Are you creating competing motivations in your sales force?

You are browsing the archive for Ethics & Values.

Are you creating competing motivations in your sales force?

July 10, 2009 in Ethics & Values, Sales Leadership, Strategy

How to incentivise and reward sales people has long been a contentious topic. Too many times I have seen businesses set up incentive programs that reward the wrong behaviours which can affect team morale, client relationships, sales, staff retention, and so on.

For instance, I recently met the managing director of a medium sized software business who asked me why would his sales people keep selling one version of their product when they had been instructed to also sell in a newer more comprehensive version of the product.

I asked him two questions:
1. “How do your sales people get incentivised for each product sale?”
2. “Do they earn most of their income from their commissions or from their base salary?”

It turned out that his sales people earned more commission by selling in the older version than the newer version of his product. And the sales people made the bulk of their income from their commissions rather than from their salaries.

There you have it. What makes perfect sense to the sales person – “If I make more money by selling in one type of product and the majority of my income comes from my commissions I would be stupid selling anything else.” does not always work for the organisation or the customer.

Lesson: If you want a different outcome (as did the aforementioned MD), you need to think about what behaviours you want to drive and reward in your people that don’t create competing motivations.

And here in lies the issue with certain aspects of the Financial Planning industry.

Much of what is being written about the Financial Planning industry in current and recent times is centering around the issue about competing motivations.

As I see it there are two different models in operation in the Financial Planning industry:

Fee for service model

Is where you engage an independent Financial adviser to guide you and instruct you in your financial planning and wealth management strategies. These people are in the business of selling their consulting services and their advice. They earn their income purely off their hourly consulting time. Service fees are applicable to the level of service provided. Their focus is on advising on the three keys are of wealth management: Creation, Consolidation and Distribution with no products commission attached to their advice.

Product sales model

Is where you buy a specific product or suite of products to incorporate into your financial planning and wealth management strategies. In this instance you know you are buying a product via a transactional product sale. You can do this at a bank branch for instance. Some people who run their own self-managed super funds work this way by purchasing only product. Others may use a broker who sells a range of these products and can provide easy access to the right product you need. Brokers usually make their money by getting a commission on the sale of these products. Some brokers also make trail commissions for the life time of the sale which is where you are seeing an increase in complaints. This model is basically the old Insurance Sales model.

There is nothing wrong with these models so long as they are open and transparent and do what they say they do.

Basically, people should know what they are getting i.e. independent advice for a specified fee or product for a specified fee/commission. For instance there are customers who do not want to ‘pay fee for service’ and prefer the commission model so these two models offer choice which is only fair in an open market.

However the problems arising for the Financial Planning industry is when people using the ‘product sales model’ try to pass it off as the ‘independent financial adviser’ model. All this does is create competing motivations like:

“Do I give my client what is best for them or best for me?”
“I need to sell more product to supplement my retirement pool not necessarily my clients.”

The issue as I see with this approach it is that we are more likely to get products that make the most money for the broker or planner not the best product or solution for us. We are at risk of becoming a vehicle for them to make as much money as possible at our expense as is evidenced by some of the more spectacular business failures in recent times.

Financial Planners who are really only selling product with a commission structure attached as their main source of income cannot truly act in an independent advisory or consulting role.

The competing motivation that can arise is that they can become more concerned with how they could get paid rather than how they can provide better advice for their clients.

This poses some important questions for the industry:

Why have these competing motivations been allowed to manifest?
In the industry trying to squeeze a product sales model into a consulting sales model?
What is the industry doing about creating a client centric model where it’s all about the client and the client’s outcome?
What relationships have been created with the product suppliers that may be leading to these competing motivations?

In my opinion the terms Financial Adviser or Financial Planner have been poorly defined and often misused by the industry potentially leading to misunderstandings, confusion, and in some cases distress and financial loss for some customers because they did not get what they paid for.

In my opinion, those who sell product should be called a Financial Product Specialist or Financial Products Broker.

And those who truly practice legitimate Fee for Service models can rightly call themselves a Financial Adviser or Financial Planner.

Clearly this issue will not go away until the industry finds the best way to legitimately define Financial Advising or Financial Planning and stop creating opportunities for competing motivations which only serve to devalue their industry and its potential for a truly professional model that works for all. More work to be done here .

Remember everybody lives by selling something.

No Comments »

Does everyone live by selling something?

June 22, 2009 in Attitudes & Behaviours, Brand & Reputation, Education in Sales, Ethics & Values, Marketing, Procurement, Sales Culture, Sales Driven Organisations, Sales Excellence Acadamy, Sales Leadership, Sales Skills, Teamwork, Vision, Mission & Purpose

‘Does everyone live by selling something?’

