Sales Motivation Schemes and Employee Turnover

Any organization that wants to conquer their market must rely on the quality of their products and their brand name to do so. Product development teams must work hard to design, produce, and enhance their products, and they cannot stop there. Once the product is launched they need to keep it updated, upgraded and competitive so it can continue to bring value to the customers, and revenue to the company.

However, it is not the job of the product development team to take the product to market. That is the job of the sales team, who are responsible for identifying the regions, companies, and people to sell the product to.

Sales Is A Complex Process

Selling is not a straightforward process. In order to succeed it needs:

  • Proven methodologies
  • A plan
  • Persistence and desire to succeed on the part of the sales team

The importance of an effective sales team cannot be overstated. The team is carefully formed and recruited by sales managers, who must make sure the members have the right skills and knowledge for the role.

From the start of their tenure with the company, a sales person has targets to meet, and those targets often increase as years go by. Even if they meet their quote for one sales cycle, they need to start over at the beginning of the next sales cycle.

A Loyal And Capable Sales Team Is Key To Company Success

Building a loyal and effective sales team is a challenge, and cannot be done overnight. For the team to bring the desired revenues, everyone in it must be aligned to the overall goals of the company, and the company’s agreed-upon approach to sales.

Getting a team to this point takes many hours of training and coaching. Larger companies invest vast amounts of money to:

  • Teach sales methodologies
  • Train salespeople on how to use the product suite
  • Learn about the competition
  • Make sure all team members understand company sales policies and procedures
  • Educate all team members about the main principles and values of the company

Turnover Is One Of The Biggest Worries For Sales Organizations

Something I frequently hear from my clients is that they are concerned about employee turnover. Turnover is a huge risk for organizaitons today, and I have personally worked with companies who were struggling with high turnover rates. Some organizations see staff leave almost as quickly as they join.

Many organizations do their best to decrease turnover by lowering targets, but that is not the most effective approach. Instead, it is better to examine the existing incentives plan and determine how it is contributing to high turnover rates.

The Consequences Of High Turnover Rates

There are several consequences of a high turnover rate. The most obvious one is that for every sales person who leaves, managers must find a replacement. It takes time and resources to find new employees.

Training and hiring are a big investment, and it is not fiscally sound to keep training new employees to get them up to speed with the rest of the team. Each new team member needs to understand:

  • The strategy of the firm
  • The products they are selling
  • The client base and its specific needs

It can take as long as a year for a new sales person to become truly familiar with the process, and be able to produce revenues at the same rate as existing team members. Clearly high turnover is to be avoided if at all possible.

How The Sales Incentives Scheme Relates To High Turnover

The sales motivation scheme serves two main purposes:

1. To keep the team motivated to meet and exceed their sales objectives.

2. To keep sales people happy and satisfied with their working environment and the potential opportunities they have. Happy sales people are more motivated and more productive, which is good news for any company.

If the sales scheme does not meet both of these criteria, it is unlikely to bring the desired results.

The Elements Of Sales Team Satisfaction

There are many elements that factor into sales people’s satisfaction. Two key elements, for example, are the amount a sales person can make if they meet their targets, and how much extra they can make if they exceed them. Knowing the potential financial reward is very motivating. On the other hand, it is very easy for the financial reward to become a demotivating factor. If sales people can only earn ten percent on top of their base salary, they will not be motivated to exceed their targets. If a company places a cap on earnings without thinking it through, it can be very demotivational. 

Companies must be careful with the financial elements of a sales scheme – just one ill thought out clause can be enough to demotivate the whole sales force. This is not to doom monger, but to make the reader aware of how important scheme design is to the success of the company.

Another vital element is clarity. Sales people need to understand where they should be focusing their effort, and which products and sales activities to prioritize. 

Adequate rewards for the effort put forward also matters. For example, if a sales person has to put in a lot of effort to work one-on-one with a client and guide their decision, it is only fair to compensate them accordingly.

A Strong Sales Scheme Equals A Strong Sales Team

A fault in the incentives system puts a company at higher risk of employee dissatisfaction. Unhappy employees are usually earger to find a better job, leaving the company to start over with finding and training a new team member.

A well thought out sales scheme that rewards effort and makes sales people feel that they have a fair chance to be compensated for their work helps keep the team happy, motivated, and loyal.

A sales motivation scheme has many moving parts, including earnings potential, sales crediting, quota allocation, and territory allocation. Getting them all in balance is a tricky task, but one that is worth it in terms of employee motivation and retention. If a company is struggling with high sales turnover, the sales scheme is a good place to start looking for the problem – and the solution.

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