CHAPTER 20
Incentivizing Purpose
There are two things people want more than sex and money—recognition and praise.
—Mary Kay Ash, founder of Mary Kay Cosmetics, Inc.
There aren't many jobs where they publicly publish the performance reviews. But sales is one of them. In sales, there's nowhere to hide: everyone knows how you're doing.
We've all seen sales teams scramble to make year‐end bonuses, pulling forward every bit of revenue they can. They hit the target, yet it's often at the expense of customer relationships and future business. You can do better. You want to do more than hit your revenue targets. You're trying to create sticky revenue: revenue that comes back to you again and again. You want to create such a differentiated sales experience that your customers don't look elsewhere.
There have been lots of studies about sales incentives, but for the most part, the research focuses on driving short‐term revenue. It's as if salespeople are cash registers—push this button, hit that key, and bang! Out comes the money. You already know that's not true. Incentivizing long‐term success means rewarding the right behaviors and galvanizing your team to create differentiation.
Most sales teams already have a commission plan, a president's club, and other financial incentives to reward top sellers. There are plenty of simple models to illustrate how to do that. You want to do more. A Noble Purpose leader creates rewards, recognition, and incentives that get the team so emotionally invested that they create emotionally engaged clients who become your best ambassadors.
To be clear, I'm all for monetary rewards for sales performance. The people who generate revenue should get a share of it. I've been a commissioned salesperson, P&L leader, and business owner whose income was dependent on sales for most of my career. My principle is always that as your sellers make you more profitable, you should make them more profitable.
Having said that, let's look at some additional creative ways you can point your team toward your purpose and create a tribe of true believers who are in it for the long haul.
What the Marshmallow Experiment Tells Us About Sales Incentives
Perhaps you're familiar with the famous Stanford marshmallow experiment. The 1972 experiment conducted by Professor Walter Mischel was a study in delayed gratification.
In the study, a child (usually about age 4 or 5) was offered a choice between one marshmallow immediately or two marshmallows if they could wait for several minutes. The researcher left the room, leaving the child alone with the single marshmallow for 15 minutes. Most of the children ate the marshmallow.
The children who were able to delay gratification and sit there for a solid 15 minutes with a marshmallow in front of them, and not eat it, were rewarded with two marshmallows. If you know anything about 4‐ and 5‐year‐olds, you can imagine how difficult it is for a young child to not eat a marshmallow. Some kids ate it the moment the researcher closed the door. Others tried jumping up and down, closing their eyes, walking to the other side of the room, and using a multitude of other self‐imposed distraction techniques to avoid eating the marshmallow. One child even took a little nibble of the back of the marshmallow and turned it around, hoping the researcher wouldn't notice. Only a few children managed to wait the entire time.
Here's where it gets interesting and has direct ramifications for business. The researchers followed the children as they grew up. Over time, the children who were able to delay gratification scored better on a variety of life measures, including a better ability to handle stress, better social skills, lower substance abuse, and even better test scores.
Using the marshmallow study of 5‐year‐olds as our jumping‐off point for incentives is not meant to imply that your people are children. It's the opposite; it's simply that we're all human. Given the choice, especially when we're tired and frustrated, we don't want to take the time to strategize how to get two marshmallows; we just want to eat one marshmallow right now.
The marshmallow experiment illustrates the challenges and rewards for delayed gratification. Your job is to help your team see that when you delay the gratification of trying to make a short‐term grab for the customer's money (one marshmallow), you can get a bigger, more meaningful sale later (two marshmallows).
When researchers reran the marshmallow experiment years later and controlled for social and economic background, they discovered, not surprisingly, that the children who were able to delay gratification were more likely to come from stable environments where there was food in the pantry and adults kept their promises.
It wasn't that they were more strategic kids; it was that their environment made them more confident. Remember the earlier chapter about sitting with uncertainty? When your environment teaches you it's okay to wait, you get better things in the end, you don't have to worry, we'll support you, you're more likely to play for the second marshmallow.
