In 2003 I completed my MBA at Henley Management College. My dissertation focused on the effect on performance of paying commission to business-to-business sales people. I was arguing the case that performance-contingent rewards undermined productivity and creativity and, importantly, made the client-seller relationship very superficial.
I was almost excommunicated from the sales brethren for being a heretic. A commission denier!
Don’t get me wrong. I was very grateful for being paid a lot for doing something called ‘selling’. I also recognised that the primary role of a frontline sales person is to grow revenue. But, when forced to choose, which was most important to me: hitting the target that triggered my commission, or putting my customer first, even if it meant missing the quota. Was I intrinsically motivated because I loved what I was doing, or extrinsically motivated by the commission at the end of the month?
I interviewed sales people for my dissertation and they would say: “What! But I am motivated by money…” And the companies I surveyed responded with: “But how will we motivate our sales teams to hit their numbers?”
As the manager of a high performing team, I wanted to understand more about what made sales people tick and explore the relationships they were building with clients. Could a non-quota, no commission structure work?
I continued my career in sales leadership, with the understanding that all the organisations known to me would continue to use the simple carrot and stick method to ‘motivate’ their sales teams. But it always felt disingenuous to me. If we are really going to solve a customer’s problem, then we need to adopt an unbiased approach, even if this means deferring a deal now for longer term gain in the future. We needed to move away from the stereotypical sales ethos in which buyers cannot trust the proposal because of the inherent self-interest.
I developed my own approach based on Self-Determination Theorywhich explores how our behaviour is motivated by three psychological needs:
- Autonomy: how our options and choices increase our intrinsic motivation.
- Competence: how positive feedback increases our intrinsic motivation.
- Relatedness: how membership of a secure, stable group predicts our capability.
Then, in 2009, I was relieved to read Dan Pink’s New York Times Bestseller, Drive: The surprising truth about what motivates us.
His book more eloquently argued my belief in our innate human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world. You can watch his Ted Talk (21 million views) explaining that extrinsic motivation does not lead to superior performance, so why do we continue to use this methodology in sales?
But I hear sales leaders ask what happens when it’s the end of the month/quarter/year and we need the deals closed? How, as sales organisations, can we ensure our people are motivated if the reward isn’t available to them at the end of the period?
Does Dan live in the real world of dog-eat-dog, winner-takes-all?
Well I believe he does. And there are now many progressive organisations out there dispensing with the traditional, revenue-based compensation model and adopting the more customer-centric, trust-building approach of recognising the whole company. And there are more companies recognising that the sales person who is at the forefront of the relationship should be recognised for creating fantastic experiences for their clients. As Graham Hawkins points out in his forward-thinking 2017 blog “No Commissions and No Quota”:…..the future model for B2B Sales:
“A sale is something that happens when you are immersed in helping your buyers to get what they want.”
The key words here are IMMERSED and HELPING. If you are driven by a revenue-based quota with quarterly goals, there is no way you can be immersed in helping your buyers. And if they know you are near the end of the sales period, they’ll probably want to ignore you anyway, or know they can extract a much better deal because you have a number to hit.
When I reflect on the deals I have done in my career, I know my best have happened when I’ve immersed myself in the customer, built their trust, explained that I am there to help them achieve what they want – despite my quota, not because of it.
I believe, like Graham, there is a strong future for business-to-business sales people in organisations that allow them to become more customer focused than revenue-centric. And key performance indicators can now be based on direct feedback from clients, buyer advocacy and loyalty metrics.
This has always been a contentious issue amongst my peers, and we’ve enjoyed many an evening debating the motivational systems of sales organisations. I believe that the time is right for vendors to shift gears and focus on different mechanisms that reflect the way business-to-business sales are completed today.
Philip Hesketh is the founder of Qdos Performance.
Qdos helps sales leaders – across all industries – deliver greater productivity, motivation, collaboration and performance.
Qdos Performance is a dynamic platform that gathers key data connecting sales people’s activities with their customers’ feedback. It puts these real-time insights in their hands, so that they can learn from every customer interaction. And it equips sales leaders to help their teams perform better.
Qdos was founded by a cross industry team of sales leaders. We’re fanatical about sales effectiveness and performance. And we’re driven to understand and share what makes a high performing sales team.
We know that the best sales people are at the forefront of their client relationships: tuning in to their customers’ needs, controlling resources, matching people to people and driving the buying agenda with urgency. They listen actively, have great empathy, build genuine rapport and ultimately influence the long-term relationship as much as the immediate sale.
You can read my dissertation here Hesketh Dissertation. My question was why organisations need to pay commission and set a quota for people who love what they do? I was convinced we could achieve a higher level of team performance without using performance-contingent rewards.
The time now is to make that change, to a performance valued culture centred on the customer experience.