Is your sales force drifting into mediocrity? What are you using to drive success in the short, medium, and long term? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha.
Most sales forces focus a good deal of their attention on the short term — on bringing in today’s sales or making this quarter’s numbers. It’s understandable: The sales team wants to be successful. Quarterly goal attainment is a visible measure of success, and often a determinant of incentive pay. Analysts and investors track company performance against quarterly goals, so company executives push the sales team to deliver on the company’s promise to the investment community. Sales leaders divide the national sales goal among sales managers, who allocate their portion of the goal to their salespeople.
In short, everyone feels the pressure to deliver quarterly results.
But sales forces that are managed only to meet short-term needs can drift into mediocrity. In extreme cases, the sales culture can become toxic, as salespeople make minor ethical compromises to reach short-term goals, and those behaviors evolve and spread. Over time, sales forces that focus excessively on the short term may not survive.
Achieving a balance between today and tomorrow requires implementing a mix of sales-force decisions and programs to drive success in the short, medium, and long term. And it requires anticipating the future consequences of decisions so that actions that boost immediate results don’t hurt performance down the road.
The best sales leaders focus their attention on multiple timeframes as they make decisions and implement programs to impact performance. For example:
They develop and retain the best sales talent this quarter by recognizing and appreciating successes; this year by training and coaching to develop competencies; in future years by hiring the best talent and creating opportunities to build rewarding careers, while dealing effectively with poor performers.
They motivate salespeople this quarter with sales incentives and feedback on goal attainment; this year with a top-notch sales compensation plan and recognition program; in future years by creating and sustaining a winning sales culture.
They encourage productive use of sales time this quarter by communicating company priorities; this year by reducing role pollution (e.g., sales time spent on duties belonging to customer service); in future years by designing the best sales force structure and providing enablers (data, systems, and tools) for supporting ongoing sales force and customer needs.
The best sales leaders understand the downside of excessive short-term focus. They recognize that actions to boost immediate results can sometimes hurt performance later, and they anticipate and plan for any future consequences of their actions. For example:
They structure the sales team around markets, not people. To keep a good employee, it can be tempting to create a job to match the needs of that individual. An example of this is redesigning a sales region for a manager who has moved to a new and less convenient location. Although it may keep the manager happy in the short term, eventually they are likely to become frustrated by trying to lead a region that doesn’t make good business sense. Worse, the gerrymandered region is likely to outlast the tenure of the manager it was designed for. Sales jobs are best designed from a customer and company perspective first — then the best personnel can be wisely matched with jobs that are consistent with long-term business needs.
They avoid rushing to fill a position. A vacant sales position, say, for a key account role, can create a temporary setback and lost sales opportunity. But a mediocre “warm body” hire to fill the position places sales in jeopardy for a much longer period. The best sales leaders anticipate the long-term consequences of their hiring decisions. It can take a year or more to recover from hiring the wrong person for a sales position. Even worse, it can take three years or more to recover from hiring or promoting the wrong person to a manager position. Sales leaders often regret hiring without sufficient forethought, and then regret taking too long to let the poor performer go.
They anticipate the future consequences of sales compensation decisions. A startup online advertising company in the early days of e-commerce paid its sales force entirely on commission. This worked well at first, attracting motivated people to the sales force and encouraging them to work hard to generate trial in a new and uncertain market. Sales took off and selling got easier. Soon salespeople were earning six-figure incomes without having to work particularly hard. As competitors entered the market and sales growth slowed, compensation costs grew too high for the sales output. Salespeople earned big commissions on easy repeat sales and rarely pursued new business. Sales leaders had not anticipated this situation when they first set up the sales compensation plan. Yet they were afraid to change the plan for fear salespeople would jump ship. The best sales leaders plan ahead when they set up a compensation structure. They make adjustments every year to keep compensation costs aligned with market realities and to avoid a situation where salespeople feel entitled to ever-escalating pay (even if the market spirals downward).
Leaders can drive immediate outcomes in a sales force by emphasizing short-term results alone. But ensuring sustained success requires a continual focus on a broad portfolio of decisions and programs, while anticipating the consequences of today’s actions on tomorrow’s results.