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The journal of high-performance business

This article originally appeared in the September 2007 issue of

Compensation

How to motivate your salesforce to great performanceBy Richard J. Bakosh

It’s not just about the paycheck. Effective incentive compensationmanagement is based on an understanding of basic human motiva-tion—on the importance of trust, self-esteem, social recognition andimproved chances to fulfill one’s potential.

What motivates a sales force? It’s an age-oldquestion, of course. But these days, it’s arguablymore important than ever, as organizations in many industries and different parts of theworld face critical talent shortages that couldimpede their plans for growth.

During a time of worker scarcity, a betterunderstanding of basic human needs and ofthe methods that can sustain high levels ofmotivation among a company’s sales staff isimportant for two reasons. First, organiza-tions need to motivate and engage their bestworkers to increase the chances those workerswill stick around. Second, when a large per-centage of a workforce is nearing retirementor being lured to different jobs, companies

want to motivate those who remain to performat the highest productivity levels possible. In both cases, it’s a big challenge. (For arelated article, see “Talent: Leveraging yourmost important competitive asset,” Outlook,September 2007.)

Based on Accenture research and on ourclient experience around the globe, webelieve that when it comes to successfulmotivational approaches and incentive com-pen-sation strategies, sales executives must“go back to go forward.” That is, they mustrediscover some of the basic and deepertruths about what factors—besides financialcompensation—motivate their sales profes-sionals, and then use those insights to design

a more comprehensive approach toincentive management.

Creating a culture of trust; leveragingthe power of peer recognition; andfocusing on the enablers and toolsthat help salespeople reach theirpotential in an increasingly complexbusiness environment—these are allcritical parts of the overall picture ofmotivating a sales force more effec-tively. By gaining a deeper knowledgeof human motivation, sales executivescan put in place a more holisticapproach—one that integrates people,process, technology and compensationstrategies—to encourage and rewardthe behaviors that help produce high performance.

What’s more, gaining insights intowhat really makes a sales force tickhas benefits that go well beyond the sales organization, since many of the lessons also apply to work-forces in general. Not all workers, of course, have motivations andincentives as tied to the very defini-tion of their jobs as salespeople do.But today, those managing all typesof workforces are beginning tounderstand what chief sales officershave known for years: When itcomes to motivating people towardgreat performance, it’s not just aboutthe paycheck.

In other words, something more isgoing on. The question is, what?

More work, less to show for it If your sales professionals feel as ifthey’re working harder today but haveless to show for it, they may be right.

The most recent results from anannual sales performance optimiza-tion survey conducted by CSO

Insights1 point to some troublingtrends. For example, after two con-secutive years of improvement, thepercentage of salespeople makingtheir quotas declined in this year’ssurvey to just 57 percent.

The reasons for this decline becomeclearer upon closer analysis of thefindings. For example, the averageselling cycle is getting longer. Lastyear, nearly 14 percent of the firmssurveyed reported an average sellcycle of one month or less; this year,that number dropped to just over 7percent. The number of calls neces-sary to close a deal has also jumped:About 46 percent of firms said that a typical sales cycle requires six ormore calls, up from 35 percent fouryears ago. And conversion rates—moving from the initial call to thepresentation stage, and then convert-ing proposals to sales—are trendingdown again (see chart, page 3).

What do these long sell cycles anddeclining conversion rates mean?First, they underscore the challengesand complexities of today’s salesenvironment. As David Joyner, execu-tive vice president of sales andaccount management for pharmaceu-tical services company Caremark,puts it: “The demands from customersand the pressure from competitorscontinue to rise, and that results in a marketplace that has higherexpectations and more demands. To effectively sell solutions, and not just boxes, a salesperson needsto have more knowledge across abroader spectrum of products andservices.” That leads to what Joynerdescribes as “a situation where youhave to know more and sell harder,but where you may be less effectivein your overall success rates.”

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Long sell cycles and declining conver-sion rates underscorethe challenges andcomplexities of today’s sales environment.

1 CSO Insights, in collaboration with CRMGuru.com, Selling Power magazine and Sales and Marketing Executive International, conducts an annual survey identifying and analyzing the challenges that areimpacting sales performance today, and examining how organizations are leveraging people, process,technology and knowledge to successfully address those issues. Input is solicited from professionalsdirectly involved in the management of their organizations’ sales force regarding their sales teams’ per-formance across 100-plus different metrics. In total, 1,275 firms participated in the most recent study.

