Sales quotas and commission payments drive self-centered behaviors and this is why there has always been the embedded distrust of sales people. Lots of vendors are now waking up and moving towards buyer aligned measurements and rewards...and not before time.
Lets cut to the chase: sales quotas and commissions are completely at odds with customer success, and if you are one of those businesses that proudly exclaims that you are “customer centric” whilst continuing to measure and reward your sales performance primarily around revenue attainment, then you are being totally disingenuous, and your business is now at risk.
Seriously, revenue quotas and commission payments have always driven sales people to be anything but customer centric. These old models have always been misaligned with the buyer and have created those quota-smashing lone wolfs and rainmakers that proudly treat the buyer as some sort of adversary whom must be conquered in order to win. Business should never be a game of win/lose, because we all know that horrible feeling of post purchase dissonance (regret) when we (as a buyer) feels like we have been exploited or misled by a sales person whom has over promised and then under-delivered. If one side of a business transaction is, by definition, the losing side then it’s only a matter of time before the ‘winning side’ becomes a loser also, especially now with the amplification of negative chatter that we now see when businesses fail to deliver (think United Airlines). Can your business afford to take that risk in 2017 and beyond?
Vested interests cannot co-exist with customer success:
Put simply, sales quotas drive self-centred behaviors and this is why there has always been the embedded distrust of sales people. Buyers consistently tell me that they avoid engaging with a biased sales people whom they know is driven by a commission because they simply cannot fully trust the recommendation of a supplier that has a vested interest in recommending a particular product? No surprise there.
My own career history is littered with what is now embarrassing examples of vendor businesses that have focused their sales teams SOLELY on maximizing short-term revenue attainment – paying scant regard to buyers’ interests. James Muir described it best when he said that the selfish sales people often wreak of ‘commission breath’, and as buyers we can all smell it when a sales person is focused on their own interests.
These outdated business models mistakenly assume that there is infinite number of potential customers that exist for vendors to sell to, and it doesn’t really matter if they burn a few along the way. They also mistakenly assume that sales people are motivated only by financial rewards to produce good work. Check out what Daniel Pink has to say about how dangerous that assumption can be:
Vendors that behave in these old ways are stuck focussing on their own short term revenue attainment when they should be focussing on Lifetime Customer Value (LCV), and that’s very dangerous now when the buyer demands to be taken on a long-term journey. Worse still, this old approach invariably creates a toxic dog-eat-dog culture inside the vendors own business which always destroys value.
Do sales people really need a commission to do good work?
Other departments don't get paid commissions….do they work any less than sales people? Do marketing personnel, product managers, pre-sales engineers, and bid management people all perform at a substandard level? Do any of these non-quota-carrying people require a commission to deliver good work? If you put aside the evolution of sales, then you now have to ask why is it that sales people are the only people on the planet that need to be paid a large slice of the transactional margin in order to be motivated to perform to produce positive outcomes? And then you have to ask yourself: are the outcomes “positive” for both sides or just one?
Most sales people get paid a large base salary these days, so let’s just imagine a world where the sales person simply works as part of a larger customer success team – where marketing, pre-sales, product management and customer success people all collaborate as one combined customer-facing team where the only objective is to ensure a ‘delightful’ customer experience – pre and post-sale. In this new model, cross functional collaboration inside the vendor organisations is now actually possible because everyone is aligned. Wouldn’t that be nice?
But sales people still need KPI’s – so what should they be?
You don’t have to be overly imaginative to identify more some appropriate KPIs and measurements for sales people in order to drive the right behaviours. Customer success outcomes, retention rates, loyalty and buyer advocacy is what will make your vendor business sustainable so it follows that if we must shift the mindset, culture and KPI’s to those KPI’s that create real buyer alignment. I’m not suggesting that this is an easy shift to make but it’s absolutely a necessary shift. The trick here is convincing senior management that they just might need to be a patient, and trust in the notion that a short-term change in focus will create the right culture and results in the medium-long term.
“The more important it is to meet your numbers the more important it is to stop concentrating on your numbers and start concentrating on the client’s numbers” (Mahan Khalsa)
The bar is now being raised by businesses like HubSpot, Salesforce, AWS and a big shout out to Australian based HR Tech Start Up - Culture Amp - whom now place the buying experience (pre & post-sale) at the absolute forefront of everything that they do. There are no commissions or quotas for sales people at Culture Amp and the “results have been astounding”. Similarly, I just helped one of my clients hire a new sales person on a comp package that contained zero commission, but instead will reward that person with equity on performance metrics around customer satisfaction and retention rates. The sales person was delighted with this new approach because she knows (like everyone else) that having an equity stake in the company that you work for creates true alignment of interests - so why do so few vendors still think that the only way to attract and retain good sales people is with the promise of big commissions?
Herein lies the big danger for the laggards: the savvy vendors like Culture Amp are creating such an amazing buying experience that the bar is now being raised very high around buyer expectations. How will your outdated sales process be compared with the truly delightful buyer aligned experience that is now being executed by the likes of HubSpot and Culture Amp?
I have seen so much "waste" over the years with these old models, and so much bad behavior that is promoted when we measure and reward sales folks the wrong way - it's that old "folly of rewarding Behavior A, but expecting Behavior B". My honest opinion is that vendor leaders will eventually be forced to dispense with all revenue focused objectives (quotas) as the key metric for running a sales function, because it's always been counter-productive to what is now the aim for all businesses - 'a delightful CX that converts to loyalty, repeat business (at low cost-to-serve) and the ultimate outcome of all – CUSTOMER ADVOCACY - where customers become your greatest ever (unpaid) sales force.
So, change the reward systems and you’ll change the behaviors and create a much needed alignment with your buyer. As David Meerman Scott said so eloquently, “you sell more when you stop selling”, and when vendors shift their mindset, culture and measurements away from 1990, and actually start helping the buyer get the right result then they have a chance of getting to that ultimate objective - the win-win. Does anyone actually think that a Millennial/GenZ sales person will ever want to work as a lone-wolf or rainmaker? Times are changing fast, and in an era where the role of the sales person is now being eroded, we sales folks will be in no position to argue – the halcyon days are over!
"You can avoid reality, but you cannot avoid the consequences of avoiding reality". (Ayn Rand)
Key take away: no buyer cares about YOUR quota or YOUR commissions (and they never did).....or how hard or easy it is for your employer to generate profits. With the innovative vendors (like Culture Amp) already moving down this path, you are now being left behind if you continue with revenue quotas and commissions. The time has now come for these anachronisms of the past to be replaced with a truly buyer-aligned approach that fosters a long term relationship, and that all important win-win.
by Graham Hawkins