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.

Now is the time to rethink your sales strategy and your sales force.  Design the sales force your business needs and get great results.

Tip: It’s all in the thinking and planning that happens before the execution.

To help you start your thinking and planning here are two case studies from our work files where the businesses got it right.

Story one: Transform your current sales team into a new sales team

“The Sales Culture transformation and competency project we worked on with you in 2008 has been such a great success for our team.  The culture is now fantastic and the morale of the Sales Team is very good.  We aimed for the culture we wanted and got it.  People have settled into their roles and are working out fantastically. It was the planning and thinking behind it that made it work.  The Competency work has, without a doubt, made a difference. The Sales Competencies are ‘Gold’. We refer to them all the time and the Sales People are using them as well to develop themselves and have clearer, more accountable, performance reviews.  The competencies helped our team realise how responsible they need to be in their roles.”

This is what can happen when you design your sales force to deliver your strategy.  This quote comes from a Sales Director of a business we have worked with for many years.  They had the same sales force structure over the last 15 years and a very stable sales force to go with it.  The team and structure had worked very well, however the market was changing and the business and its sales people needed to adapt and evolve to ensure they were current, fit and productive.

In 2008, this Sales Director realised she needed to develop a new strategy moving forward and with that needed a new sales culture and team to deliver it.  But she didn’t want to get rid of the current sales team.  They were good operators with great industry knowledge and experience.   She knew it would be foolish to start from scratch with a new team and she didn’t want to create confusion or unnecessary unrest or anxiety in her existing team.

Her concerns rested around getting buy-in from the team regarding the new strategy and, in particular, their need to adjust their roles somewhat.  Despite not wanting to lose people she was prepared to do so if necessary.

What did she do?

• Developed her sales strategy and then presented her strategy to her sales team, inviting feedback and explaining ‘why’ they all needed to move in this direction using a well researched, evidenced based approach.  The team knew what was happening in the market place so it came as no surprise to them that they needed to shift.  That is fine intellectually, however we knew the challenge would be in actually getting them to shift in real terms.
• To get the real shift happening she then engaged her team in the development of the new Sales Roles by engaging in a ‘job design’ process with us.
• Out of the ‘job design’ process we developed the right Sales Behavioural Competencies (DNA) and ‘ideal’ role/person specification matched to sales strategy, product and customer base.
• Sales Behavioural Competencies were then linked to the Sales Team performance management reviews and are now being used in coaching, recruitment and succession planning processes.
• Sales Behavioural Competencies were mapped to measurable sales metrics
• The Sales Behavioural Competencies now act as a pivotal reference point in all their work.

As mentioned, the Sales People are using Sales Behavioural Competencies to develop themselves, have clearer, more accountable, performance reviews and better role clarity which means they know how they need to perform to achieve their strategy goals.

Story two: Design the sales team you want from scratch – green fields

A Divisional Manager of a large Australian corporate came to us because they didn’t want to hire people from their industry as they didn’t think they were competitive in the current market. They wanted to refresh the gene pool and bring in fit sales people who were not tarnished by the industry mindset and its way of doing things.  They knew that in this over commoditised marketplace their sales people were their competitive edge.

They were on the right track but didn’t know where and how to start.  So here is what we did together to find elite sales performers:

• Reviewed sales strategy, path to market, and products being sold
• Developed the right Sales Behavioural Competencies (DNA) and ‘ideal’ role/person specification matched to sales strategy, product, and customer base
• Built a structured sales recruitment process and kit
• Targeted industries the new breed of sales people could come from and went to market to find them
• Built and implemented the right sales induction training program matched to sales strategy, sales competencies, product, and customer base
• Had new sales team present their ‘go-to-market’ action plan to senior management before they went to market
• Implemented a sales management support system
• Followed up with infield training and coaching
• Mapped and measured sales metrics

The results were stunning from a sales initiative perspective.

The ‘new breed’ of elite sales performers achieved a sales closing ratio of 4:3 within 2 months against an industry average of 3:1 and sold the annual sales budget within 5 months.

Feedback from the sales people was that this was the best sales recruitment and sales induction process they had ever been through.  In all their sales careers, and many came from big name companies, they have never been set up so well to succeed.  They felt confident, proud, and capable to really deliver.

Feedback from the client:  “We worked in partnership to develop an end-to-end model for a new innovative sales team. The approach was unique in that they worked with us across recruitment, training, needs analysis, pitch planning and the end delivery. They added huge value to any sales process.”