My desire to seek answers to this question was ignited back in the late 1980’s when I came across the quote ‘Everyone lives by selling something’. The quote was coined by Robert Louis Stevenson, Scottish novelist, poet, travel writer and author of ‘Treasure Island’, in the late 1880’s some 100 years earlier.

It is interesting to note that Robert Louis Stevenson (1850-1894) was a leading representative of Neo-romanticism in English literature. He was also greatly admired by many authors such as Ernest Hemingway, Rudyard Kipling, Vladimir Nabokov and others. Most modernist writers dismissed him, however, because he was popular and did not write within their narrow definition of literature. It is only recently that critics have begun to look beyond Stevenson’s popularity and allow him a place in the canon.

Over the last 20 years I have sincerely come to believe that Robert Louis Stevenson is correct in his assumption that ‘Everyone lives by selling something’. His ability to not be constrained by the prevailing views and paradigms of his time allowed him to see what many of us are coming to realise now.

Whether we call ourselves a salesperson or not, if we have an idea, product, service, skill, capability, talent, or opportunity by which we can make a living and others can benefit from, we need to be able to sell.

This means that whatever role we are in, we all need to put ourselves in a position to secure the ongoing custom of customers, members, patients, supporters, peers, students, sponsors, or clients to make a living. Even internal service providers such as HR and Procurement professionals need to be able to sell and consult in order to fulfill their roles accordingly.

In this complex world, this means that we need to make sure our talents and capabilities are visible to those who need to know about us. We need to proactively put ourselves in a position to work with others to earn what we are worth on any level, otherwise we at risk of being invisible and losing opportunity. Good salespeople have always known this, consciously or not.

Yet many people are still confused by the words ‘sell’, ‘selling’, ‘salesperson’, or ‘sales’. In fact when these words are mentioned in polite company, you can see many people visibly recoil at the concept and some even go so far as to object to you even mentioning the concept of selling.

Why?

Because many so called ‘legitimate‘ sales practices we experience as customers are nothing more than manipulation and deceit, aggression and intimidation, or hard sell, pressure tactics. No wonder so many people shy away from selling as a career or cringe at the thought. Whether we are conscious of it or not most of us don’t like how selling is being sold to us. I don’t blame you.

Despite the prevailing paradigms of 20th century ‘old school selling’ tactics and others’ self limiting beliefs, highly successful, effective, ethical sales people have always known the best way to sell is to proactively forging honest and open relationships (of any kind) based on trust, transparency, respect, and doing what they said they would do. This is their competitive edge. Their sales approach is more collaborative, integrated, holistic, and enlightened. The potential for these life skills and attitudes is present intrinsically in almost all of us whether we know it or not.

Now I are not trying to convince people to love selling, or even like it. However, we want people to recognise the vital role selling plays in our lives today. Without this capability our businesses wither and die.

Yet some people believe it is not their right to put themselves or their ideas forward instead relying on their good work to speak for themselves. Some think they may be seen as too boastful or self absorbed if they do so. Others are too frightened to sell and many have never been taught how to sell effectively with confidence, dignity, and grace.

That is why we still see too many good ideas and opportunities go to waste resulting in poor revenue results. Too many people do not purposefully and proactively put themselves in a position to explore opportunities with others, bring their ideas to the table, create new possibilities or earning what they are worth in the process.

Whether we earn a living from what we do or not, if we hide our talents and capabilities from others and no one knows about us or what we are capable of then how can we be of service and earn what we are worth on any level?

It’s also about being genuine.
In this increasingly networked world we all have the opportunity to connect with others all the time – in short we are selling ourselves. However, the way each of us portrays ourselves, our companies, our values and our lives are at risk of being seen as superficial if we do not genuinely communicate, connect and create with others.

If we want to cultivate and sustain genuine, healthy, profitable and viable business relationships with our clients, partners, suppliers or peers where a fair exchange of value is achieved then we, our business and our people need to go out to the market place and put ourselves in a position to work proactively with people and help them and ourselves achieve our collective business goals.

This is why I believe Everyone lives by selling something.

Whether you are working as a sales professional, business development manager, lawyer, accountant, engineer, consultant, internal human resources manager, procurement manager, business, manager, small business owner, team leader, psychologist, a jobseeker, or anyone in contact dependent career, we can all benefit from applying more enlightened, collaborative, worthy, natural sales practices in our daily lives.

I am interested in whether you believe Everyone lives by selling something. If you would like to have your say we have set up a poll at www.barrett.com.au to take your response to the question ‘do you live by selling something’.

