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Rethinking Sales Incentives – The Science of Motivation

August 25, 2011 in Attitudes & Behaviours, Sales Management, Sales Research, Success

‘Rethinking Sales Incentives’ was voted as the Number 8 Sales Trends for 2011. Incentive programs, commissions and bonuses have been synonymous with sales teams for at least the last 50 years. However throwing more money at sales teams to perform better, especially in these more complex and creative times may be a thing of the past.

While the ‘carrot and stick’ approach has been reasonably successful for most sales teams in the twentieth century, especially when sales people were simply selling product, scientific research is showing if you want smart thinking sales people this approach is no longer viable. If we are to have sales people who can navigate ambiguous markets, create new opportunities, forge new partnerships, and sell real value, then our traditional incentive programs are often the wrong way to motivate people for today’s challenges. Yet external rewards such as bonuses, commissions or incentives are still strong features in sales management forums.

In 2011, more and more companies will be enlisting new approaches to motivation, rethinking how they incentivise and reward their sales teams both intrinsically and extrinsically.

Australian Perks

Money Perks

For many years it has been believed that sales people are only motivated to sell if they have strong financial incentives to do so. For a number of sales people this may certainly be the case, however, it would be a false to assume that this is the case for all sales people. Another false assumption is that the more you incentivise someone the better they will perform. Science is turning the business world upside down, challenging ‘norms’ and long held beliefs about what motivates and drives people.

As the world, and with it the business world, becomes more complex, it will be harder and harder to determine who did what and who deserves what because many tasks are no longer simple transactions. With selling becoming less transactional and relying more heavily on teams rather than a lone sales person to bring in the deals the compensation issue is becoming more complex.

Who deserves what? How much should they be paid? Many companies spend hundreds if not thousands of hours going around in circles trying to work out what is fair and reasonable. And to no avail. This perplexing issue could have a more simple solution, although some people may not like it.

According to the latest research synthesized by Daniel Pink in his latest bestselling book, Drive: The surprising truth about what motivates us, the best use of money as a form of compensation is to take the issue of money off the table.

His book highlights what scientists have known for some time now:

‘The more prominent salary, perks, and benefits are in someone’s work life, the more they can inhibit creativity and unravel performance. As Edward Deci explained when organisations use rewards like money to motivate staff, “that’s when they’re most demotivating.” The better strategy is to get compensation right – and then get it out of sight. Effective organisations compensate people in amounts and in ways that allow individuals to mostly forget about compensation and instead focus on the work itself.’

I know this may be heresy to sales people, teams and sales leaders, because for so long big commissions and bonuses have gone hand in hand with sales teams. Well, maybe this could be a thing of the past.

What the scientific research is showing is that ‘for simple routine tasks which aren’t very interesting and don’t demand much creative thinking, rewards can provide a small motivational booster shot without harmful side effects.’ In short if you want people to, for instance, stack boxes more quickly, offer a bonus to those who stack the most in the shortest space of time and to the standard you want. As long as the task is simple and mechanical in nature, bonuses work to lift performance.

However if the task or situation involves even rudimentary cognitive skill i.e. you have to come up with ideas or solutions, possibilities or plans, then a larger reward leads to poorer performance.

With transactional selling going the way of the internet leaving most sales people out of the equation, the rest of selling now requires the need to deal with complex solutions, consultation, problem solving and prevention, creativity and collaboration. All of these tasks require cognition. Our brains need to work, think, sort stuff out, create options and so on.

Another key finding from Pink’s book that throws cold water on the money motivator is that most people are not motivated by money at all. Yes, you need to take money off the table, so it’s not a day to day issue, and pay the right amount from the beginning, and instead focus on fostering and developing the following ideals in your business and your people. Then you will find lifts in performance that are far more significant. The three elements of true motivation are:

Autonomy – the desire to direct our own lives

Mastery – the urge to get better and better at something that matters

Purpose – the yearning to do what we do in the service of something larger than ourselves.

If you would like to explore this further I would suggest you get a taste for it by viewing this 10 minute video by Daniel Pink which is a very good summary of the topic at hand.

