Keeping it Simple – Sales Incentives
Have you ever run a contest where a salesperson hit a big bonus or qualified for a trip by gaming the system? If you’re in Sales or Marketing management, it’s almost inevitable. It’s unfortunate, and it’s frustrating, and you’ll vow to never let that happen again. But the fear of repeating it can often lead to overcomplicated contests.
It’s easy to get carried away – cramming every possible metric into the payout tables, adding kickers, and carving out exceptions. Here’s the problem. If a sales professional needs a spreadsheet or an algorithm to figure out if they’re on track, the contest doesn’t work. They won’t even know what to focus on, or how to modify their behavior, to win the reward. So the sales team will just do their usual job, and hope that it qualifies them for the win.
Shoot for simplicity.
The goals should be based around one or two threshold numbers, so that at any time, the sales team knows what they have to do to win. And those thresholds should have a clear basis – a percentage increase over their actual sales in the prior year, or a portion of the overall sales target prorated based on the size of their territory. Numbers pulled from the air can suggest that the deck is stacked against certain individuals or regions, and can be demotivating. So make the goals Fair and Achievable.
Perhaps you want to increase the number of outbound phonecalls, meetings with new prospects, or proposals generated. If the aim of the contest is to drive new behaviors, then focus on one or two easy-to-count metrics. But beware – as soon as it becomes a matrix of actions, events and artithmetic, you’ve lost them.
If you do find that the rules are complex, and it’s out of your control to simplify them, the next best thing is good communication. Provide frequently updated leaderboards, clear reporting that highlights progress, and tip sheets with examples of the type of actions required to hit the goal. Look at how your team communicates – would a (private) Twitter feed help them? A microsite? Text message updates? An Instagram hashtag or Pinterest board? Find out how they want to interact with the contest, then drive communications through those channels.
When is Simple Too Simple?
I’ll admit, it can get too simple. One of the first contests I was asked to sign off one was extremely complicated – variable goals based on totals from different product lines, with varying multipliers on certain SKUs. Aiming for simple, we stripped it down to the bare elements – the two salespeople who beat their numbers from last year by the most units, would win a trip to the factory in Japan.
Oops! We forgot to set a minimum… and the worst-performing team member won (since he didn’t have much of a total to beat). There was some discussion about how we could disqualify the underperforming winner, but the ethical call was to honor the terms of the contest – and then we found a reason to send the third-place player to Japan on another trip.
To avoid these kind of mistakes, I’d recommend running the rules by one of your trusted, experienced sales reps. They can generally sniff out a loophole or an unintended consequence of the rules. And don’t forget to ask them if this contest would work for them – simple to understand, with a big enough reward.
I’d love to hear more about your experiences with sales contests that “went wrong.” Leave a comment, or shoot me an email.