Carrying Buckets
Once a company expands its portfolio to 2 or more products, a question arises: Should sales (and SEs) be specifically incentivized to sell all of them. And, if so, how?
You run into ethical issues if you have competing products (such as stocks in a brokerage or mortgages for a loan broker) that encourage sales to put themselves ahead of the customer. We’ll assume your company has a portfolio of mostly complementary products and simply want reps evenly focused on all or other specific products.
Incenting SEs
Ways in which I have seen this done—both directly and indirectly—include:
- Directing specific incentives for sales reps – SEs typically have to, or should, follow the reps lead with a customer
- Quota buckets – Having separate quotas for each product
- SPIFFs – a bonus for specific sale or activity
- MBO – a bonus typically not tied to specific quota attainment
While these are usually monetary based they could also be tied to awards or rewards such as club attendance.
Trouble Spots
Here are a few things to avoid when leveraging the options above.
- Not inclusive – Only incenting reps has two problems. 1) it creates a dividing line between reps and SEs, and 2) it can create animosity when SEs are doing a lot of the specific work to drive the desired behavior and are not seeing any of the direct reward.
- No alignment – Don’t have competing objectives. The simplest way to ensure rep/SE alignment are to have comprehensive programs meaning both take part in the same programs rather than creating separate ones. I’ve seen misalignment more often than one might think.
- Not immediate – Year long programs don’t yield the results and focus that quarterly programs do. You need long-term programs to maintain momentum and continuity, but always try to attach quarterly milestones. This way the SEs receive immediate reward and the positive reinforcement.
- Not realistic – This is especially important for shorter-term programs. If your average sales cycle is 9 months for a product you’re promoting, don’t set the 1st quarter SPIFF on revenue goals of the product. The SPIFF money will only go to those that already have the sale in their pipeline. It also negatively incentivizes sales teams to push the sales cycle which may be poor for customer relations.
- Too complex – The bigger the product portfolio the more temptation exists to build in qualifiers and rules to address every situation and product. Keep the programs extremely simple and make the purpose behind clause easy to understand and clearly mapped back to corporate strategy. People are very willing to accept these decisions as long as they understand the reasoning behind them.
Finally, make sure all details are well communicated and understood as early in the term as possible. Poorly defined compensation plans are one of the biggest morale killers in a sales/SE force I have seen.
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Filed under: Compensation, Management, Sales