So what does this really mean for sales teams? Well, it all depends on what you sell, how you sell it, how you run your sales business and what you want your sales people to do:

  • If you are in simple transactional sales where your sales people do not really need to think in any complex way then maybe you can continue with your current bonus or commission schemes
  • If your sales culture is more complex or is more of a lead team approach then you may need to rethink the way you reward people

One client of ours in the world of new home sales has taken the radical move to pay its sales people a far more substantial base salary to take money off the table. Instead of sales people panicking about where their dollar will come from and how they will afford to feed their family this week, they want their sales people to focus more readily on better quality sales efforts rather than the mental churn and burn often seen in this industry. It is early days and the transition will be interesting. However, in their endeavour to bring about better standards of professional selling in an industry known for its ‘cowboy’ culture, changing the way they remunerate their staff along with continued professional development such as coaching, combined with a committed leadership will see them prosper. If they can stand steady and hold their own in the face of challenges I have no doubt they will see the fruits of their labour and out perform their competition in the long run. And isn’t that the irony, when we remove these financial incentives we will get better performance.

An example of a company who have already taken this on board and making it work is Australian company Atlassian.

It’s a brave new world for sure.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

5 top tips on how to produce a winning sales proposal

August 18, 2011 in Communication, Prospecting, Sales Tips, Success

A good sales proposal demonstrates real value; a quote just offers a price.

Many sales people are required to produce a proposal or quote after an initial meeting with a client or prospect. This is a critical part of the sales process. Many sales people however, loathe producing proposals and consider it a chore believing they don’t get maximum value or return from their efforts.

Often reduced to quoting prices or at worst just a ‘find and replace’ to change the client company name, sales people can do a lot better for themselves as well as their clients when it comes to producing winning proposals.help-in-pile-of-crumbled-paper

We all deserve better – sales people and clients included.

So what is the best way to produce a winning sales proposal?

There’s loads of advice floating around about how to produce and pitch a sales proposal or quote. Sadly most of the advice is wrong. For instance, in all the years I have been selling I have almost never presented my proposals in person and have had no trouble winning business. I normally meet my client or prospect to take the initial brief, I prepare a proposal based on their requirements and then send it directly to them to give them time to read and absorb and then I follow-up to receive their feedback. Where appropriate, I often position my initial proposal as a ‘draft’ which we can use as a base plate to rework the proposal if need be. The client feels engaged and involved. It works every time.

There are salespeople however that disagree with my approach. They believe that you need to demonstrate the company’s credibility by stating your credentials upfront and then you must present a proposal in person every time before your client has read anything about what you propose.

I am here to tell you this doesn’t work. This approach is a disaster waiting to happen. It’s interesting to look at sales results of those who insist presenting their proposals in person is the best approach – what story does their results tell? In any case, we can all benefit from improving our proposals; so how do we get off on the right foot? Well here are 5 tips to set you on the right path:

