruitment and Talent podcast we'll discuss the importance of sales rewards and recognition in the enterprise.
We'll consider what truly motivates salespeople today in the enterprise; what metrics should be considered when setting up salary levels, comp plans and bonuses; 2-3 recommendations to ensure sales success and your top performers are retained; and recommended technologies and software platforms for rewards and recognition in the enterprise.
Our guest is Dave Johnston, President at Sales Resource Group Inc., an organization that helps companies improve their sales compensation and performance and motivate their salespeople effectively.
Listen to this episode of the CPSA Recruitment and Talent Podcast and discover:
* What truly motivates salespeople today in the enterprise.
* What metrics should be considered when setting up salary levels, comp plans and bonuses.
* Recommendations to ensure sales success and your top performers are retained.
* Recommended technologies and software platforms for rewards and recognition in the enterprise.
Want to hear more? Check out these bonus insights:
* Top tips for rewarding salespeople in the enterprise.
* What truly motivates salespeople today in business?
* What technologies and software platforms do you recommend for rewards and recognition in the enterprise?
Read the edited transcription:
Kevin: Dave, thank you so much for being on this CPSA Recruitment and Talent podcast. Before we dive into the rest of the show, why don't you tell us a little bit more about who you are and what you do today?
Dave: Thanks for having me, Kevin. I'm the president of Sales Resource Group. We're a consulting firm that has been designing sales compensation programs and specializing in sales force effectiveness for over 30 years. We are located in Canada, but we work globally. We look at how we can help sales organizations to improve their sales execution and deliver above average financial results.
Kevin: Excellent. As I always like to joke about, tongue in cheek, all that stuff, Dave, is way above my pay grade. Got it? All right. Listen, let's dive in a little bit deeper than that. What truly motivates salespeople today in the enterprise, and does it vary by industry, or whether or not you're a B2C or a B2B company?
Dave: Salespeople are always looking for opportunity. Today that opportunity is really most organizations are focusing it on growth, which includes both new business or new logos, as well as revenue retention. Every individual in every organization is a little bit different, though. What motivates one person may not motivate the other. Some people don't even need incentives to be motivated. Clearly, the right incentive plan does impact people's behavior. It focuses them on things that the company values and wants to pay them for, and it tells them where to put their effort and their time. From a B2B or a B2C standpoint, what we're seeing today is that most B2B organizations are focusing on relationship development, depth, trying to get more intimacy with the customer, but in a very different way. It used to be products and services and features and benefits. Now it's focused more on a consultative type of approach. Not just looking at what you have to offer them and whether or not you can bundle products, but it's looking at actually being more of a consultant or a resource to the customer to help them identify what their needs are using the expertise that you have in the industry. B2C, rather, on the other hand, is more about, today, about upselling or cross-selling. We're seeing a shift in B2C towards call centre and online sales, because I think buyer behaviour is changing. The millennials are not just our newest salespeople, they're also our buyers. They like to get their stuff online.
Kevin: A little bit more of that B2B. I know this has been my experience as well, especially selling to the mid-market and the enterprise level, that it is more of a team consultative approach, too. You may have a sales lead that is responsible, but there's other players in the sales arena. Maybe knowledge experts that you also bring in. It just depends on, again, what industry and what you're selling per se. I know in my experience on the software side, it is more of a team sport.
Dave: Definitely. I'm seeing, even in enterprise comp plans now, we're seeing individual measures, but also team measures that recognize and reward those support folks that are critical, whether it's somebody who's a proposal writer, that does a great job and helps you win more RFPs, right down to your highest technical support, in terms of people that are actually coming in to put the solution together.
Kevin: Let's talk about metrics a little bit, as it relates to putting together salary levels, comp plans and bonuses. What should be considered when putting all those plans together? Do you base it on the total revenue that they should be generating for the company? What are some of the best practices today?