A second implication of decliningsuccess rates is that traditionalapproaches to incentive managementare no longer adequate to the task.Dion Joannou, North America presi-dent of communications giant NortelNetworks, notes that “it’s importantthat a company’s leadership workharder at really understanding peo-ple. I spend a fair amount of timethinking about the things, beyondjust compensation, that are going to motivate my sales team.”

Based on the results of Nortel salesteam employee satisfaction surveys,for example, Joannou has dividedthe motivational dimension of hissales force into two categories. Thefirst is what he calls “table stakes . . .the things you need to do just to getpeople fairly satisfied. Then, on topof that, another set of factors has tobe in place if you intend to increasetheir motivation.”

According to Joannou, the latter cat-egory “may not immediately soundanything like factors that appear intraditional motivation studies. Theyinclude things like sales enablement

and tools, reduc-ing quote cycletimes, getting better documentation,and developing a product that is differentiated and therefore easier to sell. Those are some of the thingsthat actually motivate salespeople—even more than sales compensa-tion incentives.”

Joannou recalls a recent sales meet-ing attended by the head of thecompany’s supply chain manage-ment function. That executive listened carefully to the concernsexpressed by the sales force about anumber of supply chain issues thatwere sometimes interfering with sell-ing to and servicing customers. “One of the most motivationalthings our salespeople heard thatday was when the supply chain guystood up and said, ‘I understand yourissues, and I’m going to fix them.’ In some ways, that was received farbetter than any type of sales com-pensation or special bonus we couldhave put on the table that day.”

Universal needs How can one best understand thefactors that influence the motivation

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Selling is getting harder

The number of companies that expect a short sales cycle is shrinking.

Source: “Sales Performance Optimization: 2007 Survey Results and Analysis,” CSO Insights, 2007; Accenture research

Average selling cycle is one month or less

2007

2006

7%

14%

Converting initial sales call to presentationstage more than half the time

Fewer companies are progressing to the demonstration phase of the sales cycle.

2006

2007

55%

49%

Sell cycle requires sixor more calls

And more companies need to work harder to close a sale.

2007

2006

46%

35%

of a sales force? One way is toreturn to the work of AbrahamMaslow, a pioneering American psychologist who introduced, in the1940s, a hierarchical understandingof basic or innate human needs.

Generally depicted as a pyramid, the original version of Maslow’shierarchy set forth five levels ofneeds. The bottom four levels proceed through basic physiologicalneeds, a need for safety, for belong-ing and for esteem. Finally, at the top of the hierarchy sits “self-actual-ization,” something Maslow called a “growth need”—striving to live upto one’s potential.

Central to the application ofMaslow’s hierarchy are two princi-ples—first, that people are motivatedto satisfy the lowest level of unmetneed, and second, that a satisfiedneed cannot serve as a source ofmotivation. For example, a starvingperson can be motivated by theprospect of attaining food; a well-fed one cannot.

Maslow’s hierarchy is based on theprinciple that human beings share a set of universal needs regardlessof their culture and experiences.However, to apply that hierarchy to a business setting, Maslow’s gen-eral principles must be expressed interms more relevant to a particularworkforce. The figure below pro-vides that reinterpretation for a sales force, and shows four levels of motivational need.

Compensation Looking at the reconstructed figure,one can see fairly quickly whyfinancial compensation alone is notsufficient to explain the motivationsat work in a sales workforce. Finan-cial compensation—though not,strictly speaking, a physiologicalneed—is analogous to the lowest tierof needs in Maslow’s hierarchy. It isbasic and important, but it touches

upon only one dimension of motiva-tion, and a comparatively low-levelone at that.

Caremark’s Joyner sees it this way:“Salespersons in general have moreneeds than simply getting a pay-check. That is part of the reward,certainly, but once you have a faircompensation plan in place, then the real work of employee motiva-tion begins.” In other words, the carrot-and-stick approach—danglingfinancial rewards in front of a salesforce—does not work very well once a person has reached an adequateincome level and is motivated primarily by higher needs.

Trust Above physiological needs onMaslow’s hierarchy is the humanneed for safety and security. In asales context, this need can also be understood as one involving thelevel of trust a sales force has in howit is treated and compensated.

