Sales Motivation: It’s Not Just About Pay
By: Thomas Baumgartner, Homayoun Hatami and Jon Vander Ark, authors of SALES GROWTH: Five Proven Strategies from the World’s Sales Leaders (Wiley, 2011)
There is more to sales motivation than money.
A company must get compensation right, but many sales executives told us that this is no longer enough to drive lasting sales performance.
As a head of sales at a financial advisory firm said, “Compensation might produce a short-term boost, but it won’t sustainably improve sales; you have to tap into something deeper.”
Identify Meaningful Goals
For his financial advisors, that deeper source of motivation is helping clients achieve their financial goals, he said. So, when advisors aren’t reaching their full potential, managers sit down with them and talk about how they can do better for the clients.
“We go through the metrics to see where they need to make improvements to reach their aspirations,” he added. “Together, we identify the things that will address the problems, including e-learning, training, coaching, tools, help from others, new products, and so on.”
Engaging Star Performers
Feedback and coaching help salespeople tap into their inner desire to learn, develop, and advance. Non-monetary incentives tap into other desires, such as the wish for recognition.
Another telecommunications company told us that it motivates and inspires its star sales performers not by paying them more -- they already make plenty -- but rather by inviting them to share their lessons from the road with the entire sales organization.
As part of its annual sales convention, the company asks these top sales people to give a plenary speech and to facilitate breakouts for colleagues. Such visibility seems to inspire the stars to return to the podium next year -- they become the best coaches and the best motivation for others to learn winning behavior.
Go Beyond Costly Recognition
Recognition awards can be costly and elaborate -- induction into the “President’s Club” and a trip to an expensive resort, or an upgrade of the company car. Or they can be quite simple: a call from the CEO for winning a big account or a one-on-one meeting with a top manager during a field visit.
An Indian call center operator we interviewed has weekly “Call of Fame” sessions. Over employee breakfast meetings, sales managers play back the best outbound sales calls of the week, and the lucky sales agents get a special plaque to hang in their cubicles.
Some companies use fancier job titles to recognize outstanding sales performance. Title inflation can be a powerful source of motivation in emerging markets (in particular in India and China), given the competitive market for sales talent and the value placed on hierarchy and status.
In general, non-monetary rewards such as titles are especially effective because they allow high performers to show off their status to their peers, who in turn want to join that elite group.
These types of rewards are not just about training or motivating salespeople to overachieve. They can also be a good investment for companies.
A number of studies have found that non-cash rewards can have three times the return on investment of cash awards, provided they are designed and delivered appropriately.
They can be particularly powerful in countries in which labor regulations do not allow sufficiently variable cash compensation for the sales force.
When the head of sales of an IT services company in a European country realized how limited his options for variable pay were, he came up with a new idea. He set up a team-based competition, dubbed The Champions League, whose winners would attend the UEFA Champions League football games along with board members. Tickets to these exclusive games were expensive, but he found that the overall boost in morale and performance in his teams was well worth the investment.
Reprinted by permission of the publisher, John Wiley & Sons, Inc., from SALES GROWTH: Five Proven Strategies from the World’s Sales Leaders by Thomas Baumgartner, Homayoun Hatami, and Jon Vander Ark. Copyright (c) 2012 by McKinsey & Company. All rights reserved.
Thomas Baumgartner is a partner in McKinsey & Company's Vienna office. He co-leads McKinsey's work on sales and channels globally. Baumgartner advises clients in industries including high-tech, electronics, transportation, basic materials, telecommunications, and consumer goods -- where he helps them outline and drive large-scale, top-line growth programs.
Homayoun Hatami is a partner in McKinsey & Company's Paris office. He co-leads McKinsey's work on sales growth. He has a broad range of experience working with high-tech and telecommunications clients in Europe, the United States, and Asia.
Jon Vander Ark is a partner in McKinsey & Company's Detroit office. He co-leads McKinsey's work on sales growth. He has deep expertise in sales and channel management across industries including travel, automotive, industrial, and consumer durables..