Six Ways Companies Promote Sales Failure

(First published January, 2008)

It’s a new year! There’s a new sales quota and new ways to stub your toe making the number. If you’re like me, you’d rather avoid the pain and learn from someone else’s difficult experience. So, pull up a chair while I share the latest 2007 Sales winners of the We-Have-Met-The-Enemy-And-It-Is-Us Awards.

#1. Create commission incentives that reward the wrong results.

This winner comes from a software company that used a declining commission reward for increased revenue levels. Here’s the schedule from the company plan:

Up to $60 K revenue = 6% commission
$60 K to $100 K = 4% commission
$100 K + = 3% commission

I know. You’ve already done the math, and realize that a $50K deal will net a salesperson $200 more than if he sells a $70K deal. I can hear a salesperson saying to a customer “You want to spend $70,000, but Christmas is coming up—can you make it $50,000 so I can buy my kids a Wii?” When I asked the company’s VP of Sales about this possible absurdity, she remarked “Our view is that ‘it takes a village’ to close larger-sized deals. We pay less commission to reflect that.” Translation: A CXO at her company doesn’t want salespeople driving a later model Lexus than he does.

Solution: Champion the salesperson’s Lexus if meeting quarterly revenue objectives is part of your business strategy. Whatever your strategy, build your sales incentives around achieving it.

#2. Provide no-value “special offers” for prospective clients
This company broke sales rapport by offering purchase incentives that were plainly hollow. The company compounded their misery by insisting their sales force push the incentive to every prospect each month—even though the monthly deadlines were asynchronous with the customer’s buying pattern. Customers resisted, and the more astute salespeople covertly abandoned the promotion. The company committed what author Tony Parinello calls a “reload.” Shoot yourself in the foot, reload, then shoot yourself in the other foot.

Solution: Listen to your customer and to your sales force. If customers aren’t buying the promotion, there’s a reason for it.

#3. Measure and manage unproductive sales activities.
Holding steadfast to the simplistic view that sales is a “numbers game,” this company rated salespeople on how many prospecting calls they made and how many software demonstrations they provided to prospects. Since efficiency wasn’t part of the measurement, it’s worth pausing a moment to think about what behavior they encouraged—and got—from their sales team. It’s called indiscriminate prospecting. Jennifer’s numbers looked great because she averaged 70 calls a day last month. Steve was a bum because he averaged 38. Steve’s revenue is 3% lower. But who is working smarter?

Solution: Measure and manage efficiency. Ask yourself whether you want to reward more activity, or better activity.

#4. Maintain a long, agonizing “exit strategy” for under-performing salespeople
Under the guise of a “Performance Improvement Plan,” this company mandated underperforming sales people hold monthly meetings with a manager so they could receive instruction on how to improve. What’s absent from the process? For one, mining any value from the salesperson’s point of view. The “Plan” held no requirement for the manager to gain and report on insight regarding the difficulties the salesperson was experiencing. And there was a lot of it—the company churned almost 30% of its sales force every year. When I asked a sales manager if any sales person ever became productive after being on “Plan,” the answer was, “Well . . . no.” The duration of the documented “Plan” was four months.

Solution: If your company has no resources to elevate the performance of the bottom of your sales staff, make the exit short and sweet. Also, remember that you can learn as much from your underperformers as they can learn from you. Ask yourself “what was missed in the hiring process? Did we provide the right sales support? How can we avoid making this mistake again.”

#5. Disconnect your new account capture team from your installed account team
This company took “silo” to a new dysfunctional height because management felt that New Account reps would become “complacent” if they received an annuity for renewals. When a software subscriber failed to renew, the account was considered “lapsed,” which meant that after four months, it reverted to a “new account” status for sales credit purposes. You’ve probably already figured it out—this company’s new account sales team craved “lapsed” accounts, because they were easier to sell to than cold call leads. In fact, New Accounts regularly monitored subscriber activity for such upcoming “low hanging sales fruit.” You can be sure that no New Account salesperson ever called Inside Sales to share information.

Solution: Complacency is a risk for any employee, so share the wealth. Encourage your sales force to sell to valuable customers, not just to many customers. When salespeople can reap rewards for establishing long-term relationships, they will seek better prospects, and support them better, as well.

#6 Build rapport-breaking statements into your sales scripts.
This company found a way make alienation scalable. When asked for a reference, telemarketers were scripted to advise the prospect that they were obligated to protect their client’s time and they couldn’t provide reference information. Most of those calls went to the “not interested” branch on the process flow chart. “I’m sorry, my other line is ringing. In any case, please don’t call back.”

Solution: Take your sales scripts on a trial run before you distribute them to your national sales team. Bring your best nay-sayers into the conference room and write everything that could go wrong on the white board. Most important, ask yourself “how will our communication be perceived?”