In the first post of this series, I discussed the widespread assumption in the Tech industry that shared sales forces help encourage “Survival of the Fittest” products. In the second part of the series, I discussed a checklist you can use to determine if your products can be sold via a shared sales force.
In today’s post, I will be talking about the Pros, Cons and Reality of the “Three Common Levers to Create Sales Team Focus”
Does “Survival of the Fittest” work for a shared sales force? Sometimes, but from what I’ve seen, more often there are major distortions to the “fittest” based on other factors that drive attractiveness to sales. In my experience the products that get sold by a shared sales force are not necessarily “the fittest”, but instead, the products that meet more “human” needs – like reps looking to meet their quota, hit their “accelerators”, or even just to keep their jobs for next quarter – and are often dictated by the comp plan. The way they vote with their time may or may not coincide with what the executives feel are the longer term interests of the company. Of course, a company falters if they miss short term performance needs, but I would argue that just as many tech companies falter when they sell the “products they know, or can sell fastest, until the differentiation for those products withers and they and the company are left in a weak strategic position…
In my experience, there are 3 main tools that most tech organizations use to gain sales rep focus.
3 Tools to Manage “Product Sales” in a Shared Sales Force
- Tool #1: Provide Transactional Incentives for Product Sales
- Tool #2: Provide Sales Overlays to Create Additional Sales Focus and Expertise
- Tool #3: Adjust the Compensation Plan to Provide Incentive to Sell Products
Tool #1: Provide Transactional Incentives for Product Sales
Creating Focus
Transactional incentives are the most common approach to influence sales rep behavior and focus. We’ve all seen this approach till we are numb and a bit confused by the overlapping incentives that are running from different groups each quarter.
Pros
- $s influence a coin-operated sales team
- Can be effective for transactional sales
Cons
Is “lack of an incentive” really the reason you don’t have focus on all your products?
- More often the issue is lack of sales fit see the Shared Sales Force Checklist
- Is the amount and type of incentive really enough to change behavior? If your rep is selling $ million deals is $1,500 going to change behavior?
- Also check out my post, “Channel Not Selling Your Products? 3 Questions You Can Ask to Diagnose the Problem” (much of this post applies to your reps too)
Tool #2: Provide Sales Overlays to Create Additional Sales Focus and Expertise
Creating Focus
Since Overlays only sell particular products, they can’t get distracted by easier sales, and they wake up every morning trying to sell your product. Often these overlays are SEs, so they can provide both technical expertise and some sales coaching specific to the product.
Pros
- Have a team focused on successful selling of a product
- Provide a feedback loop for product marketing or business units seeking customer feedback on their market
Cons
- Typically provide double compensation for the same sale, to encourage collaboration
- And as any sales executive knows, you don’t want to pay 120% of sales payout for 80% achievement…
- Sales overlays have different goals and it is common for organizations to have INTERNAL sales engagement across products. As companies get larger (think HP, Cisco, even mid-sized companies like VMware) different Reps have different agendas at the same customer
- The Account Reps/Teams who own the overall account and get credit for all sales into the account
- A great vendor sales rep is often quite “controlling” of the decision makers and timing for discussions within their accounts, and this instinct tends to undermine efforts by those who have different roles, including:
- Your Sales Overlay Teams that must sell their product
- Your Strategic Alliances that are trying to sell joint solutions into the same account
- Your Channel partners who might be selling your product as part of a larger solution that won’t close till next quarter
Tool #3: Adjust the Compensation Plan to Provide Incentive to Sell Products
The most common approach to setting a compensation plan is “a dollar is a dollar”, where the comp plan does not differentiate whether the sale is for Product A, Product B, Training or Professional Services ($ all goes to the same place anyway, right…???)
Creating Focus
- Quota for individual product groups. For example, a Reps $500K quarterly target might include a minimum $100K from a particular “Strategic” product group
- Accelerators for certain “emerging/strategic” products (e.g. earn 150% quota credit for selling emerging Product X)
- Carve-outs – making some easier, “low-hanging fruit products” or categories of sales not part of the compensation plan. For example, many/most technology vendors do not pay their field account reps for Renewals, because that might unnaturally incent Reps to “farm” the renewals business, rather than “hunt” for new business
Pros
- $s influence a coin-operated sales team
- Impact to compensation can be significant enough to influence behavior (more than incentives)
Cons
- Must be utilized sparingly, or comp plan is too complex and Reps get mixed signals on organization priorities
- Complex comp plan with accelerated payout can result in sales reps making their number, but the organization missing bookings, revenue and profit forecasts.
But here is the dirty little secret of shared sales forces…
Even if you can assign a Product-Specific quota and have an Overlay Sales Force it is quite possible that your organization will lose sales focus (and revenue) on some products
What can organizations do to have a cost effective sales force and sell all their products? In next weeks post I will talk about some “Out of the Box” approaches organizations can use to gain the cost advantages of Shared Sales Forces AND Sell a wide range of products.
I welcome any comments below — And make sure you “Follow” our blog (look for the “Follow” link on the left sidebar) and have your say. I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world…
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