By designing your ‘ideal’ sales force blue print you can build and achieve the following in your business:

• Change your culture by creating the sales culture you want
• Design the ideal sales force you want
• Recruit the sales force you want / your strategy needs
• Refresh your thinking, ideas, actions and results
• Develop career paths and succession planning
• Clear performance expectations
• Clearer, more accountable, performance reviews
• Provide a framework for identifying what a high performing sales person looks for your business
• Profiling of the core sales capabilities / competencies for sales managers/ sales people for use in recruitment, performance management, training, coaching and succession planning.
• Provide a framework for assessing the calibre of candidates as defined by core competencies and values;

As you prepare for the next financial year and are developing your sales strategy take time to reflect on what your ‘ideal’ sales force blue print should be.

Do not underestimate the value of taking time to think and plan, ultimately it could make you a lot more money.

Sincerely, your advocate for selling the  right way.

Do you have the wrong sales team delivering your sales strategy?

Ask yourself the follow the questions:

• How has your strategy and /or market place changed recently?
• How have you seen the role of ’sales’ change over the last few years in your industry?
• How do your sales people compare to your competitors?
• How do your sales people need to sell now?
• How is your product offering behaving in the market place now? Was it once exclusive and now a commodity?

The definition of a ‘good’ salesperson is driven by many possible needs. Those needs are a function of industry standards, changing market conditions, competition, corporate strategy and culture, personalities, past experiences, just to name a few.

In addition, many organisations overlook the shift in their products or services from being customised and exclusive to a commoditised entity and the impact this has on their sales force and sales efforts.

So it’s not just how your sales people behave that can affect sales, it’s also how your product or service behaves.

Let’s take a look at computers

For many years (in the late 1980s and early 1990s) computers were highly priced, exclusive products sold by highly priced, exclusive sales people.  These sales people were specialists, experts or advisors selling into the big end of town because these were the only businesses who could afford computers back then.

However, as:

• the cost to manufacture these products decreased making them more accessible and cheaper to buy, and
• customers education, knowledge, awareness and experience with these products and processes increased

The style of the sales people required to sell computers changed.

Now you can go to small or large retail outlets and buy a computer off-the-shelf from retail sales people (most of who are paid much less than their highly priced, exclusive predecessors).  Or easier still, you can buy custom built computers online at Dell, thus eliminating the traditional type of computer sales person all together.

Daniel Pink wrote, amongst other things, about the commodisation of products and services in A Whole New Mind and specifically how we need to look at creating value beyond product.

This is why more thought needs to be given to how a business translates its sales strategy into sales action.  You need to make sure the current products and style of sales people you have are matched accordingly.

If customer’s product or service education level changes (i.e. they become more sophisticated), and there is change to the product and access (i.e. online), there will be a change in your sales force requirements.

However, some products which can behave as commodities in their own right can become part of a complex sales solution and need sales people who are specialists, experts or advisors.

Let’s look at Business Banking

Business Banking is really an essential service for any business, however the products on offer are often standard and commoditised in their own right.

So what is a business banking customer wanting from a Business Bank?

It depends on the relationship.

Current research indicates that many want ‘ease of doing business’ and ‘value for money’.  The research also shows that many customers are not as sophisticated and savvy in knowing the ‘ins’ and ‘outs’ of  Business Banking and therefore many would like to rely upon the expertise, advice and support from their business banker.

However, many Business Banking providers have not developed, trained or supported their Business Bankers to be specialists, experts or advisors.  Most customers still go to their accountant for that advice and then use Business Banking products rather than extracting the possible value from their Business Banker.

As with Business Banking, there is often a great opportunity to capitalise on the potential long-term, in-depth customer-supplier relationships even if you have a range of commodity products.

I suspect many opportunities for further profitable sales sit untapped in many businesses because misalignment with strategy, product and sales people fit.

Knowing your market, where your products sits in isolation and in combination, and the types of sales people you need to have to deliver your strategy is critical.

So as you prepare for the next Financial Year you may want to review the sales force you currently have and see if they will stand up and deliver what your business needs in FY 09/10.

I will talk about this next time in “Creating your ‘Ideal’ sales team”.

Sincerely, your advocate for selling the right way.

Take note: Lawyers, Accountants, Engineers, Marketing Consultants et al

Professional Services Firms are struggling when it comes to keeping and finding business.  This on top of the fact that many have to come to grips with the fact they need to sell.   The market has definitely changed.  You cannot sit there aggressively waiting for the phone to ring anymore.

In speaking with one partner from a well respected law firm, he vented his frustration at the lack of action being taken in his firm by partners and their teams in terms of driving the push to find new business in current and new accounts.  He stated that some teams were just sitting around with no work to do and no one knows what to do about it.