Happy and honourable selling to you all.

2 Comments »

Creating the right environment

April 30, 2009 in Ethics & Values, Sales Culture, Sales Driven Organisations, Sales Leadership, Sales Management

I was running a ‘train the sales trainer’ session with some experienced, professional Sales Managers the other day. The session I ran is designed to equip these managers to run mini sales training modules of as part of our sales fitness programs. Many manages are not trained facilitators and so we make sure we give them the information they need to set up an effective learning environment. All was going well until we came across the content entitled “Creating the right learning environment” which is a practical guide about what you need to prepare and take into account when setting up your room environment.

I happened to mention (and wrongly assumed) that this was pretty straight forward and was familiar to most professional people and we could do a quick scan and move on. However, one of the Sales Managers informed us that this was not always the case as the previous sales manager, whom he had recently taken over from, used to run some of his sales meetings and one-on-one performance reviews at a restaurant chain known for its scantily clad, big breasted waitresses. And occasionally he decided to run these sessions at the local strip club as well. Needless to say the sales manager in question did not last very long in his role.

I had thought (and hoped) we had progressed somewhat as professional business people, but clearly some people are still stuck in the 70’s and 80’s where similar stories were more common place. I really didn’t think it happened today but clearly I was wrong. I would be interested to know if this still goes in some industries today (I hope not but may find that it happens more than I had expected).

So rather than assume everyone knows how to set up the right environment I thought it might be prudent to remind us all of the key things we need to consider when setting up:

A training session
A coaching session
A performance review
A sales meeting

For learning, feedback or a meeting to take place effectively you need to create a comfortable and safe environment. For this to occur you need to plan and arrange the environment and resources you will need for your session or meeting.

Whether you are training or coaching on-the-job or in a training room, giving feedback or holding a meeting, there are a number of things you should consider before you start (most, if not all, will be relevant):

How many participants will be involved?
Is the size of the location adequate?
Is the location available?
How will tables and chairs be arranged?
Does the area have adequate lighting?
Is the area quiet enough?
Is the temperature comfortable? Is there adequate ventilation?
Is the location accessible?
Is the location private? (able to be closed to the outside world)
Do you know where all the facilities are, for example, the toilets?
Does the location have enough power points? Do you know where they are?
Are training aids available?
Are there any OH&S requirements you will need to consider?

As a sales manager, even if you are providing coaching advice to a salesperson in the car after a client meeting (which often happens) please consider the advice above. For instance having the radio on while giving feedback or giving very specific feedback on a difficult area for development while the person in question is driving is probably not a good idea.

The manager, coach or trainer who is committed to accelerating the learning process of their people must attend to creating an optimal learning or meeting environment which also includes it being safe on all levels.
Sincerely, your advocate for selling the right way.

No Comments »

The Hard Sell

March 27, 2009 in Ethics & Values, Negotiation, Sales Culture, Sales Relationships

I declare right up front that I am not, and never have been a fan of the Hard Sell. You have probably guessed that from all my previous posts.

And if you ask most people about what they think about the profession of selling they will often describe something akin to the ‘Hard Sell’. Of late I have also noticed a rise in ‘hard sell’ stories where people are being unnecessarily pressured to buy or sales people being pressured to sell at almost any cost.

The hard times may be pushing some people to do things they wouldn’t normally do like the “Hard Sell”.

The Hard Sell can also be described as:

Boiler Room Techniques
High pressure selling

To put it into perspective, the ‘hard sell’ is not a common sales strategy employed by many businesses today and for most people it is not their preferred way of selling or buying. Most people revile from being asked to sell in this way. And I would question whether it is deemed ‘selling’ at all or just a form of bullying or intimidation.

Given the escalation I have seen in ‘Hard Sell’ stories this prompted me to have a further look at what the Hard Sell is and if it has any legitimate place in our world of business and selling today. Here is some of what I found.

Hard Sell
(definition from www.businessdictionary.com)

Applying psychological pressure (by appealing to someone’s fears, greed, or vanity) to persuade the prospect to make a quick purchase decision. This approach is justified on the ground that most people are lazy and will postpone making a decision—even if it were in their best interest to make the commitment. This practice is, however, reviled when its sole purpose is the salesperson’s gain at the customer’s detriment. Also called high pressure selling.

I think the last sentence in this definition is key here. I highlighted this in Think you can get away with it. Think again. If a person is willing to be convinced and happy to take part in the process fine. However, many people who may not know what they are getting themselves into or may feel intimidated and do not know how to say ‘No’ may be caught up in the moment and buy something they do not want or need. For example if we look at the following technique you can see what I mean.