  1. Ask good questions and take detailed notes in the client meeting
    It’s all in the preparation. A proposal is only as good as the brief taken in the client meeting. Asking clear questions which get to the heart of the client or prospects issues, priorities or needs is critical. Taking detailed notes is essential. I write down the exact words used by my client – no paraphrasing here. This means I capture their thoughts, their ideas, their tone which when presented back to the client in a proposal shows them I have really listened to them which is validating and very powerful. Another benefit of taking detailed notes means you don’t have to try and remember what was said in the meeting afterwards. These notes allow you to really see what your client’s situation is currently which then allows you to look at what you can do to address their priorities with your offering. I find that after a client meeting or at the end of the day I type up my client meeting notes while they are fresh and clear on paper and in my mind. This means that I do not have to rely upon my memory alone. A key part of this process is really listening when you ask a question. And taking notes makes you a better listener.
  2. Manage expectations – Verify your understanding and establish clear intentions
    Verifying your understanding of what your client wants and needs before you leave the meeting as well as stating your intentions i.e. what you are going to do in terms of timelines, proposal preparation, getting back to them, etc. is very important. Your client or prospect needs to know what you are going to do and by when.
  3. Put the client first, always
    Put your clients’ needs and priorities first. Opening up your proposal with a section that outlines your understanding of your client’s needs or priorities is critical. It validates the client and answers the following questions: Do you see me? Do you hear me? Does what I say matter to you? Too many times sales people put their company first making it all about them not about the client, leaving the client feeling disengaged. When preparing your proposal categorise your client findings into 3 key sections: 1) the Client’s Current Situation or Circumstances, 2) Issue or Opportunities they want to address, and 3) Their priorities moving forward and results they want to see. This section needs to go first in your proposal.
  4. Demonstrate value, don’t quote a price
    A good proposal demonstrates value; a quote just offers a price. Off the back of stating your client’s priorities and needs upfront you then structure your proposal so that it shows the client how you will address their priorities and needs in a manner that will help them see the value and results they will receive and achieve by working with you. Everything must connect and link back to your client. You are not just quoting a price – it will mean absolutely nothing to the client if they cannot see themselves benefiting from your offer.
  5. Never talk someone through a proposal
    Communications expert Brett Rutledge says you should NEVER present your proposal to a client or prospect. The reason being is that you create a cognitive overload for the person(s) concerned. Looking at the proposal (visual processing) and at the same having to listen to you speaking (auditory processing) doesn’t work and only leads to people being distracted and confused. Therefore it should always be sent ahead for the person intended to read and absorb without you being present. This gives them time to absorb the content in context of their priorities, understand your offering, agree with it or not, care about it enough to take action to do something with it and you. Then you follow up to discuss further.

These are just a few key tips we have found make selling and buying easier and more effective. I hope this is of help to you.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

Avoid the Brain Drain – Why Brain Fitness Equals Better Sales

August 11, 2011 in Attitudes & Behaviours, Brain Science, Neuroscience, Neuroscience in Sales, Sales Psychology

What does neuroscience and increased sales have to do with each other? It seems more than we would think. The latest research into neuroscience reveals that how we use our brain does make a huge difference to our long term sustainability, our overall wellbeing and our success in sales and other professions.

The world of neuroscience proves what high performers have intrinsically done all along – by engaging in effective self appraisal, continuous learning, a healthy lifestyle and a mindful approach to work and one’s personal life leads to clearer thinking, better decisions and much better outcomes overall – short and long term.

Kelly Rothwell, Barrett’s neuroscience expert says the choices we make, the view we take of things, how we process and manage information and how we take care of our overall health and wellbeing can all be learned. She says that “there is a lot of information about how to lead a physically healthy life style, i.e. diet, food, exercise but very little on healthy mental habits that can lead to enhanced performance.”

Mindfulness is the practice of being in the moment. Mindfulness training, even a short amount has been found to increase attention span, increase cognition and reduce stress, and even increase our immune function.

So how can we make our brains fitter generally, more practiced in ways so they can work for us in ways that help us achieve better results in sales and in our lives?

A study published in the first NeuroLeadership journal found that there was a 30-50% improvement in the stress levels in a group of people trained in mindfulness, that is from just 100 minutes of training in one week.

From the psychical sense of the brain, it is understood that practicing mindfulness thickens a specific set of neural circuits regarding our focus, control and attention. By practicing focusing and switching your attention, you increase your ability to do so – and the benefits are multiple – for example, several studies talk to the stress and health benefits that appear to come from practicing mindfulness. You also increase your self-regulation capacity, which is the ability to control what are known as our automatic neural functions – self-regulation has been closely linked to personal productivity, and even success in life overall, in long term studies by Walter Mischel.

So how can we make our brains fitter generally, more practiced in ways so they can work for us in ways that help us achieve better results in sales and in our lives?

