A few weeks ago, I jumped into the compensation discussion with a post about commissions.  My opinion is that heavily and solely incentivizing a sales professional for their selling results might not be the most effective compensation model.  There are aspects of the sales process that involve the expertise, support, and follow-through of others in bringing new business and retaining existing business.  Providing a large portion of the rewards to the sales professional for these results diminishes the significant and valued contributions of others in supporting these outcomes.

The purpose of this post is to offer a follow-up to the commission conversation.  And, provide a little more perspective into what is rapidly becoming the organizational and process trend for most businesses.

While there are still businesses where the sales person is solely responsible for finding, identifying, qualifying, positioning, closing and supporting a client, that model is likely the exception, not the rule.  In today’s business environment marketing, telemarketing, inside sales, account management, professional resources, etc. are all actively involved in the process of attracting, closing, retaining, and expanding client relationships.  Today’s sales professionals cannot and do not engage in the sales process alone.  They are completely dependent upon the support and expertise of others.  The compensation model and the organizational model is outdated, to the point of broken, if the sales person is viewed as solely or primarily responsible for growing or increasing revenues.

Clearly the sales process is touched and supported by many aspects of an organization.  Understanding the sales process, leveraging the necessary expertise at the ideal time in the process, and creating, implementing a strategy that positions the value of the team –knowledge, experience, commitment — in relationship to the client is where business opportunities turn into revenue.

Sales is not the simple, single act of one person simply selling, it is a comprehensive, organizational commitment to:

1. Relationship building: Connecting into existing at future client organizations at multiple, valued levels throughout the organization.

2. Leveraged expertise: Introducing subject matter experts to the clients, as needed, to fulfill needs, meet expectations, and solve problems.

3. Delivering solutions: Providing answers and solutions to the challenges presented and being proactively engaged in adding value and expertise to the relationship in an ongoing fashion.

4. Great customer experience: From the beginning of the sales process through to the maintenance of an ongoing relationship delivering a consistently positive and unified commitment to delighting and engaging the customer.

It is the effective management of both behavioral and strategic components that drives growth.   These components cannot and do not simply exist completely in the functional arena of the sales department.  These outcomes are dependent upon the coordinated cross-functional expertise and support of the entire organization.  The process of executing a selling strategy involves and requires the engagement of more than a sales team or an individual sales professional.

When defining the process and structure for your sales activities, one can look at the sales professional as the quarterback responsible for coordinating and directing a comprehensive, strategic team effort.  However, the sales person is not the only person involved in the process, the primary resource for success, or the person who deserves the most accolades for success in the growth process.

Sales is a team sport and the organizations that builds strong, collaborative, strategically organized teams committed to the growth initiative will win more often than those who work in their functional, old school silos.

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I have long been a passionate proponent of commission only sales programs (including draw against commissions).  While revisiting the wide ranging reality of the sales professionals’ role and interactions with their organizations as they produce and help grow the business, I have had a significant change of heart.

The notion that most sales professionals are solely responsible for their growth efforts is, in many cases, outdated and misapplied.  In most businesses, the salesperson now relies on a team of resources to assist them with the client acquisition and management.  That they act in concert with the commitment, support, and dependence of a team does not make them solely responsible for, or deserving of, a compensation system that rewards merely one aspect of their role — results.

This is not to say that all commission only or commission intensive compensation programs are inherently outdated.  I am merely articulating an altered philosophical and business perspective that recognizes that sales professionals are not the only people participating in the growth process.  Further, their role is often merely not dependent upon or limited solely to new business activities or results.  If that is the case in your sales model, exclusively or significantly rewarding them for bringing in new business is financially inappropriate.  Hence, your compensation model is likely giving undue credit or overemphasizing a desired behavior  or expected outcome.

Defining what the compensation model is for a sales professional in your organization, I would examine and understand the following first:

1. What the sales process is:  Map out the entire sales process from lead generation through qualification activities to proposal generation to strategic development and planning to close.

2. Who else gets involved:  Understanding those people that have become part of the process is a required informational piece.  Before you can reward anyone for the results of the organization, you need to know what their specific roles, accountabilities, contributions were in relationship to the sales process.

3. What the post-sales relationship looks like: After a prospect becomes a client how does the organization supports and nurtures that relationship.   Again, take a close look at roles and process to understand the responsibilities and contributions of the various individuals or groups are in association with that process.

4. Define the financial allocation for new business and retention: In other words, assign the variable compensation the organization is willing to allocate to the results associated with both growth and retention. This figure is usually derived from a component of the percentage of gross profits associated with growth and retention.

5. Create a financial model that provides incentives to everyone: I am a firm and passionate advocate for the highly interactive, engaged and empowered team.  Compensating a lone-wolf sales professional solely on production that is dependent upon others does not bring strategies and teams together — it divides them.  Offer performance-based, performance-related compensation models to the team and reward the team for their outcomes.  This puts the sales professional in a leadership role to manage strategy, process, and the internal/external relationships necessary to steadily grow revenues.