Trust is a difficult thing to establishwithin a sales organization when it comes to the complex and ever-changing calculation of commis-sions. The story of Canadiantelecommunications company TelusCorp. is instructive in this context.Telus was suffering from the effectsof inconsistent and manually inten-sive incentive managementprocesses, dependent on multipledata sources that have little or noth-ing in the way of audit trails andtraceability. As a consequence, thecompany’s salespeople were veryskeptical about how their compensa-tion was determined: Without reliable,detailed reporting on commissionpayments, the compensation systemwas a “black box” as far as the salesforce was concerned.

When trust is absent, sales profes-sionals generally respond by creatingtheir own individualized shadowaccounting processes—most often an

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automated spreadsheet or other toolthey use to verify the accuracy oftheir paychecks and incentive pay-outs. While it might seem that noharm is done with such a process, in fact it can be a drain on perfor-mance and productivity. Estimates of productive selling time lost toshadow accounting activities canrange from one-half day to two daysper month per salesperson.

As Nortel’s Joannou notes, “Decreas-ing the amount of time a salespersonspends on non-sales activities is crit-ically important to raising overallproductivity. Every minute spent bya salesperson verifying compensa-tion data is one less minute availableto meet with customers and closedeals.” What can be done? In Telus’scase, the company adopted a holisticenterprise incentive managementsolution driven by next-generation

technologies to improve the level of trust, and to more closely alignsales force behavior with not onlythe company’s sales strategy but alsoits overall corporate strategy. WhenTelus implemented its new incentivemanagement system, the trust levelin its sales force grew.

Two years after the system’s deploy-ment, the average time spent bysalespeople on shadow accountingactivities dropped from 40 hours permonth to 5 hours per month. The company’s sales team recouped17,730 days of additional selling timeduring the first year of deploymentand 52,500 days the second year.

Productivity also improved. Telussaw its total annual sales transac-tions grow from 1,328 to 16,656 for two years after the implementa-tion of its enterprise incentive

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A salesforce-specific hierarchy of motivational factors

Fulfillment ofpotential: Having the supporting conditions in place that increase

one’s chances for success

Esteem, recognition, respect

Trust, safety, assurance

Compensation adequate for personal and family needs

Source: Accenture analysis

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management system. In total, thecompany achieved a 103 percentreturn on investment by the end of the first year of deployment andan astounding 3,316 percent ROI by the second year.

Esteem and a sense of belongingMoving further up the modifiedMaslow hierarchy, we come to twoprinciples that are closely linked interms of motivating a sales force:the need to belong and feel a part of a group, and the need to be heldin esteem and receive recognition.

One important aspect of belongingand esteem is the respect accorded toindividuals by senior management.But recognition from a peer group isalso critical to motivating the salesforce.

Joannou describes it this way:“There are two things that Nortel has never stopped or changed, eventhrough challenging economic times.One is our annual sales conference,where we bring our sales teamtogether, both to interact with eachother in a forum setting, but also todo peer recognition. You get thesales team up there on stage and youreward them in front of their peers.That is hugely important to them.”

The second thing Nortel has neverchanged is what Joannou and histeam call their “circle of excellence.”With this program, he continues, “we take the top 10 percent of oursales force and treat them to an all-expenses-paid trip to a nice location.One reason we’ve never cut that program, despite all of the cost pres-sures, is because it motivates yourbest performers to do even betterbecause they want to be a member of this elite group.”

In planning social or peer motivationprograms, companies must bear inmind that such programs should be

keyed to the transactional speed ofthe business. When a sales force isselling business solutions and notjust products, the sales cycle is generally longer.

The shorter sales cycle for transac-tional sales, on the other hand,means that sales results must beposted at least once a month, andperhaps even more frequently. Theposting itself becomes part of thereward, as it is a form of public peerrecognition. Those results generatefinancial rewards as well, cyclingback into the more basic elements of compensation-based motivation.

Creativity is often the key to devis-ing meaningful recognition programsthat have an impact on individualperformance and the bottom line. At one company we have workedwith, the top 10 percent of the salesforce is rewarded with the authoriza-tion to hire an administrative assis-tant. It is an interesting case of the“rich getting richer,” since these topperformers can then leverage theadditional help to generate even better sales. And the turnover ratefor that level of the sales force is notjust low; it is zero percent.

Fulfillment of potentialAt the highest level of Maslow’smotivational hierarchy is what hecalled “self-actualization,” which wehave expressed more simply as thefulfillment of potential. People havean instinctual need to make the mostof their unique abilities, and theyadvance toward that goal by havingthe conditions in place—which oftenmeans acquiring new knowledge andskills—that enable them to take onever-greater challenges.