Some important Brain facts:

  • Our Brain uses up to 30 per cent of our entire body’s energy supply
  • Our Brain uses about 20 per cent of our body’s oxygen supply
  • Our Brain wants to conserve as much energy as possible
  • When we expend energy from our Brain, it is from our Conscious processing part – our thinking, our focus i.e. problem solving, decision making, creating, etc. Thinking and focusing use up more energy which is not the main goal of our Brain, yet we need these functions to succeed and thrive. Ever wonder why you feel so tired after really concentrating on something?
  • The Conscious part of our Brain is our computer programmer (what we think). It is where all our thoughts, our ‘self talk’ takes place – whatever we think drives how we feel, which in turn drives what we do or say, and is then etched into our Subconscious
  • Our Subconscious is our hard-drive, with all the programming (our thoughts) in it. The subconscious part of our Brain manages 99.7 per cent of everything we do. Therefore if what we think is faulty or toxic we are programming our subconscious to be faulty or toxic
  • Interestingly our Brain does not recognise what is helpful or unhelpful to us, it just does what we tell it or ask of it. If we ask unhelpful questions or feed it unhelpful information, we are likely to get unhelpful answers when our subconscious retrieves it
  • The quality of our thinking in the Conscious part of our Brain can really affect our ability to perform well and if we do not recognise unhealthy programming that resides in the subconscious

This information is important if we want to work out how we can perform at more optimal standards with fitter brains. Finding ourselves in a more complex world requires even more considered thinking and focus. This means using the conscious part of our brain more often requiring more energy. Unfortunately the brain, by nature, wants to use less energy.

Kelly Rothwell points out that one of the reasons we make assumptions is that from a simple brain perspective, we ‘assume’ to save energy. If we operate off old memories and experiences which are etched in our subconscious, rather than creating or writing new ones, it helps us save energy which is the main goal of our brain.

Saving energy is a very important function, yet it does not help us in situations where we really need to pay attention and listen with focus and without prejudice. This is why, even with the best intentions, we are not always helping people or clients the best way we could or should.

There is however some good news. As before, we can train our brain habits to improve the quality of our performance such as listening, questioning, processing, focusing, etc. Purposefully training our brain to the standard we want and need in turn improves our sales results and customer experiences. The good news is we can program in better capabilities by first consciously, deliberately making them important and practicing them until they become automatic, part of our subconscious. This way when we need to access these skills, they are easier to retrieve and fulfill the brain’s main goal; to consumer less energy.

So which subconscious programs are currently serving us well and which are viruses causing us to derail?
Every thought we have is either health enhancing or health depleting, so how are you programming your brain and is it able to give you the performance you need?

We need to take care with our thoughts. We have a saying at Barrett ‘watch who you let near your mind’ for good reason. Thoughts are very contagious and passing on the wrong ones to others can have disastrous consequences. Just think how most people feel about prospecting – most people are scared of it even if they haven’t had to do it themselves. Most of their perceptions are formed from hearsay not actual experience. This is why all of our programs include Mindset as a critical component so people can reboot their subconscious hard drive with better quality content and habits. It’s also why Barrett recommends interval training for all our programs to provide opportunity for people to apply their new skills, behaviours and mindset bit by bit so they create new and better habits in their subconscious.

If you want to develop or improve your brain fitness take a specific look at our Optimistic Professional program on our Mind Your Emotions website. And for more information on neuroscience and sales culture please contact our head of Consulting and neuroscience expert, Kelly Rothwell on 03 9533 0000.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

The New Age Customer

August 4, 2011 in Customer Service, Procurement, Sales Leadership, Social Media

In a world still recovering from the GFC and grappling with the buzz of social media, we are now in the midst of a war between retail and online shopping facing daily decisions about purchasing locally or overseas, and B2B sales teams challenged with moving from selling product transactions to being business people who can sell value and ideas.

It’s no wonder that businesses are grappling with the new age customer who has emerged looking somewhat different in this new climate.

New Age Customer

New Age Customer

 

Sales leaders often struggle with the changing dynamics of the customer relationship. The Sales Industry has spoken for years about the importance of aligning every aspect of sales, marketing and the whole of an organisation around The Customer, yet we see sales forces and organisations at large consistently missing the mark.

That is why CSE11, Asia Pacific’s Premier Sales Leadership Conference is focusing on getting customer relationships right. As part of the conference program I am speaking in concert with a leading procurement professional about The New Era of Professional Selling: The Pathway from Supplier to Partner which is an industry first.

