by Donald P. St. Clair, Ph.D., Master Pneumatic, firstname.lastname@example.org
While companies and managers devote massive resources to sales force controlling, monitoring and compensating, sales leaders continue to be puzzled over how to motivate their sales personnel to drive desired outcomes. The economics and shifting contexts related to motivating B2B salespeople are staggering. U.S. companies spend more than $900 Billion each year on B2B sales force compensation, representing the single largest marketing expense.
Customers are better informed than ever and expect salespeople to be consultants – which is consistent with recent research findings that incentives distract from the creative problem-solving required for such consultative sales roles. Yet, extrinsic rewards continued to be pushed leading to suboptimal outcomes.
While salespeople face an array of obstacles in meeting customer and organization needs – and as the center of gravity shifts in buyer-seller relationships – it is imperative that sales leaders reexamine how motivation affects sales performance. A recent review on sales force drivers reveals U.S. spending on sales force incentives – traditionally utilized as the primary sales motivator – exceeded $200 billion in 2010. Certainty concerning how best to use sales force drivers remains elusive, with nearly 80 percent of U.S. companies making significant changes to their sales force programs every two years or less. In fact, a recent survey of over 700 firms revealed that 20% found that their compensation plans moved the sales needle, 12% had no idea if the plan was working and less than 9% were able to link their plans to improved selling behaviors. That’s simply a massive amount of wasted resources!
Yet, countless researchers and sales managers propose that monetary rewards are the primary motivators of sales efforts. Perhaps not surprisingly, many U.S. corporations employ programs to motivate employees by linking compensation to one or more aspects of performance. Meanwhile, some companies have abandoned such sales incentives, favoring salary compensation plans while citing the detrimental effects of such short-term economic incentives on the long-term relationship-building goals of the sales organizations.
Here are two key findings about how to really motivate salespeople, based on decades of successful sales leadership and scholarship relevant to successful sales forces in business markets:
Finding #1: Take money off the table.
In addition to my decades of B2B sales and sales management experience, my study and many others have found P4P plans, and carrot-and-stick approaches led to decreased well-being levels and diminish feelings of autonomy and intrinsic motivation. In fact, new research strongly supports intrinsic motivation drives improved performance with younger generations (Generation X & Millennials) and since millennials have become the largest generation in the labor force and account for over 1/3. While I agree simple selling tasks (transactional) require incentivizing, selling in today’s B2B world requires creative and conceptual skills. In this transformational B2B sales domain, incentives hinder performance and are the competitor of exploration. Sales managers should pay salespeople generously and equitably and do their best to ensure money is a non-issue. Please do not mistake this as an indictment on all extrinsic rewards. I have found they can be effective if used appropriately and are not linked directly to performance. In fact, aligning contests, compensation packages, and incentives can be a worthwhile endeavor.
Finding #2: Promote purpose.
Rather than tweaking your sales compensation plan, yet again, focus on how to promote purpose. The first step to recovery is admitting you have a problem. This addiction to incentives is challenging and stifles innovation and the cross-pollination of ideas. After all, we are indoctrinated into this “if/then” thinking – like children. We bribe our children with rewards stating “if” they make their bed and mow the lawn (or other countless chores), ‘then” they will reap a reward. In doing so, we are attempting to control them. If you believe you need to pay salespeople more money to do their job or that, by paying them more, they will perform better over the long term, you – simply misunderstanding intrinsic motivation – are unknowingly creating unsustainable compensation models.
Salespeople are intrinsically motivated by the challenging work and by the ability to improve their customers’ lives. In his book, Creativity: Flow and the Psychology of Discovery and Invention, psychologist Mihaly Csikszentmihalyi coined the concept of the “flow state.” My study uncovered intrinsic motivation (doing an activity because they find it interesting and derive natural satisfaction from it) to be rooted in creative behavior that is often characterized by a “flow state” where a person’s skills are fully engaged in overcoming a challenge that is just about manageable, so it functions as an attractor for learning and developing new skills to tackle even more challenging problems.
Specifically, “flow” is defined as a state in which a person is a temporary psychological merger with the activity, which produces positive feelings such as enjoyment and enthusiasm. In practical terms, this research revealed salespeople felt a sense of wholeness when they were allowed to do what they do best – help improve customers’ lives.
Salespeople are seeking genuine relationships where there is no longer an “us” or “them” but rather a “we” (collaborative relationships) – we are all people seeking connection, a sense of belongingness. Sales managers need to transition their thinking into paradigms without incentives or sales goals and encourage salespeople to self-actualize – to grow vertically to a new stage of consciousness. In this new world of B2B sales, sales managers need to decouple sales performance models derived from the share of the customer’s wallet to ones that foster the higher-order development of its sales force.
In their book Why We Do What We Do: Understanding Self-Motivation, authors Deci and Flaste suggest the question sales managers should be asking is, “How can people create the conditions within which others will motivate themselves?” The ineffectiveness of incentives highlighted above strongly suggests that sales managers need to shift resources and energy toward models that align better with what matters to salespeople – improving customers’ lives! Sales managers need to create systems that feed purpose and promote self-actualization rather than try to drive change through control mechanisms.
Managers should recognize that different types and levels of the motivational mix (intrinsic and extrinsic) are unique to the employee along with contextual factors. There is no “one size fits all” approach to motivation and what works today might not work tomorrow. That said, metrics should evolve from frequency and quantity of sales calls to quality of relationships, customer retention rates, customer satisfaction, and other longer horizon metrics. If sales managers are willing to shed orthodoxy and reshape their motivational mental models to fit the new world of sales, they can take full advantage of what the new world has to offer.
Donald P. St. Clair, Ph.D. is a sales manager at Master Pneumatic in Sterling Heights, MI. He can be reached at email@example.com