Incentive Program FAQs

Author: 
Tim Houihan

A single-page article in print is rarely enough for me to the get the message across, so this online extra helps fill in the blanks. I hope it provides clarity in the case of feeling a little confused.

Q: What is a pre-mortem and why should I do it? I’ve already been to the dentist once this year.

A: Don’t worry – no drilling is involved. A pre-mortem is a way to analyze the program as if you’re already at the end of it. Use your experience from past programs to remind you what went well and what didn’t go as expected. For example, what caused pain points at the end of the program: reps changing territories mid-program, sales that were booked but not invoiced, clients who made verbal commitments but didn’t sign contracts, field sales managers that vouched for sales that didn’t get logged into the system on time, etc.? The pre-mortem helps you anticipate troubles that might come up in the  contest you’re planning, which reminds you to design around those things. Want to learn more? Read what Annie Duke, World Series of Poker master, has to say about pre-mortems.

Q: Why not use quota as a bar to require reps to pass before they’re eligible to earn in the incentive program?

A: In most organizations, close to 50% of the reps operate below quota. If you think those below-quota reps are not trying, or they’re not well-suited for the job, get rid of them. However, a large portion of near-quota reps are really trying, but they typically need more of two things: 1. Coaching. 2. Confidence. Give people who are near quota a chance to be winners. See Michael Ahearne, PhD’s research on Stars-Cores-Laggards.

Q: Why should I, as the sales manager, have a goal? Isn’t my objective to grow sales or meet the numbers handed down to me from senior leadership?

A: Of course, the sales manager’s job is to adopt the company’s mandated goals, but the reality is that sales managers don’t love their distributed-from-Mount-Olympus goals any more than reps do. With lower commitment to the goals come lower achievement. Why not set a goal that YOU believe in and that YOU are striving for? See Gary Latham, PhD’s work on goal setting.

Q: Why not stack rank my reps? It motivates the daylights out of them!

A: The lens you have as a sales manager of the stack-ranking report is fogged by the fact that you’re no longer a top-performing sales rep. You’re a sales manager. Certainly, ranking top reps revs up the very few who excel at their jobs to challenge each other and to strive for the top spot. Without a doubt, stack ranking top reps can deliver powerful motivation. However, if you have 50 reps under you, close to 30 of them may be good enough to stay on the payroll but they’re not superstars. But, they are your core team. Ranking them isn’t going to instantly motivate them to be No. 1 – they don’t have the skill, the territory or the experience to make that happen with the simple introduction of a stack-rank report. The bottom 10 reps – your laggards – need coaching, or they need an escort off the team. The embarrassment they experience by being at the bottom rank will only reinforce their feelings of inadequacy and this will either diminish their performance further, or it could drive them to find other jobs quicker. (Whether this is good or bad depends on the availability of talent in your markets.) Stack ranking is not the tool to accomplish weed out the poor performers – what you need to do is manage. See Michael Ahearne, PhD for managing Stars-Cores-Laggards.

Q: Why conduct a post-mortem? The baby is born…what’s the point?

A: Sure, the event is over. That doesn’t mean it’s done. The intuitions you already have are typically very good – so pay attention to your gut when evaluating the program’s success. Data collected during both the pilot and the program can illuminate aspects we don’t often see. For example, the contest just ended and the quarterly numbers were blown out of the water. The program is a winner. But on deeper investigation of the data, you see that only 10 percent of the team earned a reward and just two accounts contributed 85 percent of the incremental sales revenue. Was it still a success? How might that impact the way you design the next contest?

The point of this article is to challenge you to dig deeper into your desire to grow as a sales manager. Your career is important and your management of your teams is critical to your success. Part and parcel to that success is the deployment of effective sales incentives. You can amp up your game by considering new, alternative ways to get your reps motivated.