Conference or not, we need to adapt and improve our relationship dynamics. Sales leaders need to ask key questions such as: ‘how do we change our customers’ perceptions around the type of relationship we have with them and the value we bring to their business?’ and ‘how do we move away from being seen as a vendor who ‘sells stuff’ to that of a ‘hard to substitute’ Business Partner who adds critical value to their business?’

Today’s customer is smarter, savvier and more socially aware. They know what they want and can easily find where to get it. They have access to information at the click of a button and are mindful of price. They’re not averse to discussing with strangers the merits of a product or service online and they’re not afraid to name and shame. Competition is high and expectations even higher. The changing role of the customer means that sales people and business people need to adapt or get out.

For business, it’s six times more expensive to acquire a new customer than retain an old one so it is critical that businesses educate all their people on how to work with clients even if they are not in touch with them every day. Interestingly 68 per cent of customers stop dealing with a business because they’re upset with the treatment they received from the sales people, customer service person or someone else in the business.

Prior to the internet most used to suffer in silence and simply go elsewhere. Now customers are making themselves heard via the internet through social networking sites and blogs. Prior to the internet studies revealed that one unhappy customer told 11 others, who in turn told five other people. With the Internet and the variety of blogs available, the flow on effect of an unhappy customer could number in the thousands and be devastating to your business.

The new age customer expects more than ever before but this doesn’t mean you can’t keep up and deliver. It doesn’t need to cost you more but you will need to take time out to revisit your business strategies and reevaluate the way you deal with your customers.

Key areas of importance are:

  • Customer service
    Are you delivering quality customer service both online and in person?Many businesses don’t take enough care with online customer service believing that as a quick and effective communication tool the job is done. Untrue. In fact, more care needs to be taken. By communicating online with your customer, you lose the personal phone or face-to-face opportunity. You therefore need to make more effort with your presence online. Responding quickly to customers with the right information they need is key. Handle queries simply and easily. Make sure you clarify and solve people’s problems and communicate in a positive, professional manner. In some markets you have less than two hours to get back to people before they move on.
  • Listening
    Listen to your customers. Stop talking about yourself and your business. What do your customers want and need? Are you giving it to them? Listening doesn’t need to just be one-on-one. Take time out and explore the web. What is being said about you and your brand? Or what is being said online about your competitors? By reviewing the web you will gain insight into customer’s expectations and will find it easier to give them what they want.
  • Consistency
    People don’t like change but we are resilient creatures and we do adapt to change. We much prefer it if we know it’s going to happen and can prepare ourselves which is why businesses should communicate potential change to their customers and give them time and help to adjust. If you aren’t planning change, make sure your sales team and your customer service people know your processes and are all providing the same advice. Your customer wants to know what to expect when they deal with you and doesn’t appreciate a sudden change of service.
  • Dialogue not monologue
    I always encourage sales people to have dialogues rather than monologues with their customers. The new age customer doesn’t have time to be preached to. They want to talk and they want to be heard. They’re in touch with you because they’re interested in what you have to offer, but they probably have others waiting in the wings to take their business. Long gone are the days of sales monologues, today’s new age customer has completely outgrown this tactic and now want to be listened to. Let your customers do the talking, ask them questions, find out what they are after and then work with them to give them what they want and/or need.

Smart businesses and sales teams know there are many ways to work with our customers and develop deeper value based relationships that are based on true partnerships.

If you can, join us at this year’s CSE11 conference which brings global and local industry case studies of organisations getting customer relationships right. The conference will focus on uncovering the enablers and blockers that will either derail or enable the acceleration of sales performance in today’s market. Over 200 industry sales leaders will be sharing their insights supported by keynotes.

This will be an incredible learning experience with no doubt a few gold nuggets to walk away with! Barrett will also be hosting tables for our clients and contacts to ensure you get introduced and connected to key stakeholders and international speakers. If you would like to attend please download the registration form or please register your interest and we will get an information pack sent to you ASAP.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

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