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Complacent Sales Reps
When entering the boardroom at Capital Paper, a Kentville, Nova Scotia, Canada-based jan/san distributor, it’s tough for the company’s six person sales staff to overlook the elephant in the room.
Plastered on the boardroom wall for all to see is each salesperson’s “thermometer” — paper cut outs in the shape of thermometers that record each sales rep’s performance throughout the year. At the end of every month, each thermometer is filled in with each rep’s sales numbers, with their predetermined yearly sales goal at the top.
Used as a motivational tool and to spark friendly competition among the sales force, the top performing salesperson — the one whose thermometer is the highest at the end of the year — is given a $1,000 prize from the company.
“It’s very visual to see who is winning and who is losing and that’s been a subtle way to get guys motivated,” says Jeff Zettler, the company’s president. “Most people don’t like to lose.”
By turning his salespeople’s daily job into somewhat of a selling competition, Zettler is trying to steer clear of the trap that just about every jan/san distributor has fallen into: complacent sales reps.
Complacency, a widespread intrinsic flaw — even in today’s period of economic decline — is holding salespeople and their distribution organizations back from pushing beyond the status quo.
“Sales guys in the jan/san industry have become complacent over time,” says Zettler. “If they get to a base that they’re happy with, say they’re making $60,000 a year, and they’re going along with a good customer base, they tend to get comfortable. Sure they’ll try to sell a little more to their current customers, but as long as they’re hitting their sales numbers they’re comfortable.”
That contentment is more typical than most distributors are willing to admit. In fact, a common trend with most veteran sales members is that they tend to stay within their comfort zones of established customers and familiar products. With that hanging overhead, distributors have been experimenting with ways to get sales employees to go above and beyond their comfort levels.
“It’s easy to buy product, it’s easy to process the orders, but the biggest concern distributors have is how to motivate salespeople,” says Bill Weidmaier, president of Iowa-Des Moines Supply Inc., Des Moines, Iowa. “How do you get your people to go out and call on new accounts and develop new business? It’s a constant battle.”
Traditionally, distributors have found it rewarding to entice salespeople with special incentives or rewards in addition to their base pay. So it’s no surprise that according to a recent sales survey conducted by Sanitary Maintenance magazine that 70 percent of distributor respondents say they are using incentives or bonuses to get the most out of their sales staff.
Varying greatly depending on the characteristics of the sales force and the leadership style of the sales manager, there are a number of strategies currently being used by distributors to motivate salespeople in the jan/san industry. Some distributors host contests, give out cash bonuses and provide vacations, but the most common sales motivator used to get salespeople to go beyond their base pay is setting goals for their sales staff, according to 67 percent of distributors surveyed by SM.
“The biggest sales motivator that we found is setting a budget for the year and if they don’t hit their budget, they’re not getting a raise and they might even get a demotion in salary or they might be out the door,” says Zettler. “Carrying the big stick isn’t the nicest way to run your business, but we haven’t been able to put many carrots in front of them.”
Sales goals aren’t always enough to motivate staff. Sometimes salespeople respond better to money. In fact, 88 percent of distributors surveyed by SM say their salespeople typically respond better to monetary incentives than non-monetary incentives. In addition, 58 percent of distributors surveyed are handing out bonuses for opening new accounts, meeting sales goals or selling a certain percentage of a particular product or product line.
Most cash bonuses, however, are not coming from distributors’ pockets. Instead, they are coming from manufacturers who drive programs, known as spiff incentives, aimed at getting distributor salespeople to sell more of their products.
“A spiff program through the suppliers is very common and can be somewhat lucrative for the sales rep,” says Zettler. “That’s not coming out of a distributor’s pocket, so that’s always nice.”
For example, some suppliers will give a distributor salesperson $2 for every case of product sold. So if a salesperson goes out and sells 200 cases of product during this spiff promo period, the salesperson can earn an extra $400 from the manufacturer, on top of their base pay from their distributor company. Manufacturers also entice salespeople with non-monetary rewards as well.
A manufacturer recently introduced a spiff program to Capital Paper where the company’s sales staff was encouraged to increase their sales by 25 percent on a certain line item. Those salespeople who hit that number received a free round-trip flight to anywhere in North America.
Most often, manufacturers will approach distributors to see if they’re interested in partaking in spiff programs. However, distributors can also ask manufacturers if there are any additional incentives that they can offer their salespeople by selling a particular product or product line.
After cash bonuses, the next most popular incentive is competitive contests, according to 45 percent of survey respondents.
At Armchem International Corp., in Fort Lauderdale, Fla., for example, this incentive program has been a great motivational instrument for the company’s sales staff.
The company holds quarterly sales contests where employees can win prizes such as televisions or computers for outperforming their colleagues, says Andy Brahms, the company’s president.
“The prizes are not that costly but because there’s something there that they can compete against, I feel that the camaraderie and the in-house competition helps to stimulate quite a few of the salespeople because they’re competing against their comrades,” he says. “That a lot of times for competitive people is enough to get them out there and make them want to do better, just because they don’t want their friend to do better than them.”
Although it may build solidarity among sales employees, distributors have varied takes on the benefits of competitive contests.
“The good salespeople always seem to win the contests,” says Weidmaier. “They are the ones that are making the most money and are the most driven. But it doesn’t seem to motivate the mediocre salespeople to new levels.”