Dave: Market competitiveness is very important today. Demographics are showing us there are fewer people going into sales, and they require, because of the ethnic mix of the population, it requires sometimes people with specialized skills to focus on certain markets. Making sure that your people, their total compensation is competitive in the market place is absolutely essential. Once a salesperson gets an offer, it's too late to come back and counter offer. I would say probably 80% - 90% of the time, counter offers don't work, because the expectation of the salesperson, in terms of their employment, has already changed. We are seeing a move not towards just revenue, but revenue with margins. We're seeing sort of matrix type incentive plans where it's a balance of optimizing the amount volume and revenue you can generate, but making sure it's within the margin requirements of the company so that they're making the kinds of profits that they need in order to reward stakeholders. Again, how you design the sales compensation program has a huge effect on your recruitment and the kind of talent that you acquire.
Kevin: Let's talk a little bit more about those recommendations, then. You've kind of just led into one. What are maybe one or two more that relate to ensuring sales success and that top performers are also retained, which I know, that can be a high churn in the sales arena. I know in the HR and recruiting technology space, that it tends to be a cycle with sales professionals from company to company. I see it all the time, because I've worked with many of these folks over the years too. Again, recommendations on how you should base that success on and try to ensure it. Also, what about other non-monetary incentives?
Dave: Number one, sales organizations are getting much more specific about the kind of roles. Clarity is absolutely essential to attract and retain good salespeople. Very often what we will see is that recruiters will oversell the position and the person is attracted. Once they get in there, they find that it isn't exactly the way it was portrayed to them. Salespeople aren't known for the greatest patience, so they're usually gone within a year. Making sure that there's clarity about what the expectations are in terms of delivering results and the nature of the role and who they'll be working with and the kind of support that they'll have. These things are all really important today, even more so than they were in the past, because I think people today, young salespeople especially coming into the field, if it's not something that motivates them, they don't stay long.
Secondly, for top performers, there's sort of a rule of thumb. You're taught 20% is always going to be your top 20%. These are good salespeople who understand the market. They know how to sell. They're always going to be near or at the top. Your bottom 20%, while they take up a lot of management time, it's not likely that they're going to get to the levels of performance that are going to keep their employment long term. It's the 60% in the middle that you can really influence, you can really move the needle with these folks. You can't have all top performers. You want good, solid salespeople who find it important to hit their numbers, they want to earn a good living, they support each other, they support management. These are folks that you need in there and you need to be able to identify the right kind of sales talent for that level. In order to retain the top salespeople, though, you need to increase the leverage in the reward system for them so that when they do perform and when they do overachieve, there's clear differentiation between top performers and average performers.
One of the biggest things that we hear all the time is, "You know what? I worked my tail off and I earned $5,000 or $10,000 more than somebody who's just putting time in." Top salespeople want to be paid relative to their peers in the industry. It's important when you're looking at market data, both from offers as well as compensation levels, you want to make sure that your top people are paid like top people in the industry. The last piece that you mentioned around recognition, we are seeing a return to President's Clubs for top performers, and recognizing the kinds of performance that is worthy of that kind of an expense. The variety, in terms of budgets, for these kinds of recognition programs, though, are quite wide. They range in budget from maybe $1,000 to $2,000 for pure recognition up to some organizations that will spend in the millions to send their top performing salespeople to some exotic resort. The thing you have to be careful, though, is as soon as we get hit with a recession, that's the first thing to go.
Kevin: It is. Yeah. You're absolutely right. Since we've come out of the last great recession, what I've noticed again in the industry, in the HR recruiting technology industry, is that those have come back, those President's Clubs, some with a vengeance, actually. I agree with you. They tend to go away immediately when things take a dive. The last thing I wanted to ask you, Dave, is just briefly, what are some of the technologies and software platforms you recommend for rewards and recognition in the enterprise today for sales individuals?
Dave: When I look at technology to support sales, Salesforce has become such a powerhouse and it's not by accident. It's a great platform. Xactly Corporation is an organization that I've seen and I've worked in projects where their software's been implemented, and it is outstanding. It has the ability to accurately track and calculate incentives so that salespeople have real time access to their performance and sales managers have the information they need to be able to coach and mentor. A lot of other platforms out there tend to be very high-priced, and I haven't seen the delivery out of that investment. If I had a choice, it's probably Xactly.
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