As a leader, you create the environment. Paint a picture for your team of what two marshmallows looks like, and also reward them for the behaviors that will get them there. Year‐end bonuses are great, but incremental rewards, which don't always have to be monetary, will keep the momentum going.
Hit Your Goals with Momentum
Kyle Porter, founder and CEO of Atlanta‐based startup SalesLoft, says, “Our goal is to hit our revenue numbers with momentum.” SalesLoft, a SaaS firm that provides a sales engagement platform, was founded on “a shared belief that modern sales should be more about authentic, sincere interactions than insincere mass outreach programs and other less‐personal sales strategies.”
Porter conceptualized the momentum concept after signing up for a bike race. At 78 miles, it was much longer than any other race he had done. He says, “I was riding it by myself. I saw all these people with the same jersey. I asked, ‘Hey, what are you doing?’ They said, ‘Come hang out with us.’” He stayed with their pack for miles. He says, “By mile 58, I was huffing and puffing. The leader said, ‘Hey, do you want to help? Pull up front.’”
Porter, who was already exhausted, says, “I was dreading it, but you can't say no.” Yet he found when he pulled to the front of the team, “It was so much easier. I had the whole group behind me, pulling for me.” He says, “When I hit the finish line, I had more momentum, more energy, more capabilities than ever before, and that is exactly how we want to hit our revenue milestones.”
SalesLoft has driven dramatic revenue growth in a short period of time. Named a top 10 fast‐growth firm, their series D fundraising round raised $70 million. Many startups push for fast revenue growth. SalesLoft has made a point to reward client engagement. SalesLoft knows that rewarding and recognizing team members who embody their purpose creates stickier revenue. Instead of merely hitting their goals, they want to incentivize their team to hit the goals with momentum.
A leader who tells his or her team, “I want to hit our numbers with power, influence, and trajectory” has a big advantage over a leader who simply says, “Hit the number.” It's an entirely different set of marching orders. SalesLoft consistently wins Best Place to Work awards, and they attract top talent. Their solution is considered a top-tier sales engagement platform, and they're constantly innovating. Their team morale is off the chart, and being in their meetings is like swimming in a sea of positive energy.
Rewarding your sales team for things like being the seller with the most engaged customers, best display of strategic thinking, and longest‐lasting customer contract reinforces: “This is a two‐marshmallow game here, people.” You want everyone to know, “We're more than transactional cash registers. We're Noble Purpose sellers.”
Why the Winner‐Takes‐All Model Fails Midyear
One of the challenges with many sales incentive programs is that they only reward the top tier. Imagine you're a top performer; you're on track to deliver $2 million for the year. You'll make the bonus club and go on the incentive trip. Your morale is high, but then you lose a big account in October. Now you'll never make $2 million. Do you quit trying? Do you throw all your sales into next year?
If your only incentive is to hit the top tier, you'll likely give up on this year and start loading up next year. Let's be honest: people find a way to game the system. Look at your comp plan and ask yourself, what's the incentive for people who aren't top performers? Make no mistake, the cache and cash for being a top performer is a good thing—a very good thing. The pride that comes from making the President's Club or the Inner Circle is real. People should strive for that. Top performers look forward to it.
But you also want to ensure that the people who aren't going to make the top end keep their head in the game.
Reward the Right Behaviors
Patrick Hodges, general manager for Blackbaud, whom you first read about in Chapter 2, runs a big team, many of whom are in their first sales job. They have a long sales cycle, so it's unlikely new people are going to be bringing in big numbers quickly. It would be easy for them to get discouraged. To keep his team motivated and focused on the right behaviors with customers, Hodges provides tiered incentives. He says, “As sales changes, customer relationships become even more important. You want your people to develop those skills and you want to reward them for it.” He also notes it's very costly to replace people. He says instead, “You need to help your 50% and 70%ers to get better.”
People who may not qualify for Blackbaud's President's Club can still be successful and earn rewards. Sellers who meet preset criteria that include completion of training, validated comprehension pre-set with testing and role‐plays, and baseline sales performance can earn additional money. They also get interim promotions within their role. Hodges says, “It gives people forward career momentum.”