While some compensation models may be perfectly suited for a commission only program, I do not embrace the notion that one-style fits all in the ever-changing sales arena.  Before you start drawing up a compensation plan understand your process, know who plays a critical roles in your growth model, and reward your team for the successful contributions for both growth and retention.

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Far too many businesses are unnecessarily struggling with the notion that they have to convince customers to buy from them.  Besides not having enough prospects, the number one complaint is that their customers are taking too long to make decisions.  And, when they do, these decisions are predicated on price.

While it is true that clients have become more deliberate in their decision making process, their criteria is not price – it is value!  Does your product, your offering, your benefit, and your package offer the value to justify their investment?

Every one of your prospective clients makes an investment – not just price or cost – when they decide to do business with you.  Before they make that investment, they need to assess the risk associated with that investment.  Here are the five components of risk they assessing when going through the decision making process:

1. Replacement Risk:  Chances are quite likely you are replacing an incumbent supplier.  While they may not be receiving all the benefits you have to offer compared to their current provider, the risk of replacing you – an unknown supplier – is greater than keeping their current one.
2. Professional Risk: Although they may have a high degree of confidence in you, your company, and your offering, their decision to make a switch will come under severe scrutiny if your team screws it up.  In today’s economy, people are fearful of making high-risk decisions that could adversely affect their jobs.
3. Credibility Risk: Despite all the best efforts to convince someone that you have what they need, how trustworthy and reliable you and your organization are, there is still a risk.  If you are like most salespeople you have done a marvelous job of telling them all the great things they need to know about your value, your company, your service and your experience.  Do you think you are the only person shoveling that garbage?  Unless you have really built a strong relationship and established an incredible level of trust, your credibility will be scrutinized.
4. Productivity Risk: Making a change is much more complicated than simply making a decision and placing an order.  Change involves budget assessment, administrative processes and approvals, receiving and delivery adjustments, and end user training and awareness.  Whenever a new supplier is brought in, there are a lot of changes – some significant – that will occur in your client’s organization.  It is not always that easy to simply plug your product in and replace the other guy.  These changes can have and often do have a effect on the productivity of the team.  Like it or not, any effect on productivity is a cost and a risk to the organization.
5. Financial Risk: The most important consideration is the financial risk.  Companies look for products and services that make them money, save them money, improve a process, or fulfill a need.  These are the only decision making criteria for purchasing from a supplier.  With every one of these criteria comes a financial expectation of value and performance.  Until this risk can be assessed, quantified, and measured you are not getting the order.

Next time you think it is taking your client forever to make a decision remember this – there is a lot more going on in the decision making process than simply cost or price.  If you aren’t aware of or addressing these issues through an extended relationship development process – you will be spending a lot of time waiting for people to respond to your proposals.

It is not your client’s fault it is taking so long to make a decision – it’s yours.  You spent too little time earning the right to do business with them!

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A top salesperson is “someone who grows their business by growing the client’s business.” ~ Frank Lee, Sales Academy in Dallas.  What a refreshing thought.  Success is not measured by the increases in revenues the sales professional has provided the company; rather, it is measured by the value that the sales professional has delivered to the clients.

Sales is a very engaging and supportive profession.  It is one of the few professions where there is an opportunity to connect with people; discover and uncover the issues, challenges, wants, and needs they are working through; and, be a resource to help them discover the solutions to them.

The potential to offer value and be very successful in sales is not in finding people to buy your stuff; the path to success is becoming very effective at helping people discover the answers to their questions.  For being a valued professional resource makes you reliable, trustworthy, and credible.  It is that type of relationship that generates buzz, referrals, and access to more people who are looking for what you offer; and, what a top salesperson offers is access to solutions and results.

The learning model that facilitates a level of understanding so that you are able to help involves knowing in detail the answers to three questions:

1. What they want: Whether they are sharing this information with you or not, everyone is working toward something.  With this in mind, your clients and prospects have something that they want to happen in their business or their lives.  Helping identify and understand what that is will help prepare you to solve their “problems.”
2. Why they want it: Knowing what the “want” is, is not enough.  Now you need to know why this is so important to them and how important it really is.  Taking the time to discover and understand the motivation, the driver, or the issue behind the “want” provides you a better sense of perspective or context.
3. How they believe this can help them: People believe, sometimes incorrectly, what solving a problem or fixing an issue will do for them.  Besides understanding why they are working on solving a problem (why they want it), you need to understand their vision or expectation for the cure.  In other words, what does fixing this issue enable them to do or accomplish that they were not able to do before they fixed it.  Understanding this provides you the ultimate insight into the actions they are taking or would like to take as it relates to the original “want.”

Too many sales professionals get hung up with the perspective of “I know what they need.”  While they may be correct, you can only give them what they know they need or realize they need.  This information is best gathered and collected through a series of open-ended questions that uncovers their frustrations, goals, and challenges (the “want”) in conjunction with a clear perspective of the motivation, drivers, and expectations associated with delivering the “want.”  When you are able to consistently provide solutions that make your clients’ business better – you will be a very, very successful salesperson.