“It’s so frustrating, they just don’t even know how to pick up a phone and call clients and prospects.  They are just sitting there saying they have no work to do all the while our business is struggling to meet revenue targets.   While I know some service areas have been hit harder than others there is still work to be done and if we could only just get talking to customers we would be ok.  All I know to do is to get out and have coffee with as many clients as I can and even though I haven’t been trained in how to sell well am finding business.  Although I would like to know how to do it better for sure”.

Despite the tougher market, there are market opportunities are out there.  There is money to be made.  There are clients to be won!  However, many professional services firms are not realising their true potential.

Relying mainly on passive referrals for new business leads and glossy marketing materials, most professional services firms are not securing their current and future revenue streams.  They have left themselves vulnerable and weak.  In many cases they are not even accessing their existing client data bases to see what new business opportunities exist there.

And don’t even talk to them about cross selling and up selling other service lines – many remain trapped in the silo mentality.

Through our work and observations in the professional services sector, it appears many managing partners and principals are wanting more from their partners, directors, managers and associates when it comes to proactively building sustainable and profitable business relationships with their clients.  The problem is many of them do not know where  to start or how to do it.  They have tried to make a start by putting on a Business Development Manager but it’s really the partners and managers themselves that need to be out there selling as part of their job.

Our research shows that no longer is it good enough for these people to rely solely on their technical competence i.e. being only a lawyer or accountant.  Now and in the future, these people also need to effectively self promote and prospect for new business using professional and ethical sales strategies, demonstrating real value for money.

However, the sales function does not come naturally to most people in these professions and often they don’t possess the relevant tools necessary to make it work.  They certainly weren’t taught this at university.  In fact many were fed derogatory myths about selling and many still believe them to be true today.  Which is one of the reasons they are in trouble.

We have found that many professional services staff have not been shown the right way to sell or taught the behaviours and skills necessary to put them in a position to win quality business.  Often the sales function’s importance is undermined, underestimated or left to too few people, usually the most senior partner or “rain maker”, possibly leaving the business vulnerable to missed market opportunities, hidden revenue and competitor erosion.

Many firms lack the foundations to create a viable professional sales culture e.g.:

• Inaccurate or poor perception of what good selling really is and its importance to business
• Very poor skills in the sales area
• Partners and directors lacking direct accountability for new business and revenue growth
• Mixed messages: “I’ve got to find more business but if I don’t do my  6 billable hours I won’t meet my performance standards”.  Partners are being caught in the billable hour performance trap and not using putting the time to get out and grow business they can then pass on to their teams to deliver.
• No use of client data bases and a silo mentality limiting up sell and cross sell opportunities
• No new business sales strategy or plan
• No client retention strategy or plan
• No sales model for people to learn, follow and apply
• Sales limited to ‘pull’ prospecting strategies such as brochures, website, etc. at the expense of proactive prospecting and real professional relationship sales strategies
• No Key Performance Indicators and Key Result Areas linked to sales, new business growth etc.

To name a few.

Given that professional services firms are operating in an increasingly competitive market place with more sophisticated clients expecting higher levels of service and value and some of their services are at risk of being commoditised:

What are firms doing to differentiate themselves?
How are they ensuring their future viability and success?
How are they making sure they are sales fit?

The ones who get it right NOW will set themselves up well now and in the future.   Those that don’t will either be reduced to shadows of themselves or be out of business all together.

So to all you lawyers, accountants, engineers, and consultants out there, if you are not already, it’s time to get sales fit and learn how to sell the right way.

It will be worth it.

Sincerely, your advocate for selling the right way.

Welcome to 2009.

Over the summer break I was talking with a number of friends about what 2009 will hold for us, our families, our communities and our businesses.  Without exception, we discussed the current and possible effects of the GFC (global financial crisis) on our markets and especially on our thinking and our actions moving forward.   We discussed the importance of open, clear and honest communication and decisive leadership, clear goals and defining what we stand for.

We discussed the fact that it would be very hard for people to make ‘easy’ money this year  i.e. playing the stock market, etc. No more making money by just moving money around.  And that people now needed do some real work to get real revenue coming in the door.  (not that some of us weren’t doing that already.)

It was mentioned that the current market conditions call for people to draw upon the ‘real’ money making skills of ‘Selling’ and any businesses relying solely on:

• Blanket Advertising, or
• Their technical capability, or
• Passive referrals, or
• Brand or reputation. or
• SEO alone (depending on your market model)

will suffer as a result.

And those people and businesses who haven’t integrated their sales and marketing initiatives and invested in developing their sales people’s prospecting and sales skills will be left wanting this year as well.

We acknowledged that this is the year where leadership and people’s real sales fitness levels and skills will be put to the test and further developing our leadership, sales and business development capabilities skills is critical to not only survive but thrive.