Notice that Hodges is purposeful about rewarding people for learning. They have to pass tests and do customer‐focused role‐plays to demonstrate they're fluent in the right behaviors to qualify. By doing this, he's reinforcing, “We're learners, we're always improving, and we want to become experts in the right sales behaviors.” It's also important to note that Hodge's program includes a level of sales performance; he's not handing out meaningless participation trophies.
At SalesLoft, Porter and his team reward and recognize “Lofters” who embody their purpose and values. They make a big deal of it at weekly meetings and publicize it on LinkedIn and Instagram. Imagine your boss sharing a photo of you describing how you “put customers first” and “have a bias toward action” (two of SalesLoft's values). Your friends see it in your Instagram feed—there you are with the CEO, getting an award for the way you treat customers.
Giving Everyone a Trophy Is Not the Answer
Now is a good time to discuss a group we get a lot of questions about: millennials. You can't address recognition and incentives without talking about young people. Millennials and Generation Z behind them have a reputation for wanting instant rewards. When they do good work, they want someone to notice.
I'm going to state my premise right up front: the things younger generations are asking for in terms of rewards, recognition, and incentives benefit everyone, including the business overall.
Many think the “everybody gets a trophy” or “snowflake generation,” as some refer to them, are adverse to hard work. This has not been my experience; quite the opposite, in fact. Some of our most successful clients are filled with young people who are on fire for their work.
Blackbaud and SalesLoft are excellent examples. Patrick Hodges crafted Blackbaud's interim rewards program because he knew the young people on his team wanted something immediate. By giving out tiered promotions and interim rewards, Hodges is building his tribe of true believers.
When you tell your parents and announce on LinkedIn, “I just became a Level II Account Exec,” it fuels pride: pride in yourself, and pride in your organization. Hodges is incentivizing his team for living their purpose. His people could easily give up when they don't get success right away; or if they are successful, they could job‐hop for more money. Instead, he's giving them interim wins and helping them forge a stronger bond with the organization and their customers.
While generations are not monolithic and people are obviously unique, generations do share common cultural expectations. One reason the purpose movement has taken off is that younger people have demanded it. As a leader, this is very good news; it means you have lots of tools beyond money to incentivize your team. After working with a number of younger teams, here are some observations about incentives. The data tells us they apply to younger people; personally, I think they apply to most of us:
- Participation trophies are meaningless. When young people move out of their parents' homes, they generally don't take their participation trophies with them. You may still have your third‐place ribbon for track (that you actually won), but young people know they didn't win that plastic junk. The joke is on the parents who spent the time and money to ensure everyone felt special. Young people see these for what they are: souvenirs.
- People want a real win and to be unique while they're doing it. Yes, younger people were all told they're “special” by their parents. Now they want to prove it. They need to see that your company is reshaping the market, or whatever your version of differentiation is. Give out recognition and rewards that spotlight their contribution and broadcast why your firm is unique. It builds pride.
- Consistent meaningful feedback is a reward. People want to know how they're doing now; it shouldn't wait for review time. Quick hits of feedback are like rocket fuel. It doesn't all have to come from you. Create self‐reinforcing feedback loops involving customers and other team members. Live‐time “how am I doing” feedback like scoring customer intelligence for robustness or assessing call quality gives people recognition and boosts confidence.
- Salespeople aren't fragile, but they (sometimes) need help with resilience. You want a team who can deal with setbacks. It's especially important for young people, who don't have the life experience to realize that “this too shall pass.” To build resilience, reward it. Publically recognize people who rebound after a bad call or tough quarter. Create a Rebounder Award or a “you got this” incentive for someone who can win a deal after losing one.
If you find yourself thinking, “I did it with no fluffy incentives or nicey‐nice feedback! Their paycheck should be enough,” here's a quick reminder: if you create a transactional relationship with your employees, they'll create a transactional relationship with your customers. Both your customers and your team will quickly jump ship for a better price.
You want your rewards and incentives to build long‐term pride in your team that will translate over to customers. Money matters, and so do lots of other things.
