How to Effectively Incentivize Your Sales Team
Henry Ford once said, “Nothing happens until someone sells something.” Without sales, businesses flounder. Sales is an integral part of most organizations; it directly impacts cash flow, provides insight into market fit, and lays the groundwork for customer retention.
Sales teams are often on the front lines for their businesses, serving essentially as the face of their companies. That’s why US companies spend up to $800 billion each year on sales compensations, more than three times what they spend on advertising. Yet, sales folks are more burnt out than ever after selling through a pandemic, the Great Resignation, and the shift to hybrid work, they've been pushed far beyond their usual capacity.
Metrics prove that incentivizing sales teams boosts your bottom line. A Vantage Point Performance study found that businesses with effectively-managed sales pipelines grow revenue 15% faster than businesses without them. With the right incentives, businesses can keep their pipelines full. Without those incentives, organizations’ unmotivated sales teams will suffer poor performance and decreased growth.
Incentivizing an organization’s sales force is a crucial step to success. Unfortunately, the current incentive system is broken.
The prevailing sales motivation structure is flawed
The average sales team turnover is 35% a year, far exceeding the average employee turnover rate. Exiting team members carry direct and indirect costs, like taking clients with them when leaving, and new hires often take more than three months to fully ramp up. Sales roles can be exhausting, and a poorly-run sales team can have far-reaching consequences for an entire organization.
A key reason for the failure of sales team is a lack of motivation. There’s no replacement for the incentives provided by salaries, commissions, and goals, but those only go so far. In fact, relying solely on an “if-then” motivation system can paradoxically harm performance.
Many popular sales incentive structures can encourage the wrong kind of behavior by focusing solely on quotas or short-term gains. These structures keep salespeople from helping each other and can alienate individual employees, leading teams to be, at best, unmotivated and underperforming, and toxic at worst.
Sales teams need the right kind of motivation to align themselves with company goals and successfully sell. However, research suggests that rewards alone secure only temporary success. When it comes to securing lasting change in attitudes, behavior, and employee retention, teams need something more.
There’s a huge opportunity to improve sales team performance and reduce turnover.
The solution is to connect sales to purpose
Compared to their average counterparts, top sales performers all have one thing in common: a sense of purpose. Successful sales teams focus on the purpose of the product or service they sell, their role, and the impact they have on customers. According to Lisa Earle McLeod, salespeople who truly wanted to make a difference for customers consistently outsold their colleagues who focused solely on reaching sales goals and quotas.
When asked about what millennials want from an employer, 76% of younger Americans indicated that working for a company with a clear and impactful mission was most important. Having a fulfilling work life is a top priority. According to Imperative’s Steve Woods, work is no longer the means to an end, and intrinsic motivators are more powerful today than ever before.
How can you foster a sense of purpose for your sales team? Here are four actionable steps:
1. Focus on successful long-term relationships
“You don’t close a sale, you open a relationship if you want to build a long-term, successful enterprise.”
Most customers would rather engage with salespeople who have their best interests at heart, who look for ways to help instead of focusing on quotas. Jim Stengel, author of Grow, found that businesses focused on improving people’s lives outperform the market and grow three times faster than peers.
Developing fruitful relationships helps salespeople feel a sense of purpose as a contributor to their clients’ continued success. When their client wins, they win.
How can you inspire your team to focus on the long-term customer relationship? Reward behaviors that benefit clients like holding regular feedback sessions to share and learn from customer experiences. Think about creating a playbook that emphasizes relationship-building activities. Celebrating both new contracts and renewals with the broader team.
You’ll more easily gain the trust of clients, build purpose, and even save costs – acquiring new customers can cost around five times more than keeping existing ones.
2. Hire the right people, and onboard communally
"Great vision without great people is irrelevant."
It can take new sales folks a full nine months to be competent and another 6 months after that for them to be top performers. The direct and indirect costs of hiring are high, so it’s important to get it right the first time.
Authors Frank Cespedes and Daniel Weinfurter offer three areas of focus to begin the sales hiring and onboarding process that can help instill purpose early on. Taken from their HBR feature, The Best Ways to Hire Salespeople. These are:
Focus on the behaviors.