Understood in this context, itbecomes clearer why such a highpercentage of salespeople around the world appear so unmotivated and disengaged from their work and seem to lack a commitment to

There are often deepstructural obstaclespreventing sales-people from living up to their potential.

their organizations. The complexityof the business environment oftenmeans there are deep structuralobstacles preventing salespeoplefrom living up to their potential.

In a sales environment, the rapidexpansion of the basic catalog ofproducts and services, the changingtechnical environment, and the needto sell in new ways to new cus-tomers place such a burden on thesales force that their existing knowl-edge simply may be inadequate tothe task. Psychologists tell us that inresponse to this condition—known ascognitive overload—people oftenretreat back into modes of perfor-mance that make them more com-fortable. And that can be deadly toan organization that needs its salesforce to meet new challenges by per-forming in new ways.

More sophisticated tools can helphere. For example, the AccentureSales Workbench is a comprehensive,technology-based tool that deliversa salesforce-centric, role-based sup-portive environment that providesthe knowledge, content, legacy appli-cations, productivity tools, learning,collaboration and expert networkcapabilities that enable salespeople totake their performance to higher lev-els. The supportive environment cre-ated by the tool can also be tied toan enterprisewide performance man-agement capability that linksdifferen-tiated individual performance tohigher workforce performance and,ultimately, to high performance forthe organization as a whole.

A similar kind of sales workbench has been used effectively by a majorUS medical products distributor toincrease the types and numbers of products it sells to physicians.Although the company offered more than 30,000 medical products,it found that most of its customerswere consistently ordering from just a small percentage of the total catalog.

To help its sales force succeed, thecompany rolled out an applicationon a Tablet PC that is now used byits field sales force. One of the func-tions of the new application is whatthe company calls a “condition cal-culator.” It uses data mining tech-niques—similar to the methods usedby Amazon.com to link one cus-tomer’s purchase patterns to those of other customers—to suggest addi-tional products the physician mayneed based on what other doctorshave purchased, on that doctor’s own past buying preferences, and on known ways that multiple prod-ucts can help serve patients better.As a result of using this new tool,the company has seen dramaticimprovement in its sales perfor-mance, including a 400 percentincrease in cross-selling.

These sales tools, along withimproved training, put workers in a position where they have a betterchance of overcoming cognitive over-load—and, more important, a betterchance of fulfilling their potential.

Going back to go forwardIn the face of complex performanceenvironments and looming workerscarcity, sales executives must returnto the basics of human motivation tounderstand why financial incentivesalone cannot hope to move thebehaviors of the sales organizationin a direction that can support busi-ness growth.

When compensation is approximatelyequal among the sales forces ofcompeting companies, those with a better chance of achieving highperformance will be the ones thatrecognize the importance of suchthings as peer recognition and a trusting relationship between sales-people and management.

Companies must also be betterattuned to the challenges of the com-plex marketplace and of cognitiveoverload; the two often combine to

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impede the ability of the sales forceto achieve its potential. It is vital toboth personal and corporate successthat critical workforces are given thetools they need to succeed in a morecomplicated marketplace. Technologyis a key enabler here. Advanced solutions now provide real-time per-formance support for sales personnelat the time of need, and also providelinks to companywide performancemanagement systems.

By understanding how an integratedand holistic approach to motivationworks—the importance of trust, ofself-esteem, of social recognition, of improved chances to fulfill one’spotential—traditional incentive com-pensation management strategies canbe rethought and implemented inways that improve the performance of the sales force and help the entirecompany achieve high performance.

About the author

Richard J. Bakosh is the managing partner for Accenture’s Sales Strategyand Sales Transformation practices. In this role, Mr. Bakosh leads a globalteam—comprised of experts in salesstrategy, sales enablement, talentmanagement and sales operations—focused on helping large organizations

increase revenues through improvedproductivity. He has more than 20years of industry experience coveringall facets of business and sales man-agement at Fortune 500 companiessuch as W.W. Grainger and GeneralElectric Co., and has been named oneof the Top 25 Sales & MarketingLeaders in the World by the CorporateExecutive Board, Washington, D.C.

richard.j.bakosh@accenture.com

Jason Angelos, the Los Angeles-based Accenture Global IncentiveCompensation Management lead, contributed to this article.

Outlook is published by Accenture.

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