Why Public Recognition Is Powerful
Zach Selch, principal of Global Sales Mentor, describes one of his most memorable sales awards; it's something he still remembers even though it happened over 20 years ago.
At the time, Selch was the director of international sales for South Asia for a Fortune 100 company. He says, “I closed the single biggest deal ever for the corporation, which included the single biggest PO in the history of one of the product divisions.” The product division was so excited about the sale, Selch says, “They made a golf shirt for the specific deal—the only time in the corporation a shirt was made for one deal. About a hundred were printed up. I got three; the rest went to people who worked on the deal and the top management of the company. Everybody knew the people wearing the shirt were in on the deal, and the whole company knew it was my deal. I was a freakin' rock star for a day. The best feeling ever!”
There were 250 people in the company with responsibilities similar to Selch. But only he had “the shirt.” It was a unique wearable “trophy.” He says it instilled fantastic pride in himself and his support team.
It's worth noting that Selch made a big commission on that sale. Again, you should pay your people for bringing in business. He said the commission on that single sale was double his previous year's salary. But 20 years later, what he remembers most is the way he felt when he was wearing “the shirt.” To this day, the two most important things Selch has displayed in his office are his paratrooper beret (30 years old) and that golf shirt (20 years old) in shadow boxes, for all the world to see.
You want incentives that make your people feeling like freakin' rock stars.
Nine Ways to Incentivize Your Purpose
Here are nine things you can do (some monetary, some not) to reward long‐term focus, drive the right behaviors, and build pride with your team:
- Reward customer results. Does your organization improve customer efficiency? Do you help your customers sell more to their customers? How do you help your clients improve their organizations? Find a way to measure your customers' results and provide awards to salespeople who excel at getting the best results for customers.
- Recognize and reward interim behavior. Can you create a Best Discovery award for someone who really rocks the five categories of critical customer information (see Chapter 11)? What about the best call opening of the week? Or the most customer‐focused presentation? Get creative. You don't have to give out cash; the winner can get their name on the leader board and choose lunch on Friday.
- Reward customer retention. Who has the longest‐running customer contract? Whose deals never go out to bid? Which service team helps you keep business? Reward and recognize the behaviors that keep your customers engaged.
- Give out NSP exemplar awards. Did you have a rep sleep in his or her car, in the snow, like the Graham‐White rep in Chapter 8? Did one of your salespeople do the right thing in a tough ethical dilemma? Did your support staff catch an error before it went out the door? Take a page from SalesLoft, and share your awards publically. Look for ways to recognize and reward the people who exemplify your Noble Purpose in action.
- Give incremental promotions. Flatter organizations mean fewer regular promotions. Use Blackbaud's tiered system, where salespeople move into graduating positions of responsibility and salary, earning bonuses and upward mobility within the sales role.
- Crowdsource and reward best in class. Hold a contest for creating the best presentation or sales engagement tool. Give a cash prize and bragging rights to the winner. You'll access your team's best thinking and wind up with useful tools. Name the winning presentation after the winner. Sally's killer proposal should become legendary.
- Showcase the shiny objects. If you're going to give away something, bring it into the office and put it right up front. You want to create a tangible talisman. If you're giving away tickets, put them at the front of your bullpen, along with a photo of the venue and souvenir hat. You want people to see them every day. If it's a bragging rights contest, create a wrestler‐style belt or a jacket or hat the winner can wear for the week. It might seem silly, but you'd be surprised how fun it makes it for people.
- Memorialize wins. Make sure the wins are public. Remember, you want people to feel like freakin' rock stars. Print golf shirts for the winning team; put a banner over their cubes. You want everyone to see “here's what we did.”
- Bring in customers and support staff to make awards more impactful. Blackbaud regularly brings in customers when they give out sales awards. Having the customer talk about the impact the solution had on their organization makes the award more special and builds pride in the whole team. Include the support team. The customer and the backstage team will appreciate the recognition: it reinforces why your company cares more than your competition, and it differentiates you in a powerful way.
There are lots of ways to provide incentives. Get creative with your team. Your incentives should create a high today that drives the right behaviors for tomorrow. You're building a tribe of true believers; you want them focused and excited.