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Commission-driven salespeople who depend on quota fulfillment to keep their jobs on a revenue treadmill that increases its speed year to year will never be trusted advisors to clients. That won’t change until the basic ‘culture of engagement’ for sales forces changes. ~ Andrew Rudin

The two part series on sales professionalism received a great deal of welcomed and insightful commentary.  Thanks to those who engaged in the conversation and pointed out a couple of keys issues to some of my conclusions. 

The above quote was one of the more succinct comments.  In this quote, Andrew Ruden identifies the most critical contradiction in the sales profession — we incentivize sales people to make deals and the pressure to make deals increases constantly.  Until we change the system we can’ fix the problem.  Precisely!

Improving sales professionalism means changing the “sales engagement culture”.   Though it is not politically correct to stereotype people these days — we expect sales people to exhibit certain sales behaviors; often they don’t disappoint us.  Imagine an environment where the salesperson did behave completely differently — would we see them differently?  Probably not.  It is because we are permanently wired to view salespeople in historical context to a certain type of personality, behavior, habits, and style.  This merely reinforces the historical culture and perpetuates the notion that salespeople need to act and behave and engage in a certain way.  Not so! 

We can change, we have changed, and we can be trusted professionals provided you reward those of us who engage appropriately.  How many times have we told our children what we wish they would do, “just once”;  and, when they do it we barely acknowledge it.  Our children’s perception is that you didn’t even notice, it didn’t make a difference, so why should I do that again?  Same for our sales professionals.  Would we even be willing, able, or committed to acknowledge great sales behaviors when we see it?  I am not sure. 

The problem with the whole sales professionalism issue is, like Rudin says, cultural engagement.  Here are some of the bigger challenges and fixes:

1. Management: Leadership wants results.  They want their salespeople to generate leads, crank out proposals, and close deals.  That is their job.  Most sales training programs applied today focus on getting results through this process.  In today’s sales culture this is not how great, lasting, sustainable results are achieved; hence, it is not how sales professionals need to be trained.  However, most managers have not been in the sales arena for a long time, if ever, and are not in a position to take the “risk” of investing in training and developing a productive selling culture reflective of the shifts in buying and purchasing attitudes.   As a result, the same old is perpetuated and the cycle lives on.
2. Purchasing: The purchasing behaviors of organizations make the deal the only aspect of the relationship.  Submit RFQ’s and sell on specs developed and evaluated by people who would not know what a real solution looks like.  Instead of shifting to a process that rewards organizations who know how to identify and solve problems, who know how leverage internal and external resources to create business relationships, and who are incredible at customer experience and engagement, businesses have created a bureaucratic, numbers driven process that rewards dealmaking and then complains that its salespeople are simply order takers. Engage a team of professionals in the research and buying process and have them select solutions providers who demonstrate great relationship building, solutions oriented skills and abilities and experience.
3. Stereotyping: Quit looking at salespeople in historical context.  Choose the people you hire or do business with based on the skills and abilities you expect and desire, not the ones your historically have experienced.  To change the game, you have to change the rules. To change the rules, you have to create new rules and abide by them.  Don’t blame the sales profession for giving you what you simply expect from past experience – demand what you expect and reward those behaviors when they are delivered.

Changing the customer engagement is not easy.  However, facilitating the changes that need to be made require a revolutionary overhaul in attitudes, perceptions, processes, and recognition.  Until then, we will be and are on a hampster wheel of unprofessional behavior that will not change until the culture of engagement changes.  Change the game, change the rules, change the results and the see what happens.

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The loss of a customer is never a good outcome, especially in these competitive times.  Before anyone cons you into why that customer left, let me be the first to clarify one gigantic misconcpetion — your customer did not leave over price! 

A General Manager at one of my earliest employers used to goad salespeople claiming the reason they lost a certain account was “price.”  His response was, “Why is it that whenever we win an account it is the excellence of the salesperson and when we lose one it was because of price?”  While most sales professionals did not find any humor in his commentary, his philosophy was well placed and on point.

The final act of a customer departures may be the result of finding a better deal.  However, the reason they were looking in the first place was because they either did not feel valued as a customer or, they did not see the value in the product or service anymore.   Either way, their decision to leave had more to do with VALUE that anything else.  When they found a better deal, it was just that much easier to leave. 

Nothing is more important to the stability of your revenues than your existing customer.  Your best, long-term, loyal and valued customers are the foundation from which net revenue gains begin.  The churn of existing customers only results in an unstable revenue stream.   You, your sales team, your management team, and your organization have an obligation to nurture and value every customer relationships.  Treat your exisiting customers as good or better than you would your new customers.  And, always take time to demonstrate your appreciation and value for their relationship. 

Your customers likely did not buy from you on price in the first place; don’t let it be the excuse for them leaving you.  Educate your sales people and your organization on valuing all good business relationships all the time.  It will do wonders for your revenues!

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