Today's guest blog post was written by Dan Welch, Vice President Enterprise Sales at Xactly. When I was in High School, my history teacher was also my wrestling coach. He would often remark that he believed that history revealed that a common thread in human motivation is the pursuit of freedom. The trick in wrestling he would go on, only half humorously, is to inflict such pain that people choose to be pinned (or defeated). I believe he was on to something. Throughout history humans have sought to control their own environment. They sought out safe areas to sleep or prepare food. They fashioned weapons to defend these areas, and learned to control fire to stay warm. Later, they innovated to develop new means of farming and hunting to feed themselves, and designed better locks and weapons to provide for their safety. Finally, they made alliances, some more fleeting than others, formed to provide for greater or more rapid accumulation of means to defend, feed, or comfort oneself. When alliances cease to benefit a member sufficiently they move onwards most often to an environment that they perceive will have a greater chance of greater control(1). In today’s world, this may reflect what country one chooses to live in. More commonly the need for control is reflected in what career and company an individual chooses to work for. If one opted to work for Microsoft in 1982, had the ability to scale with the organization, and made the right choices, they would most likely be a multi-millionaire today. This person formed an alliance with an organization, likely formed other alliances within that organization to make a sale, design software, or manage a new marketing message, that led to the success of the alliance and therefore met the needs of the individual. In fact, it is possible that the individual's needs were so effectively met that they earned enough wealth to have the current ultimate form of control over one’s environment–wealth. In the modern corporate environment the persona most often found to desire autonomy is the sales persona. In most corporate settings there are large numbers of people in and around Sales who earn far more than their collaboration-friendly rule-compliant counterparts in Finance, Engineering, Marketing, etc. Sales personas pursue and attain the greatest amount of individual control available to most employees. The ability to choose what one works on, where one travels, what strategy is employed, how hard to work today, and so on. Frequently there are multiple sales people that earn more compensation than the first line corporate executives so they are also pursuing the greatest amount of control in relation to effort expended. So here we have a control seeking, collaboration adverse sales person in a modern complex sales environment. Against their basic nature we expect them to follow instructions, submit to control, partner with others inside and outside the company, and use our strategic sales methodology. How do we achieve victory over one’s basic nature? We incent them to choose to be defeated. But unlike wrestling…everybody wins. My wrestling coach was a genius. I recently had the opportunity to work with a large corporation employing 6,500 sales people and sales managers. In their experience no amount of command and control process would result in meaningful behavioral change. There are just too many people to try to strictly control. What if you could help those 6,500 sales resources learn that “what helps the company helps me?” What if you could provide them an increased amount of control such that they self-manage? This of course is the answer but almost every trend in the modern world is reducing that feeling of control. For example, in 1980 I was asked to travel to the United Kingdom to negotiate an agreement. It was not easy to make calls back to the United States then, there were no fax machines or cell phones, email was not in common use, and even my ATM card would not work in UK cash machines. Still, I was entrusted to negotiate the agreement in its entirety and return to the home office the conquering hero. Fast forward to the year 2000 and I was negotiating an agreement in Melbourne, Australia and my CEO was instant messaging me during the whole negotiation making suggestions, over-turning my ideas, and essentially operating me like a puppet on a string. Admittedly this was a large complex deal and I appreciated the help but certainly did not feel that same level of control I had in the UK twenty years earlier. Tight command and control is not scalable and it does not attract, retain, and motivate sales representatives who have the personality attributes needed to innovate and excel. This theory X sort of style is hardly in vogue while companies are suggesting Holacracy (2) as their preferred management model. In these cost conscious times many companies are de-layering middle management so the need for correct autonomous behavior of employees is greater than ever. What is needed is education, communication, and transparency of information that is up-to-date and on-demand. The representatives know what to do because they are aware of corporate goals, current policies, how to counter common objections, how to quote, etc.
