One of the first jobs I had when I went to work for IBM was managing the Western region’s sales force compensation, and I was surprised at how much sales people gamed the system. Sales people are incredibly focused on status and competitive metrics—at least the good ones are—and that is why companies put in place sales contests to get them off their butts, out of the office, and working on closing deals. The problem then (and now) is that, typically, your top performers get most of the awards. Usually, top performers aren’t the folks who have trouble staying motivated, which is why so many sales contests fail to meet management’s expectations. Another reason such contests fail is that management often doesn’t understand how incentives work. In reality, it is the recognition and status that can make a difference more than the money (this is based on theories by Maslow and Herzberg back in the 1960s, so it is hardly new).
So it was with some interest that I listened to a presentation on a product called FantasySalesTeam, which was founded by an ex-sales executive named Adam Hollander, who is now CEO for this new venture. The product had been credited with increasing sales performance at one of HP’s units, Lionbridge, All Over Media, and Go Daddy, and it provides a fascinating way to take folks who game sales compensation systems and use that tendency to drive more revenue.
The Motivation Problem
The problem with motivating sales people is multi-faceted. One of the big components is that most sales managers don’t understand the science behind motivating people. They know sales process and they know how to close deals. Otherwise, they wouldn’t be in management. They’ve likely moved up through sales jobs, but if they were truly interested in motivational theory (or any theory), they’d likely hold a different position. Successful sales people are very status focused, driven by goals they can feel and touch (not abstracts), and tend to be flashy and outgoing. Granted, there are always exceptions, but this generally defines those who do well in sales.
Motivating them with contests isn’t easy because, as in any specialty, you’ll have those who are naturally driven to win and don’t require much oversight along with those who require a lot of coaching and support to get out of the office in the morning.
Most sales programs are focused on individual performance, which either has the motivated folks constantly taking all of the awards or (and this isn’t mutually exclusive) the less motivated folks gaming the system and/or trying to trip up the leaders. Neither of these situations is beneficial to the sales process.
So managers need a tool that motivates the driven sales folks to help the sales folks who aren’t as driven or maybe are less experienced, while it assures your folks that they aren’t working against their peers. And gamification is a big new trend among companies that are trying to motivate employees.
What is kind of fascinating about the FantasySalesTeam solution is that it takes the fantasy sports (football, basketball, etc.) model and applies it to sales. People who participate in fantasy leagues spend hours trying to figure out how to win for small awards. By taking this model but creating sales teams as the tool, this product uses a similar methodology.
For example, for a division of HP, sales had been dropping in the Americas 16 percent year over year and they were down a whopping 20 percent worldwide. This was in a recently acquired unit with lots of executive changes, so the sales force was clearly unfocused and struggling to get motivated even though the product was obviously good since HP had bought the company. After implementing the FantasySalesTeam program, HP reported sales increases of 44 percent in the Americas and 31 percent in EMEA during the first month and a whopping 94 percent in the Americas and 48 percent in EMEA the second.
I’m sure HP’s CEO Meg Whitman noticed that success and I’ll bet at some point HP will take this program company wide. (The likely reason that it hasn’t yet is because HP doesn’t have a corporate head of sales that I’m aware of, so coordination between divisions is probably lacking at the moment.)
What this HP division found was that sales people competed really well as teams under the program, everyone had a chance to win, and that neither the top performers nor those who typically get left out of programs like this were alienated in the process, which is why the sales results were so stunning.
Any sales incentive program that provides the kinds of results that HP is reporting (just to reiterate, HP buys the tool; it doesn't sell it) is worth checking out, because businesses live or die on the success of their sales people. They are the front line troops, and if they are happy and motivated, business opportunities increase. If they aren’t, then sales fall and businesses often end up failing or cutting back.
IT often owns the systems that manage sales compensation and IT should host the programs that manage sales contests. If your company’s sales aren’t going this well, you might want to suggest that your sales VP check it out.
This is a creative solution to a tough problem, and I love creative solutions—particularly those that seem to pay huge dividends.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+