If you've done this before, you know how expensive this is for the company in addition to an already expensive sales team.
Today, I want to suggest to you the idea of customizing your incentive plans based on your people. In your organization, there are three types of salespeople: hares, oxen, and snails.
Hares are the highest performing salespeople. They have a high internal drive, but they will likely not over-achieve if a ceiling is imposed.
Oxen are your core team who drive the needle the most with the right incentives. Unfortunately, they typically get ignored the most.
Snails, on the other hand, need a lot of prodding and pulling. They need carrots as well as sticks to achieve new goals.
Here are some suggestions on how to motivate each type of salesperson to get the best performance and the biggest bang for your bonus bucks.
Use Pace-Setting Bonuses
Snails, the bottom performers in a sales force, are motivated by bonuses that are quarterly over yearly. Quarterly payouts keep the benefit within reach and give them something short-term to strive for.
Some case studies have found that removing quarterly bonuses in place of annual bonuses decreased the performance of all three types of salespeople, but it had the greatest negative impact on the snail groups.
Pay More Attention To Your Core
Oxen are the most neglected type of salespeople, yet they are most likely to push the company forward. They make up the most extensive section of your sales force.
One way to motivate an ox is to set multi-tier targets. Although this tactic doesn't work to encourage snails or hares, this can be a useful method to keep oxen striving to surpass targets in bullish and bearish months. A triple-tier structure, for example, will act as a pathway to guide oxen higher above the curve.
Offer Custom Prizes
Ideally, you want hares and oxen to each be motivated with the potential prizes. Because hares usually win the top awards, oxen will consider those out of reach. It can be challenging to create a prize structure that appeals to both types of salespeople but not impossible.
Offer non-monetary gifts for lower level prizes that are either equal to or better than the top level prizes in some way. For example, it should offer at least one thing of value that the higher tier prize does not such as a family benefit. It that way, it doesn't appear as a downgraded version of the top tier prizes which will hinder the ox's motivation.
Add New Sales Talent
If you're struggling to motivate snails, continuously adding new sales talent is a natural pressure to keep them performing. Having "bench players" is a great way to remind people that eager people are waiting to take their place.
One study found that this method increased the performance of snails by 5% compared to teams without bench players. From a long-term perspective, the benefits of increased revenue will outweigh the cost of new sales talent.
Don't Use Sales Caps
Sales caps may help control costs, but they hurt revenues by demotivating your top performers. Hares are high achievers who push themselves and are motivated by big rewards. Having a commission cap is a great way to ensure your salespeople never sell beyond it.
If you currently have a commission cap, removing it will be an instant boost to your revenue.
Going forward, instead of a blanket approach, consider tailoring your incentive structure based on each type of salesperson. Create your plans on using real evidence rather than assumptions, and you can get significant increases on your return on the investment.
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