How Sales Contests Kill Sales

Salespeople are motivated by money and competition.  If you want them to sell more, offer more money, and have them compete for rewards.  The sales contest is the perfect motivational combination.

Or so goes the conventional wisdom.  But it’s wrong—and many of the best salespeople will tell you so.  Here’s why.

Money and competition are about getting more money from your customers than other salespeople can get from theirs. And contests are typically short-term affairs—usually a matter of months, a year at most.

Salespeople in a contest are therefore in a rush to see who can extract the most cash out of his customers the fastest.  As one of the hoary old “jokes” about sales goes, “selling is the fine art of separating the customer from his wallet.”

I don’t happen to think that joke’s funny, and I doubt too many customers do either.  But that’s the mentality fostered by a race to extract maximum money per short term time period.

It turns customers into objects.  It telescopes time into the (very) near future.  And so it flies in the face of developing relationships based on helping the customer, and based on a longer time-frame that allows the evolution of strategies beneficial to both seller and buyer.

Here’s the paradox (there always is a paradox when it comes to trust).  Sales contests are usually held to juice up short-term results.  But the best short term results actually come from the ongoing execution of long-term strategies.  Sales contests actually hurt long-term performance.

The mania for measuring short-term has led many companies to execute a massive faux pas—managing for the short-term.   You know the saying: “you can’t manage it if you can’t measure it.”  The unspoken corollaries are, “more measurement is better,” and “if we can measure it short term then we’d better manage it short-term.”

None of it is true.  If you were to manage all the other relationships in your life this way—maximizing the short-term monetary benefit you can extract from your spouse, your friends, your children—then you would live a shallow life that will come to bite you.  It is no different in business.

Do you grant your loyalty and future business to someone who views you as primarily a source of their own short-term financial gratification?  If not, why should you expect anyone else to?

Sales contests are just one of the more obvious manifestations of this mania for short-term, treat-‘em-as-wallets, manage-like-you-measure mentality. It infects comp systems and sales process designs as well.

If you’re a sales manager, measure short-term results—but teach everyone that the best way to get them is to manage long-term.

If you’re a salesperson, then—unless you’re a year away from retirement and don’t give a damn about your reputation—act as if you plan to be in service to your customers for a long, long time.

That’s how they return the favor.

And there’s that paradox again.  The best way to make money is to stop selfishly looking to make money.  Instead, be trusted—by being trustworthy.

14 replies
  1. Lark
    Lark says:

    Sales efforts, for the expressed purpose of "making money", are inherently deceitful… no matter how we try to disguise it.

    This fact alone has me in a bit of a quandary, Charlie.

    Yes, I understand we can gussy-up the frame of this statement to make it sound more appealing… or even to change the frame entirely… but to this day I’ve yet to  come up with one single product or service to peddle on the internet  that lets me sleep well at night.

    If I had my druthers I’d prefer to bottle happiness represented by a graphical image that is an actual multi-media eBook and trade it within various barter  clubs for the essential goods and services I actually needed to  stay happy myself.

    So what the hell’s wrong with me?

    Money just seems to buy  mostly stuff  I can well do without.

    Stuff itself – like information – is produced…  and appears everywhere… in endless supply…  so I’m not so sure I wouldn’t be doing mankind a disservice by peddling more of the same.

    Maybe I should grow food or medicine and just sell it online… and in my local community.

    Then I’d be too busy to think about ethical persuasion strategies anymore!

    The eBook can be given away for free… with a link… and a wink.

    You think? 😉

    Reply
  2. Shaula Evans
    Shaula Evans says:

    Lark, I don’t know if there’s such a thing as a "persuasion strategy" that is "ethical."

    Here’s my take:

    Persuasion is the art of changing someone else’s mind, manipulating what someone else thinks.  Once you’re engaging in persuasion in a sales context, I find it hard to imagine a situation where ethics hasn’t gone out the window.

    And to be honest, I was raised by a tremendous salesman, and sales has been a big component of many jobs I’ve held.  I’ve done very well in those jobs — by choosing /not/ to attempt to persuade people.

    Instead, I talk with and listen to my customers/clients, to find out what their needs are.  Then, I let them know, honestly, whether I am able to address those needs.  If I’m not, I do my best to refer them to better help.  If I am, I walk them through the available options/choices, so that they wind up with what is right for them.

    In absolutely any field, this has been the path for me to rewarding business relationships, high-quality referrals, and happy clients/customers .  And note that persuasion was never engaged.

    From my own experience, I have to conclude that the most ethical persuasion tactic is to avoid making use of persuasion.

    . . .

    Charlie, back to the topic of sales contests.  It seems to me that it would be possible to set up contests that encourage, rather than discourage, long-term thinking. 

    Rather than make the contest objective about short-term sales results, what about setting up a contest based on things like:
    – calling through old client lists to say hello;
    – sending valuable, non-pitch information to clients;
    – socializing with clients in a no-sales, non-business setting;
    – updating data bases with information about clients’ interests, families, specialities, etc.