Many of the conversations reminded me of the late 80’s and early 90’s markets when I was working as a recruitment consultant and the lessons I learnt in how to really make the most of tough times.  I wrote about this on 4 February 2008 in Watch who you let near your mind

In my opinion, this year calls for focus on 3 key areas:

• Clear and decisive Leadership
• A clear market message of intent
• A proactive, disciplined, ongoing sales effort

This is the year where people and businesses need to prioritise and focus on these core areas that will help them make 2009 work for them and their customers.

The SmartCompany.com.au webinar (15/01/09, download the audio file here for free) featuring IBIS stated about 65% of a business’ success will depend on leadership effectiveness and how honestly and ethically you face the challenges ahead.

I can’t agree more.

My friends and I discussed our leadership approaches and what messages we are putting out to our staff, our clients and our markets.  How we are communicating our intentions to participate in the business world.

Clear plans, goals, honesty, ethics, values and trusted relationships all featured heavily in how we would and should communicate where we stand and what we stand for and how we wanted to be communicated with ourselves.

We didn’t want more hype and ‘promises’ that can’t be backed up by evidence, transparency and trust.  We want to give our people a reason to step up and be counted.  We want our people to be clear about what we do for our customers and confident and competent to get out there and genuinely connect with our market place, our customers.

Having a clear market message your sales people can communicate to customers in a way they can understand, relate to and action is vital in uncertain times.  To illustrate the point, one of my close friends was in New York and London in October 2008 when the GFC was in one of its first full free falls and said the difference was clear.

In New York the atmosphere was distressed, disturbed and directionless, a real helplessness seemed to prevail.  People were complaining that there were no messages being broadcast or communicated at all by the US President or his Administration.  They bemoaned the lack of leadership.  Where as in London, love him or hate him, Gordon Brown was communicating with the media every day about what he and is Administration they were doing.  While people were rightly concerned about the GFC, the atmosphere was somewhat different.  My friend said people were resigned to the fact they needed to deal with the GFC.  Instead of feeling helpless they were already looking for solutions.

In my experience it is better to know if it is good news or bad news than no news at all.  This way you can take action and keep moving forward.  Therefore in uncertain times it is even more vital that our leadership is evident and our market message is being heard and understood with the best intentions and right outcomes.

Here are some questions you might like to consider regarding your key market message:

• What key message(s) are you giving to your prospective market about how you intend to operate this year?
• How is the message(s) being received and understood by your sales people?
• How is the message(s) being delivered by your sales people and received and understood by market?
• How can your customers take action and work with you?
• Can your customers  trust you to be a valid business partner with them in 2009?

Now take your key message and couple this with a Proactive Sales approach.  If you haven’t already, you need make sure you and your sales people know and understand the message and can then get out there to connect with, listen to and understand your customers and prospects so you are in a position to really understand how they think and feel and what decisions they want to make this year and where you will feature in that relationship.

Unlike advertising, selling is the vehicle that gets you in real and direct personal contact with your market, your customers and your prospects.  This is where you have real conversations about real business, real priorities and possible solutions.

If you are not already talking with your customers, referrals and prospects you need to be NOW.

I encourage you to make sure you call as many customers, referrals sources and prospects as possible because, if my 25 years+ sales career is anything to go by, there are a lot of changes happening out there and it’s not all bad news.

In fact when I returned from leave on 12 January I spent the better part of that week calling as many clients, past clients, referrals sources and leads as possible and will continue to do so this year.  The amount of changes, information, leads and opportunities I unearthed as a result of making these calls in one week alone was fantastic.

And if you not convinced, take a leaf out of one of our larger clients who, despite the GFC and really tough market conditions, have prioritised sales fitness as one of their Top 3 business priorities.  The other two being clear leadership and clear market messages.  They have invested heavily in training and up skilling their regional and rural business sales teams in sales vision, planning, sales prospecting and selling process.

Despite the drought and tough times these sales people are out there selling and communicating that they are there to do business and its working.  Even though it is still early days they are finding viable deals and good clients to do work with despite the challenging markets.  They are being supported by their managers, who in turn are trained to deliver effective sales coaching and provide sales leadership to make sure this in a ‘way of life’ not a fad.  They all know this a vital life skill.

By focusing on:

• Clear and decisive Leadership
• A clear market message of intent
• A proactive, disciplined, ongoing sales effort

They have also found there is greater team unity, better cooperation and collaboration with each other and with customers, greater sales results and better margins.

So don’t hesitate!    Get clear, get focused, get active.

There is business to be done and business to be won.

I wish you happy and prosperous selling in 2009.