Boiler Room techniques

Outfit where salespeople use hard-selling (often dishonest) techniques to peddle (often fraudulent) offers to unsuspecting prospects (referred to as suckers) over the phone or face to face.

These techniques have often been attributed to Insurance or Car Sales industries i.e. used car salesman, e.g. …extremely aggressive behavior by an Insurance Agent to convince a Prospect to purchase the insurance product without due regard for the prospect’s ability to pay the Premiums and/or needs for the product.

Just think of the Subprime market in the USA and you know what I mean.

Let it be said however that I am not proposing that all sales people in Insurance or Car Sales are selling this way. In fact more and more businesses in these industries are consciously training their people in more sustainable and honest selling practices. See A car sales story with a difference

Some industries like Time Share and certain personal development courses still mainly employ Hard Sell tactics bringing people in for 90 minutes pitch fests coupled with a lunch or some small incentive. Prospects are often pressured to sign up before they leave and can be intimidated to do so as described above.

I have had experience of this myself some years ago and my advice is this: walk away and think about it before you buy unless you are really certain and have done your homework. If the salesperson says you can’t walk away and think about it outside of the venue or call them the next day then in my opinion it’s likely to be dodgy. A colleague described one such situation happening to her earlier this year. The salesperson in question was charming and positive to my colleague up until she said that she needed to think about it and would get back to him. He tried to convince her to part with $1,000 upfront but she would not do it. It has to be said that my colleague had nothing against time share she just didn’t want to be pressured to part with her money just yet. When she did not cave in to his demands and asserted herself, the salesperson’s attitude turned from one of charm and positivity to disdain and frustration in a split second.

By contrast, the term Soft Selling is to describe the opposite of Hard Selling and is often defined as where:

Sales philosophy oriented toward identifying the customer’s expressed and tacit needs and wants, through probing questions and careful listening. It contrasts with hard selling which promotes application of psychological pressure to generate a relatively quick sale

I do not like the term Soft Selling, what they are really describing is Consultative, Diagnostic or Solution Selling. Soft implies weak and insipid to me. Those people how engage in healthy, trust based, transparent Consultative/ Diagnostic/ Solution Selling are assertive positive and very helpful to customers and understand that not everyone is in a position to buy now. By treating people with respect and working in partnership with them then you set yourself up for a better future.

One of my clients said just that the other day. They employ a Consultative sales approach and have found to be far more sustainable and professional. He said it really cements them as a preferred supplier or partner, especially up against competitors who employ ‘Hard Sell’ or price gouging tactics. He should know because his business is a much smaller player at present up against much bigger businesses with a much larger sales forces. He said his sales people are well respected, well regarded, and are making good sales despite the competitions’ tactics. He has held firm and not resorted to the ‘hard sell’ and it is paying off in more ways than one.

I understand it is tough out there for many businesses but desperate times do not call for desperate sales measures. (Desperate times don’t call for desperate measures)

While the ‘Hard Sell’ has always been around and is likely to be around for some time in the future I would encourage you stay true to what you know is right.

Sincerely, your advocate for selling the right way.

No Comments »

Think you can get away with it. Think again

March 5, 2009 in Brand & Reputation, Ethics & Values, Mindful selling, Sales Relationships, Value Proposition & Value Add, Vision, Mission & Purpose

In the world of sales there has always been the following advice for customers and for good reason:

Buyer beware
Read the fine print
If it’s too good to be true then it is

And so on.

As much as I advocate for and encourage healthy, trust based, open transparent customer relationships I am fully aware of the ‘dark side’ in the profession of sales.

In my travels, sadly I hear of many stories about people being ripped off and taken advantage of often with no idea about what is happening to them until it’s too late. All under the guise of selling.

There will always be those people who are after victims instead of customers. While they call themselves ‘sales people’ they are really con artists, thieves and ‘rip off merchants’. They are always looking at how they can get something at someone else’s expense. If you’re unsure about your sales ethics check out Are your self-promotion and prospecting tactics ethical or not?
However with so much access to information these days customers are doing their research and shonky sales people are getting found out more and more.

If you want to rip people off, think again.

As I wrote last week about healthy sales relationships and good news sales stories here are some things to look out for as a customer when some people cross to the ‘dark’side’ of selling.

