April/May 2008
Motivational Masters
Ever wonder why your competitor’s top salesperson is so successful? We’ve got the goods on the best motivational tactics distributors use to psych up top performers, from trips and cash to days off and handling better accounts.
What’s the best way to motivate salespeople? It’s a tough question. And no matter who you ask, the answer is different. Some sales managers think money motivates best. Others insist trips are the key to top performance. Some think, ironically, that promotional products are useless motivational tools, given that promotional product sellers, accustomed to touching and selling products every day, are immune to their allure.
One thing they all agree on: Motivating sellers is crucial to significant growth. “Every dollar we put into rewarding salespeople comes back handsomely to grow this company,” says Gregg Emmer, vice president and chief marketing officer for Kaeser & Blair Inc. (asi/238600).
He’s right. If anything, the industry’s sales executives realize that motivating sellers requires developing specific incentives for each sales team – even for each individual seller – since not all sellers are motivated equally. Here are nine of the most effective motivational strategies in the industry.
1. Motivate non-sellers
With only two outside salespeople and herself to generate new business, Rose Stransky needs every sales opportunity she can get. For Stransky, president of Designables (asi/179522), that means motivating staff members who aren’t sellers. A little over a year ago, she decided to see if, by offering incentives to her office manager, she might squeeze out an extra deal or two each quarter.
Stransky continued to pay the staffer an hourly wage but said she would offer her a 15% commission on any piece of business that she brought to Designables. Stransky hoped the worker would think of Designables and potential clients in her personal time – at church, for example. The plan paid off, generating an additional $40,000 in business over the past year and a half on annual sales of $650,000. Stransky has since upped the commission to 30%. “The more she sells, the less I have to sell,” says Stransky, who could use extra time to focus on the company’s vision.
2. Use peer pressure
There’s nothing more motivating than having a colleague nag a seller for a sales prize. At least that’s the thinking behind the unusual motivational program in place at distributor Caliendo Savio Enterprises (asi/155807). It may sound unorthodox, but the incentive is effective, says Mark Ziskind, the company’s COO.
Sales incentives at the company often work like this: Every seller who makes his monthly numbers qualifies not only for his own incentive or commission structure, but also for awards for the customer service rep who works with him, receiving, most recently, a $50 gift card. “Every little bit helps, and it keep everybody’s eye on the ball,” says Ziskind, who says he often hears customer service reps “nagging” sellers around the office, asking if they’re going to hit their numbers for the month.
“This is about a business effort” with different departments working in tandem toward one goal of greater sales for the organization, Ziskind says. Such incentives have helped push the company over $36 million in yearly sales.
3. Try incremental commissions
“Most of my outside salespeople are independent reps … carrying multiple lines,” says Mike Owings, vice president of sales for A4 Moshay Inc. (asi/30121). “So I never get 100%” of their sales efforts. By the same token, Owings says, “it’s hard to motivate them other than financially.”
His 32 independent sellers also tend to target clients and prospects they know are a sure bet. But that isn’t always in A4’s best interests. To motivate sellers to target smaller accounts as well as large ones, the company has established a tiered commission structure that actually pays higher commission rates on smaller sales volume – a tactic that pushes business in new markets and with customers that are small now but whose business A4 could build into larger orders.
Orders up to $4,000 earn sellers an 8% commission. Those between $4,000 and $10,000 earn 7% commission. And for those over $10,000, there’s a 6% commission. It seems counterintuitive, but the results are what A4 is looking for. “Since our small accounts don’t get called on because they’re not worth it, we pay a bigger commission rate to smaller accounts,” Owings says. “The only way I can motivate reps is with cash.”
4. Use travel incentives
It takes a lot more than quick incentives to motivate sellers who are already selling more than $1 million a year in promotional products. Just ask Greg Muzzillo, founder and co-CEO of Proforma (asi/300094). People on that sales level, Proforma has decided, need special recognition. So the company created what it calls the Million Dollar Club, an exclusive group of producers who, because of how much they sell each year, qualify for special travel incentives.
In March, 100 sellers who qualified for the club this year by selling more than $1 million in merchandise were invited – along with their spouses and the company’s top suppliers – on a four-day, three-night trip to St. Thomas in the U.S. Virgin Islands. “It’s the networking experience of a lifetime,” Muzzillo says, as top earners mingle with other top sellers and some of the industry’s biggest suppliers. The club, he says, which includes an awards dinner and the distribution of Million Dollar Club jackets worn by members in the same way golfers who win the Masters golf tournament wear the green jacket, grows by 15% a year.