    Maybe a regular "contest" based on relationship-building tools, with rewards given out for improvement and innovation, could help build and reinforce professional work habits — and, incidentally, lead to a happier customer base and higher sales, without damaging the company or customer relations.

    . . .

    You also touched on an interesting tangential point in your article: "…unless you’re a year away from retirement and don’t give a damn about your reputation…."

    With hordes of baby boomers nearing retirement, I find this idea very interesting.  How /do/ you effectively manage sales people who are won’t be around for long-term payoffs?

    If you’ve given the topic any thought, and especially if you’re coming across it in your work, I’d love to hear your thoughts (here or in a stand-along post).

    Reply
  3. Charlie (Green)
    Charlie (Green) says:

    I’m intrigued by what both Lark and Shaula have to say, the idea that any form of persuasion is inherently unethical.  I’m largely in agreement, but not entirely. 

    If we think all persuasion linked to self-interest is unethical, then what are we to make of any political speech, for example?  You might well say, of course they’re all unethical, but I think there are some babies getting thrown out with the bathwater.

    Personally I like Shaula’s approach–my words for it are always do the right thing for the client, and when that right thing happens to include what you are selling, great; otherwise, steer them to someone else who can help them.  If you do that, you can make a pretty good living based on the number of times that they need what you’re selling, and it’s rewarding because it’s all based on helping people.

    Lark, I think you under-sell your ability to be of service to people.  I think. 

    Reply
  4. Martin Calle
    Martin Calle says:

    Charlie,

    I find it is a matter of training sales people to help other people get what they want. When you help other people get what they want, you get what you want – and John Maxwell is an excellent coach/mentor on this subject. Not everyone will bend their will to adopt his teachings, but those that do are found to have an uncommonly high level of integrity, accountability and responsibility. Few use sales tactics as "Jedi mind tricks" to get people to buy their stuff.

    Reply
  5. Clayton Shold
    Clayton Shold says:
    A very interesting post, I had to go back and read it a second time as my first brush left me feeling a little like it was a knock against those in the sales profession. I submit there are varying degrees of persuasion, just like there are varying degrees of trust. Most of the very successful sales folks I know don’t “sell”, instead they focus on helping the consumer make an informed purchasing decision.
     
    I agree short term sales contests may drive the wrong behaviors depending on the criteria selected to determine “winners.” A sales manager can not abdicate his or her responsibility for monitoring, managing, and mentoring their team during a short term contest. Personally I favour longer term contests. I like a mix of total production and minimum units to avoid a windfall sale qualifying a producer, which may end up driving the same behavior as do short term contests. The top producers who qualify year after year for their companies’ incentive awards understand they must sustain their results.  The trust and strong relationships they build over time is rewarded with additional business and referrals. Sales is one of the toughest professions I know. It takes a special breed to do well. I believe their mindset is the most critical element for success, passion for what they do is essential, and a competitive edge is healthy. Egos still exist, and being the number one producer isn’t just about income, it has a lot to do with bragging rights.
    Reply
  6. Martin Calle
    Martin Calle says:

    On the other hand, one of my other businesses is a piece of the world’s largest outsourced sales organization. We outsource trained and highly motivated B2B sales executives to Staples, UPS, ATT, Verizon FIOS, Starbucks etc. for purposes of account acquisition and retention. When we need to goose sales and new accounts I throw a contest that day. First place gets $100, third place gets $100 and second place gets a buck because no one remembers second place. No one cheats, lies or steals to get new accounts because it would hurt the organization, the image and the equity of clients. If anyone did, they don’t get three chances; after hearing their side of an issue on a client or customer complaint, we generally let them go. And that has proven an adequate means of instilling INTEGRITY, (What are you doing when know one is looking) for more than 35 years.

    Reply
  7. Robin Carpenter
    Robin Carpenter says:

    Please enter your comment

    I worked with Charlie Green for a decade.  We worked important consulting projects for important clients.  For a while, we shared a co-owned house.  I know him well.

    Today Charlie sells trust-based selling, but he’s always practiced trust-based thinking., with lots of thinking.  If Charlie Green says sales contests are dysfuncitonal, believe me, they are dysfunctional.

    Reply
  8. Charlie (Green)
    Charlie (Green) says:

    Hey Robin! How great to hear from you!  No friends like old friends.

    I appreciate Robin’s testimony as to my ethical standards; and he would know.

    It’s also true–and Robin also knows–that while my intentions are generally clean, I am on occasion quite ignorant, so keep those comments coming.   Just say that I’m wrong, not venal, and avoid the wrath of Robin.  

    Who, by the way, is one very smart dude in the field of financial analytics.  And curious, and with a great sense of humor.  Nice to hear from you, RC!

    Reply
  9. Shaula Evans
    Shaula Evans says:

    Charlie, now that we’re in an (American) political season, I wanted to come back to the example you raised about persuasion in political speech.

    I won’t say all political speeches are not ethical, but I’m happy to say that a large number of them are problematic.