Evaluate your current screening tools and processes. It’s import to observe an applicant’s behaviors, using simulations or even hiring for temporary roles where potential hires can be observed before offering them a full-time position. At the very least, consider multiple interviews from different team members in a different settings. Do these behaviors fit with your team’s common purpose?
Be clear about what you mean by relevant “experience.”
Double and triple-check experience: Follow up with past employers and references. Assess any necessary technical knowledge through assignments or tests if necessary. New employees should be prepared to carry out their responsibilities so that they can sooner focus on the most meaningful aspects of their role.
Conduct ongoing talent assessments.
Continuing professional development opportunities are important to most employees. After the hire, reevaluate the salesperson’s skills, knowledge and ability and provide the necessary training for improvement.
The hiring and onboarding stage is the perfect time to educate new team members on core values, incentivizing purpose-driven behavior through recognizing achievements, both big and small, that line up with those values. This is also an opportunity for existing team members to help new team members in their first few milestones.
3. Go beyond the commission
“Motivation will almost always beat mere talent.”
–Norman Ralph Augustine
Commissions and bonuses are important sales incentives, but giving purpose-focused recognition and rewards can be more personal, memorable, and successful.
Sales teams are already winning deals and booking calls – surfacing this kind of activity consistently in a public forum can solidify purpose, improve communication, and reinforce transparency. In a Close.IO article, Steli Efti explains that the best way to protect sales reps from burning out is to pay close attention to them by celebrating wins and empowering top salespeople to mentor and support their peers.
Also consider recognizing smaller wins that benefit the whole team, sharing lessons learned instead of keeping knowledge siloed. This can be especially motivating for teams with long sales cycles who rely on shared sales assets like case studies, scripts, and message templates.
Meaningful and creative rewards that go beyond cash, even ones that are either low or no cost, can also help employees feel like their work is more meaningful and appreciated. Think about rewards that employees will use often, ones that will be constant reminders of accomplishment and positivity. For example, winning a gadget or piece of clothing used every day will remind an employee of their past success and lend purpose to their continued activities to repeat that success.
Want to try something new? Experiment with unique rewards for the whole team to work toward. To amplify the motivating effect of rewards, you can provide a wide range of reward options and give visibility to the interesting rewards people are choosing.
Consider using an employee recognition and rewards platform like Bonusly to facilitate meaningful motivation within your own team.
4. Encourage team-oriented rather than individual competition
“If you want to go fast, go alone. If you want to go far, go together.”
Competition for sales teams is a highly motivating factor that helps give purpose, and it’s important to channel it into something productive and collaborative so team members aren't isolating themselves or their diverse perspectives.
Fortunately, productive competition can take many forms.
For example, giving the whole team (or smaller teams) a target to aim for together can be more productive than having individuals compete against each other. Give rewards that entire teams can benefit from. Having a team work together toward a goal can bring individuals closer and foster collaboration between sales and other departments.
Purpose doesn't always have to be about the business goals. Another way to foster healthy, team-oriented competition is to run wellness challenges. Encouraging a healthy level of fitness, nutrition, and sleep among teams can be fun. More importantly, it can also improve well-being and productivity, keeping employees motivated to do their best at work.
For sales teams who find meaning through competition, creating an environment of healthy competition that challenges them every day can be extremely beneficial.
Committing to a purpose-driven sales team
Sales is a critical aspect of any organization, but these teams face challenges that require more than financial compensation to overcome. In Daniel H. Pink’s book, Drive, he found that the idea of being successful is often a better motivator than getting paid. To feel truly successful, sales teams need a strong sense of purpose.
To build a high-performing sales team, all incentives and goals should contribute to the team’s purpose. Goal-setting sessions should be team efforts, with the organization’s leadership guiding the team in their endeavors. Developing successful sales teams requires showing them how their efforts impact the success of the organization and its stakeholders.
For more inspiration when it comes to improving employee engagement across your organization, check out this resource: