As a front-line salesperson, sales leader, sales operations executive, company president and CEO, Howard Woolf has spent his career achieving sales success in the technology and communications industries. We recently had the opportunity to catch up with Howard to discuss his thoughts on effective sales incentive programs. Below is an excerpt of our conversation with Howard on
www.salescompinsights.com.
MM: Howard, from your perspective, how important is the incentive program in the toolkit of a sales leader?
HW: The incentive program, if done right, is the fundamental way a sales manager 'communicates' to the salespeople in a way that is sure to get their attention. Over time it consistently reinforces the mission and method for the organization, along with each individual's role within it. Further, the sales plan sets the stage for both direction and behavior, but also builds organizational 'confidence' which is the key building block for overall success within any sales force. Unfortunately, when done incorrectly, it has the reverse effect - so it's important to get the incentive plan right.
MM: Are there any guiding principles you’ve used to help with your incentive plan decisions?
HW: Yes, the first is simplicity. I use the traffic light example. If a salesperson leaves a customer after getting an order and while stopped at a traffic light, s/he can't figure out what they earned on that sale, then the plan is too complicated.
Many companies think more is better and they load up the sales incentive plan with corporate 'good to do' things and complex measurements. Unfortunately all that does is diffuse the message, often making it hard for a salesperson to be successful even when they are doing the right thing and actually performing well. In fact you might end up rewarding the wrong people for doing the wrong things, which further destroys morale and can negatively impact performance. So less is more!
MM: What are the characteristics of the best plans you’ve seen versus ones that didn’t work so well?
HW: Beyond being simple, a good plan has to fit within a 360 degree mapping that deals with; 1) goal setting based on each individual assignment (I prefer bottom up with top down tuning); 2) measurements that can readily be made and reported; and 3) communication that ensures understanding, buy-in and proper execution of the desired behaviors. Often, automation is involved so that aspect needs to fit with the three key elements as well. IT should be an 'enabler' of the plan and not get in the way of a good plan, which admittedly, can be difficult.
MM: Having observed the design process from various vantage points, what insights on the do’s or don’ts can you share?
HW: Sales is a key function for the company and unfortunately there can be a lot of people within the company who think they are a sales measurement expert. They'll suggest all kinds of bells and whistles to the plan - this is usually how complexity creeps in. Finance, HR, IT and even Manufacturing and Marketing are looking for a link between the sales plan and their functional goals.
It is important that the fundamentals of what Sales Management wants to prioritize, communicate and reinforce to the sales people be the pre-eminent definition of the plan. Keeping it simple, measurable and communicable against the goals of the sales manager should not get lost into the many diverse elements of running the company.
The role of all other functions (Finance, HR, Mfg, Product Management, etc.) is to line up behind the sales manager to help him/her execute to this target without trying to take over the plan for their own needs. Or load it down with elements that diffuse the message and limit the potential impact. The Sales manager should be able to take a step back and say “if the sales people on this plan do well, then the company will have done well against its key goals and the sales force will have played their role in making that happen.”
MM: What expectations should a company have relative to communicating the plan?
HW: Typically, the new plan provides a great rationale to pull all of the sales team together and communicate the new goals for the year, the company plan to support those goals and how the plan will work. Usually, this is a good opportunity for workshops with senior management, functional leaders such as product management and local sales management to interact with the salespeople and relate the company deliverables, as well as help line up the background for the plan execution.
However, for plan success, there needs to be a very specific and conscientious communication strategy that starts with the kickoff but gets reinforced throughout the year. Ongoing communication and reporting on individual and group performance is key to using the plan to reinforce the best behaviour, build morale and enthusiasm, and make any mid-course corrections that might be necessary. Communication deliverables need to be 'tight and right' – written in an easy to understand fashion with crisp detail and include a personal view with clear focus on the measurement and reporting process (along with examples) that will be followed. The plan administration should have built into its process how it will launch, sustain and communicate the necessary information and ongoing reporting.