Contests can also diminish the spirit of competition and leave members of their sales staff discouraged. So instead of making it a competition, some distributors suggest setting individual goals so that every salesperson can win, instead of rewarding the top seller.
Other popular motivators include recognition at company events or ceremonies (39 percent), as well as entertainment rewards such as trips or gift cards (36 percent).
At Armchem International, when sales employees amass certain sales numbers at the end of the year, Brahms takes his top selling salespeople and their significant others on a week-long all-expense paid vacation.
A Different Generation
Incentive programs don’t work for everyone, however. Not every salesperson is motivated by money and rewards. In fact, a major gaffe that distributors ignore is that the modern sales force is not necessarily motivated by the same things as previous generations, says Dave Kahle, expert sales coach and president of DaCo Corp., Comstock Park, Mich.
“Today’s salespeople, the 20- and 30-year olds coming into the business are not nearly as motivated by money as the older generation was,” he explains. “The bosses and the owners who are people in the 50s and 60s were highly motivated by money and since they were, they think everybody else is. But the truth is the 20 and 30-year olds are not nearly as much.”
What seems to motivate the younger distributor salespeople today, however, is to have distributor companies prove that they are willing to invest in their careers, says Kahle.
“They expect their employers to invest in training and educating them, which, by the way, most distributors are dismal at.”
But with the current economy in shambles, Kahle says salespeople who normally aren’t motivated by greenbacks may soon change their outlook.
“We’ll see. The issue of money-motivation may change in the near future due to the economy,” he explains.
If money-based incentives programs still do not drive distributor salespeople to perform, Kahle says it’s best for distributors to change their sales staff’s behavior by instilling some discontent.
“One way to do that is to change their compensation plan,” he explains. “But that’s not the only way. You can also change their territory, you can change their account base, you can do things like that but the most effective is to change their compensation plan and make it more strenuous to earn an income that they have to produce more to be content.”
Besides motivation, educating salespeople on the art of selling can also help boost sales. In fact, an ongoing problem with distributors is that they want their salespeople to sell more and they think how they can motivate them, but the fact is the salespeople have never been taught how to sell well, says Kahle.
“So what they’ve done is, since very few distributors have ever invested in training their salespeople, the salespeople are expected to just pick it up on their own,” he explains. “So you motivate your people to do more of the wrong things, you’re not going to get the results. The biggest issue is not motivation, the biggest issue is education. They just have never been taught the best practices of distributor selling.”
Driving distributor salespeople to sell more and go beyond their selling comfort zone will always be a difficult proposition for distributors. Rewarding them with incentive-driven programs is one popular way to do so, but distributors must continue to push the envelope by constantly revisiting their compensation plans.
Compensation Leads To Complacency
Managing a sales staff can be tough for jan/san distributors. Deciding on how they are going to compensate their sales employees is even more challenging. In fact, many distributors have searched — and are still searching — for the right sales compensation plan that can truly motivate their sales staff and improve sales performance.
A commissioned salary is the most common and traditional way distributors have motivated and rewarded salespeople — especially veteran team members — for meeting sales goals or closing big deals. The biggest advantage associated with a straight commission compensation plan is that it gives sales employees an incentive to work harder for their paycheck. However, straight commission programs typically reward only the top 5 percent of the sales force, and these salespeople are driven by the need to achieve and they will seek higher levels of performance no matter the compensation plan. The rest will plateau at an income level they are most comfortable with, says Dave Kahle, expert sales coach and president of DaCo Corp., Comstock Park, Mich.
Traditionally, distributors started new or inexperienced sales members out on salary. The basis behind this compensation plan is to reduce the pressure to sell.
Nick Spallone, president of Tahoe Supply Co., Carson City, Nev., says by paying his salespeople on straight salary actually makes the salesperson more effective and provides an overall better purchasing experience for the customer. It also provides stability.
“As far as month to month or day to day, there’s definitely some stability there,” Spallone says. “All of my salespeople are really liking the fact that they don’t have to worry about [job stability], they can just do their job.”
A salaried compensation system also turns salespeople into consulting experts rather than pressured salespeople. Spallone says he markets his company to customers as a non-commission sales company.
“It’s also a benefit to our customers because they know that our employees aren’t going to make additional commission if they try to sell them something out of the blue,” he says. “We use that in a lot of our marketing towards customers that we’re non-commission.”
On the flip side, salaries can make for a pay ceiling and limit the amount a salesperson could potentially earn and make them complacent.
“If you’re getting a salary, you’re never going to make as much as you would on straight commission,” says Andy Brahms, president of Armchem International Corp., Fort Lauderdale, Fla. “Because salary means that there might be other little benefits and perks that they’ll give you and you’re never going to be able to make a whole lot of money because they’ll limit how much you can make in bonuses or commission.”
There is no simple answer to overcome complacent commissioned or salaried salespeople, but what has been rewarding for some distributors is a pay scale that balances both commission and salary.
The salary is a benefit because it is the floor — the least amount of money a salesperson can make, while the commission is boundless pay based on performance, says Kahle.
As distributors struggle to develop a compensation plan that works for their sales staff, providing a mix of salary plus commission just may motivate them to sell more and make their hard work worthwhile.