Do commissions motivate salespeople? (I still don’t know by the way)

Motivating Salespeople with Commissions

I’ve always been curious about what motivates us.

Why do people feel the desire to swim 3km, ride 140km and then run a marathon in an ironman triathlon? Why would an astronaut sacrifice seeing his or her family to orbit in space for 6 months? Why don’t more people hand in the lost wallet they find at the park?

When it comes to motivation at work, I’ve read books on it and pondered it on a daily basis as I do sales forecasts, seating plans, and interview candidates. But I’ve never been able to crack the magic of how to control it.

I’m lucky to work at a business that is forward thinking, ambitious and smart. That provides me with the freedom and support to try new things (and fail even). So I decided to test something that I’ve been curious about for years.

Do commissions motivate the behaviour of salespeople?

I’m responsible for the results of a team of around 10 quota carrying B2B (business to business) outbound phone consultants. The team has been reasonably successful over the last few years with a base and commission remuneration model. You get to keep your seat (and take home your base) for achieving “X” each month. Once you hit x+y you start earning commissions. Pretty normal remuneration model. Commission earnings were generally bell curve shaped. A couple would do great, most do ok, some not so good.

Having a big, hairy target each month made it very easy to see who was doing well and who wasn’t. Except, I’m not sure it did.

I had a weird feeling in the pit of my stomach that maybe the fear of missing target, or not delivering the required number of first conversations per day was actually a hinderance to the performance of good people.

If I’m worried about how much money I’m going to make this month, that must be a distraction from worrying about my customer. Maybe? There are 2 days left in the month, I still need 1 more sale, why would I hand a warm lead to someone else in the team (who’s already hit their number by the way) even if it’s the best thing for the customer?

Experiment time! We worked out what the salesperson was averaging in base plus commissions over the last 6 months and started paying them that as flat fortnightly remuneration.

“But what if we pay them the money and we don’t sell anything?”

It took about 30 seconds for this question to be asked by at least 1 of my executive colleagues. And it’s a fair question.

To say that nothing comes from someone sweating a target is wrong, I’m sure of that. But the line between sweating-driving focus and panicking-losing focus is blurry. And most of these variables are amplified in a startup business where most things are unknown.

What happened? Sales didn’t change much. Dammit.

So, more importantly, what did I learn?

If you take a motivation away, you must replace it with something else. When I unlinked the target and commissions, I didn’t explicitly share what good now looked like for them. Mistake. They still need a very clear, tangible goal, even if it doesn’t drive what they earn.
They shared more. Doing what’s best for the customer was all the mattered.
They were more willing to spend time learning and developing their craft.
One remuneration model won’t fit everyone. The reps roughly fell into two groups. Those that are driven by the close (deep down somewhere in their DNA), and those that were more focused on the exploration – just being part of a solution that addressed the customer need was a win for them.
Commissions aren’t an evil thing that will make someone do anything to get the dollar. The right people like a goal but also know ‘what’s right’.

If nothing else, I hope it demonstrates to them that we care about them, and how their longer term success is also everyone’s. We may go back to commissions for our sales people. We may not.

I wonder……..the marketing team is KPI’d by the number of warm leads delivered. Would they push harder if beating that target by 10% meant something to their back pocket today?
I’ll let you know what happens with my next test!

Written by Matt Dunstan, Head of Customer

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