Sounds ridiculous, right? Except in Sales.
David Hoffmeister, director of DePaul’s Sales Leadership Program, quoted in Management Issues blog
has this to say about a recent study they conducted:
Most of the firms in the survey use the traditional base salary plus commission formula for compensation, but Hoffmeister argued that profound changes in the attitudes of today’s savvier customers mean that they should consider alternative ways of rewarding sales staff.
"Customers are unhappy with sales people who are motivated by commissions to sell to them rather than serve them," he explained.
"Firms need to think about reshaping their compensation practices so that sales people are rewarded for partnering with customers rather than for sales volume alone."
I recently heard of a major US company altering the incentive structure for major account managers. Historically, the AM role was client-service-oriented. Now they’ll be evaluated on sales volume.
Hmmm…let’s envision the results.
Anyone guess, more customer dissatisfaction?
How do companies make such seemingly (to me) wrong decisions?
For three reasons, I think.
- Some really believe that since their product is the best, the customer is best-served by buying from them. Thus, customer satisfaction is a direct function of share of customer wallet. The potential for circular thinking is apparent.
- More typically, the company is revenue-driven, and believes that revenue-based incentives—typically financial incentives—are a no-brainer. They are oblivious to the consequences Hoffman points out. Paying someone for selling you doesn’t make the customer feel cared about.
- More deeply, there are a set of au courant beliefs—metrics, line-of-sight thinking, accountability— that link everything to short-term customer profitability. This flies in the face of the simple idea that the greatest short-term profitability comes from long-term customer focus—and precisely not from focusing on tweaking short-term metrics.
Some companies say, “We’re very customer-centric. Incenting our key customer relationship people on sales aligns their interests with the company’s, and they know that the company’s goals are to be customer-focused. It’s all a virtuous circle, and we’re aligning the compensation system to fit with it.”
In my experience, if you hear this, check your wallet. They’re telling you that they’re paying the salespeople more money if they behave unselfishly.
That’s like paying a boy scout to escort the little old lady across the street.
Offering bribes to obey the ten commandments.
Paying people to go to church.
It’s telling them to be unselfish by appealing to their selfish interests.
Does it work? Sure—it works to create faux unselfishness, fake sincerity, conditional customer service. That’s the trouble with external rewards; they poison intrinsic motivation.
But don’t listen to me. Check out Jeffrey Gitomer, one of the more in-your-face personal sales cold-call sales gurus (who nonetheless gets the trust thing, by the way):
According to Gitomer—and he ought to know—the concept of the money-driven short-term shake-hands-count-your-fingers hustler salesman is not genetically encoded in the salesperson. It’s a direct consequence of the way executive management has treated sales over the years.
They got what they asked for: people who would hustle to move product. The majority of salespeople have never felt comfortable with that self-view, in my experience, and have suffered from not being able to articulate their way out of it.
Hoffmeister is right. Customers have nothing against alignment of rewards—they’d just like to see the alignment based on value to client, not on money extracted from client.
What’s amazing to me is that selling organizations, for the most part, have yet to figure out that this level of customer satisfaction is also in their best interest.
Gitomer lays the blame at the feet of top management. But there’s plenty to go around.