5. Pay instantly
“People work for two reasons,” Emmer says: For the satisfaction of it and money. With that in mind, Kaeser & Blair now rewards sellers more quickly by giving them bonuses on sales as soon as possible. The company used to pay sales commissions once a week. But as sales increased steadily, the company realized its administrative costs were rising, due to those weekly payments, since each check cost nearly $5 to produce.
To reduce those fees and inspire its sellers to produce more, the company decided to move to a direct deposit system – paying out commissions the day an order is sold. The initial change required a $3 million cash backing, Emmer says, to float the commissions until receivables were paid. But the effort paid for itself quickly, since the cost to transfer money was about 15 cents a transaction. “Even if we sent someone a transfer five nights a week, we’d have 75 cents for paying them that week,” Emmer says.
More importantly, since the company’s sellers are all independently owned dealers of Kaeser & Blair, they’re more inspired because they receive cash for their efforts instantly, Emmer says. Being so independent means they “possess a lot of self-motivation,” he says. Paying them immediately for their efforts is the key to keeping that motivation high.
6. Have reps run meetings
For years Conrad Franey, vice president of sales and marketing for Gateway CDI (asi/202515), would run his sales meetings himself. It made sense, after all, since he was the company’s sales manager. But then nine months ago, it occurred to Franey, “I wasn’t getting through to them,” he says. “I worked for lots of other sales managers when I was younger, and it dawned on me, I realized I hated being sat down, called into the office and having the sales manager talk at me.” Those formal sales meetings usually left Franey uninspired and feeling lectured to, he says. “I guess it was a lightbulb moment.”
From that point on, he decided his sellers would lead the meetings instead. Doing so would give them more of an active role and sense of ownership in running the company’s sales organization – and its bottom line. Now, each month, Franey assigns one seller a meeting date and the responsibility of coming up with a compelling topic and points of discussion for the meeting. Franey approves the topic 48 hours in advance and instructs the rep leading the meeting to send out an e-mail to the company’s other sellers. That way, the team knows “they better come prepared with something to talk about,” Franey says. “It’s great, because they forget that I’m there,” and conversations are much more lively and productive at the mandatory meetings held each Monday at 4 p.m.
Giving them a greater sense of ownership in the sales organization has paid off, Franey says, with revenue rising 40% last year. “We had a record year last year,” he says. “And we increased our margins.”
7. Offer flash incentives
Often unexpected incentives can be as inspiring as the big trip lurking at the end of a yearlong sales push. Stransky, of Designables, says the idea works well. To motivate her two outside sellers last February, she phoned them on a Monday and said, the first one to bring in a new order (whether it was a new client or not) worth $1,000 or more in business would receive a $20 gift card to QuickTrip, the gas station/convenience store chain. “Gas was expensive,” Stransky says, and February is typically a slow month for the company. Playing on her reps’ need to cover their expenses worked well, boosting business for that month.
8. Push them on quotas
To push his sellers a little more each year, Dennis Pottebaum, president and CEO of Quality Resource Group (asi/303015), inspires his team with incentive-backed quotas that nudge them beyond the previous year’s performance. The key, he says, is to make them “achievable with a little bit of a stretch.”
In this rewards point system, sellers can build points throughout the year in various three-month periods, depending on how much they sell, and exchange them for prizes. For example, reps who sell between 100% and 106% over last year’s quota get 100 points. Between 107% and 111% the reward is 200 points. Those selling 112% to 121% receive 500 points. In each quarterly contest five groups of prizes are doled out, with a 200-point minimum needed to receive any of the prizes, all the way up to 1,100 points or more for the top prizes, which vary, but might include, say, a $700 clothing allowance.
9. Put it on the peers
In February when top sellers from Capitol Sales Co. Inc. (asi/43785) went on a four-day reward trip to Cancun, they did so in part because of their top performance the year before. But they got there not just because they were recognized by higher-ups for their top performance, but also because their colleagues thought they should be there, says Curt Hayes, president and CEO. While sellers were selected based largely upon how much they exceeded growth goals, the company – in a bid to make selling a collective, team effort – asked employees to nominate sellers and non-salespeople as well. Approximately four out of the 25 salespeople and six of the 50 additional staff members attended because their peers thought they belonged there, Hayes says.
The ongoing program helps sellers and other staff get rewarded who might not have reached the highest percentages (a group that automatically qualifies for trips) but nonetheless deserve recognition for their efforts. The program, Hayes says, effectively rewards employees on various levels and not just top performers. “I’m a proponent of not having horse races,” Hayes says. In those types of contests, “top reps win and win,” causing other staff who perform well but not at the top to become demotivated.
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BETSY CUMMINGS is a senior writer for Wearables.