Alan Kohler wrote about one to causes that can lead to unethical selling practices when highlighted the need for finance brokers and financial planners to shift to a ‘fee for service’ model rather than the trailer commissions from products model and on Smartcompany.com.au 02 March 2009. While I hope most brokers and financial planners do the right thing by their customers regardless of how they are remunerated, the real problem with trailer commissions is that is sets up competing motivations i.e ‘Do I give my client what is best for them or best for me?’ The issue as I see it is that we are likely to get products that make the most money for the broker or planner not the best product or solution for us. We are at risk of becoming a vehicle for them to make as much money as possible at our expense.

Here is a story from the field to illustrate the point:

Business Banker gets contacted by a Broker and Accountant of a Grazier in northern Queensland. The Broker and the Accountant are wanting to get the Grazier into a financial product where they can make more money on trailer commissions even though the product concerned is not the right product for the Grazier and will cost the him a lot more than he needs to pay.

The Business Banker, who shared this story with me, did not give the Broker and the Accountant what they wanted. However he felt very uncomfortable knowing this was happening and was unable to help the Grazier directly as the client relationship was with the Accountant.

It’s bad enough the broker was shopping around for trailer commissions, but when your own accountant is in on the act then who can you trust?

Lesson: Whenever you are being recommended a financial product of any sort by your Broker, Financial Planner or Accountant, ask them point blank do they get trailer commissions or any other kickbacks from the deal. If they do, then keep looking, preferably for a new Broker, Financial Planner or Accountant.

Remedy: fee for service, not trailer commissions.

Ask questions and read the fine print

I don’t know about you but I like to know what I am getting upfront before I make a purchase. I do not like surprises. Here’s another story about buyer beware:

Another business banker was telling me a story about a prospect he was speaking to who was trying to get out of a financial deal that his current bank had put him into without fully disclosing all the fees involved.

The current deal was drawn up for the prospect by his current bank. The deal was ‘very good’ according to what was on paper. The business banker I spoke to said to this prospect that deals like this usually attracted high Treasury fees (which had not been disclosed at this stage) and he couldn’t understand why they hadn’t been cited in the deal. He suggested that the prospect go and ask about the back end of the deal and get it fully disclosed. The prospect did ask about these fees but was reassured by his bank that everything was ok. The prospect signed the deal and was stung for, you guessed it, treasury fee of $20,000 that wasn’t disclosed up front.

Now the prospect is trying to get out of the deal, but has signed the paperwork.

Lesson: check for variance in any contract. If you don’t feel comfortable, don’t sign. Get professional advice (however make sure your adviser is not on trailer commissions for that advice).

Do your research and check the real deal

From the Telco industry.

Customer wants a new mobile phone and contract. He calls a mobile phone dealer to buy a new phone and contract over the phone. After lengthy discussions with the mobile phone dealer he pays for the phone contract and a new phone separately only to find out later that the phone contract actually included the new phone as part of the cost. At no time was this make clear even though he asked on several occasions about the way the deal was structured.

He ends up paying for the phone twice.

Essentially this customer was robbed.

Unlike more stably priced industries the finance market fluctuates. Therefore it pays to really check out what the current rates are.

Another business banker I know gets a call from a prospect she had been talking to. The prospect cites that they are being offered two vastly different rates by their current bank for the same deal.

The prospect stated they had acquired a new business banker who was quoting them 12.4% for a fully secured loan. It didn’t sound right to the prospect so he called around to the same bank but in different regions and twice was quoted 8.5% for the same deal. He rang back his new business banker to tell them the news, and they demanded to know who he had spoken to and how dare he look around. Who is she kidding? The prospect is now in discussion with the business banker I know about how they can move ALL their banking to the new bank.

Lesson: Do your research before you buy, especially in industries that are littered with ‘deals’. And check what goes with that *. That asterix is responsible for more dubious deals than we can poke a stick at. Also don’t cop abuse from shonky sales people.

All these stories are NOT about good selling practices, they are about people cheating and ripping off other people.

Customers are onto it. And customers are sick of it. Customers are taking their business elsewhere.

Today’s customers have access to more information than ever before and have more choice. And whilst it might take more time to check you out customers can and they do.

Most customers know what they are after even if they don’t know how to articulate it sometimes. Today, customers expect to deal with a real professional who knows their own business and how they can best serve their customers’ needs with creative solutions and fresh ideas.

Customers don’t expect to be coerced, bullied, tricked or intimidated into buying. They don’t expect to be treated like an idiot by shonky sales people who just talk at them and flash brochures or product sheets hoping to dazzle them or seduce them into signing deals.

Customers are now after ‘business people’ who can sell. They are looking for partners to help them map a pathway forward into the future. Now that is GOOD SELLING.

Happy selling.

No Comments »

Barrett Sales Blog

You are browsing the archive for Ethics & Values.