    The purpose of public speeches in political campaigns (and indeed, many other campaign activities) is to persuade voters to support a candidate.

    Now, if this were done by accurately, if flatteringly, representing the candidate’s policy platform, vision for the job, relevant experience, and qualifications for the position, I’d be much happier about the ethics involved.  (And as a former speech writer and campaign veteran, I’d like to point out that this can be done effectively.)

    But, if you pay attention to the substance, as opposed to the rhetoric, of campaign speeches this season (and I’d recommend comparing  reading the text of the speeches to watching/listening to them, as an interesting and informative exercise), you’ll find that there’s a lot of factual misrepresentation — or at least some very ambitious bending of the truth — along with dog whistles and coded messages to special interest groups that contradict the "official" campaign messages targeted at mainstream voters.  (Cf our earlier discussion on the John McCain campaign’s powerful branding strategy.)

    As an employer, I wouldn’t tolerate and I certainly would not encourage or reward this kind of behaviour in a job interview.  And when you take away the bells and whistles, at one level a political campaign is an extended job interview before an extreme large hiring committee. I wouldn’t condone it in creating or promoting a brand for a commercial product or service, either. I absolutely wouldn’t accept it from a sales person.

    If you as a candidate honestly and accurately (i.e., you’re not deceiving yourself) believe that you can fulfill a given office in a way that will benefit me and my fellow constituents, and taking care of your constituents is your intent, then please go ahead and try to persuade me — provided that what you are saying is accurate and honest.

    On the other hand, if you are running for office in your own self interest (vs the low self-orientation in the example above), and in an attempt to "sell" your candidacy and persuade me for my support, you misrepresent who you are, what you stand for, who advises you (i.e., who you trust), what your agenda in office will be, what your past is, and how we can reasonably expect you to perform in the job…then, as in any other job interview, or sales or marketing situation, I think we do indeed have an ethical problem.

    The persuasion activities of a great many political campaigns boil down to turd-gilding.   And the solution for politicals ultimately lies in your  recent good advice to  the pharmaceutical industry: forget about the old school PR / marketing / education / persuasion/ brainwashing, and upgrade your product / candidate/ platform to a higher quality that sells itself without the need to lie.

    Reply
  10. Charlie (Green)
    Charlie (Green) says:

    Anybody that works "turd-gilding" into a sentence has got my vote.

    Shaula, let me ask your (very) educated take on two questions here:

    1. I think of the Lincoln-Douglas debates in the US in the late 1850s as the epitome of what good political speechifying could be.  They were  (at least, I understand they were) very much about policy, not so much about personalities.  And they were very erudite.  And large crowds turned out.

    That was a long time ago, and very possibly gilded by history.   And maybe those were just different times.  But do they hold out hope for intelligent persuasion on a completely ethical basis?

    2. To the point of ethics in politics, is it possible that the words don’t quite fit?  Just like a lawyer is paid to argue a case rather than find the truth, isn’t the job of a politician to find the majority on a common ground?  And if so, doesn’t that job necessarily invalidate the adherence to principle?

    I don’t have a point of view on these things, but I’m trying to find one.  You know something about these matters; what’s yours?

    Reply
  11. John Fox
    John Fox says:

    If Sales Contests don’t work, then why do organizations of all sizes and types keep running them?

    It’s analogous to postal direct mail (aka, junk mail). We ask why marketers keep doing it, since it "obviously" doesn’t work… 

    Yet, in the real world, whether you love ’em or hate ’em, direct mail, like sales contests, actually do work.

    Reply
  12. Charlie (Green)
    Charlie (Green) says:

    John,

    That’s a fine question, and it deserves an answer.

    The answer is, basically, people do stupid things, even sometimes knowing they are stupid.  People smoke, drink excessively, become obese–and engage in short-term behavior that feels good but is long-term destructive.  I would suggest sales contests fall into that category.

    As Alfie Kohn puts it, "incentives definitely work. They incent people to get more incentives."  Sales contests are a little like crack cocaine: if you win them, you get that great rush, that great positive feedback–you get more money.  And the more you experience that great feeling of getting fast money based on something you did, the more tempted you are to cut a few corners to get more of it.

    What do I mean by corners?  For example, subtly letting your customer know that if they just get their order into the book this month, you’d really appreciate it.  That behavior basically says, "I want you to time your orders to help me–not you."

    The contest is all about short-term not long, yourself not the customer.  And the salesperson tends not to be transparent about it because it looks selfish (which it is).  And if you are transparent about it, it definitely looks selfish (which it is).

    The most powerful economic results do not come about from sequential sales contests, they come from long term continued emphasis on the customer, not the salesperson. 

    Sales contests do work.  They work to juice short-term sales results; they work to incent salespeople to juice short-term numbers; they work to get salespeople hooked on more short-term numbers.  They work, as Kohn says, to incent people to sign up for more contests.

    At least, that’s my answer to John’s very valid question.

    What’s yours?

    Reply

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