Three Areas Where Sales Representatives Require More Control
1. On-Boarding In the late 1970s I started a new job, which offered me a 12-month training program before becoming a full quota-bearing representative. In addition, a portion of this training was ten weeks of classroom training at the company headquarters. The investment in education of the sales representative was enormous. They offered detailed training on the product, sales benefits, and an ROI model with tests every Friday. Don’t pass the test? No problem! Here’s your severance check. We wore blue suits, white shirts, wingtips and red ties. Free lunch and chair massage Wednesdays— not so much. No one can afford this kind of investment in employees today and remain competitive. In truth it was not even that effective then. Five weeks of continuous training is like watering your grass with a fire hose. Too much, too fast, and it may even do some harm. When training was complete much was forgotten and there was little recurring training to hone skills or keep up with new feature benefits and fresh objections. The further you were away from the home office the more out of the loop you were. Human Resource departments have employed Learning Management Systems with some success for years but they are better suited to static compliance training and central administration. Sales departments that use best practices need to make it easier to use on-boarding software under control of the sales enablement team that allows for frequent changes and updates, collaboration, and provides on demand availability. Sales representatives want to take the training at their pace, and revisit “on demand” even many months or years into employment. Some companies use cloud drives to store such training materials but this denies sales management visibility into who has completed the required training for required roles. 2. Coaching Even Tom Brady has Bill Belichick as a coach. It’s not like Bill is going to walk out on the field and start playing. Bill is a separate set of eyes and offers years of experience. Tom has some level of autonomy but can also communicate with the sideline and in a pinch call time out and discuss it. It’s hard to argue with the success of their relationship. What if there were ten quarterbacks though? Tom would not get the time or attention needed to succeed. Even if he called timeout the coach might be otherwise engaged. The game would slow down, mistakes would be made, and no one would be happy. Now consider if there were 50 quarterbacks and pressure to have fewer coaches? I have used internal and external sales coaches with success over the years but scaling this on a human level is not consistent or affordable. Best practice companies are migrating to coaching frameworks that provide automated reusable coaching based on opportunity attributes. Consider sales coaching tools like Xactly Inspire™ or DealMaker from Altify. Dealmaker enables users to populate attributes on organization charts, which results in specific coaching advice for each prospect individual on the chart. Such systems can be augmented with workflow to flag managers to review and comment if needed. Other tools like Xactly Inspire allow managers to quickly and easily record new content, even from a cell phone, and make it available in a nimble fashion, and track adoption. 3. Training to sell while their buying Sales representatives should understand in the moment what the best response to a sales objection is. “Phoning a friend” for a decision slows the rate of progress in a sale, and frustrates both the employee and the prospect. In addition trade off decisions are often required to move ahead which multiplies the permission loop. Time kills sales. A Wharton MBA is not required to understand that Net 60 is worse than Net 30. A sales persona should be empowered, in the moment, to trade Net 60 for a press release, or lower pricing for longer subscription terms. Best practice sales organizations often employ “Playbooks” or “Coaching Software” that educate sales representatives about how to counter an objection. The best of these also include severity ratings per objections so that severe items will get escalated, and trivial ones can be negotiated. In this example a concession score could be tabulated in the CRM/SFA tool which if elevated may generate a warning message before concessions are communicated, or be routed to management for further review in severe cases. The coaching advice in such tools or policies often includes a first then second fallback position and finally who to approach for exception approvals. This can work well for the company minded sales representative but there is a deeper need here. Why can’t “what’s good for the company” also be “good for the sales representative?” Sales management should ideally be self-governing if you can design the compensation plan effectively. Self-governing seems like you have control, which keeps morale elevated, decisions flowing, and produces scalable growth. Skinners Box? Spreadsheets? It’s not that simple I’ve read many articles over the years discussing the concept of Operant Conditioning (3) relative to compensation. You may recognize this as “press the green button get a food pellet” – “press the red button get an electric shock”. The problem with this relative to compensation is of course it all depends. Consider paying no commission for non-standard payment terms. Simple enough right?
- It’s the last day of the quarter and your company is one deal away?
- It’s a $5,000,000.00 order?
- A board member works for that prospect and the CEO wants it closed?
- The prospect is willing to do a case study?
These items are of course situational and multivariate. Besides, if behavior modification is your goal punishment is not shown to be effective in the long run. What if you work for a company that sells hundreds of products in multiple markets under various terms and conditions? It can be very difficult to design and communicate a compensation plans that employ so many measurements. In fact it is counter productive. Somewhere in the organization is someone who can make these trade-off decisions and it is the mission of the compensation team to understand the trade-offs, abstract them in some way, communicate them to the sales team, empower the sales team to make decisions in near real time, periodically measure the results, compare them to the industry at large, optimize, and repeat. The challenge to remain competitive and nimble in today’s environment is why the Incentive Compensation Management (ICM) market has reached a tipping point. Most companies realize that the challenge cannot possibly be met with spreadsheets. Companies like Xactly Corporation, and other major players, offer sophisticated means to automate the design and calculation of compensation plans, and motivating the sales team by making timely and transparent results data immediately available. In addition complex business intelligence analytics are available to senior management at the touch of a button; because rather than having data lost in spreadsheets or home grown data warehouses, modern cloud based applications benefit from having years of data available for trend analysis. Now what if you could take the vision two steps further?
- With cloud-based applications the opportunity exists to anonomize data and produce crowd based emperical data to compare your company’s results with the market at large, companies in your geograpaphy, or your size, or in your industry. What better way to measure the efficiency of your compensation plans and further optimize? As a cloud-based applications company from its very start only Xactly, is capable of providing this service to its customers.
- Market leading Incentive Compensation Management (ICM) tools enable what used to be strictly annual compensation plans to be nimbly revised to respond to changing market conditions. Sub-annual product launches, ever more frequent mergers, and changing strategic priorities all demand the capability to communicate plan changes, SPIFS, etc. on a quarterly if not monthly basis. To return to Skinner, true behavior shaping can be achieved by reinforcing behavior only as it moves closer and closer to the desired behavior (raising the bar in effect). This should be the essence of effective plan design.
In summary, compensation professionals adopting ICM tools are more able than ever to empower and educate sales, give guidance to management, and compare the effectivness of the plans they design to the market at large. They can accomplish all of this while enabling scalability, improved “quality of sales”, and improved morale (and retention) by delagating --- Control. References:
- Destruction and Creation By John R. Boyd 3 September 1976
- Holacracy: The New Management System for a Rapidly Changing World Hardcover – June 2, 2015
by Brian J. Robertson