The Incentive AddictionBy: Cameron Taylor

Overview of Article

Outline

Analysis of Incentives

Incentives Activity

SummaryPhase 4

Phase 1

Phase 2

Phase 3

Journal Article OverviewBreaking the Sales Force Incentive Addiction: A Balanced Approach to Sales Force Effectiveness

• Authors: Zoltners, Andris A.; Sinha, Prabhakant; Lorimer, Sally E.

• Source: Journal of Personal Selling & Sales Management;Spring2012, Vol. 32 Issue 2, p171-186

Journal Article Overview Cont.Incentives (LSTI)

• Often relied upon too heavily by management for• Motivation• Production• Structure• Retention

• Currently approx. 40% of salesforce pay is made upby incentives

Sales Force Drivers (SFE)• Managers Teach

• Skills• Capabilities• Values• Motivation

LARGE SHORT-TERM INDIVIDUAL (LSTI)Pros:

• Works great for highly motivated Salesmen

• More independent workplace• Keeps costs inline with

revenueCons:

• Negative short term client relationship

• Minimal prospecting• Overstocking

Pros:• Creates a positive work

environment• Longer tenure with employees• Better Client service

Cons:• Long Term investment by

management• Requires patience

SFE DRIVERSIncentives vs. Knowledge

3 choices:• Individual Based• Team Based• Mixed individual and

team based

84.6% wanted the INDIVIDUAL system• Shows that Incentive systems

do NOT build a team environment

Incentive Survey

PrimeTime Premium Popcorn Extra Butter• Competition• Every Box Costs $23.00

Incentives Activity

ACT II Butter Lovers• Every Box Costs $23.00• For every Box sold you receive $15

PrimeTime Premium Popcorn Extra Butter• Bags burn• 150 Calories• Bad customer service

Incentives Activity

ACT II Butter Lovers• Twice as many kernels as competitors• Has more butter than ever• 120 Calories• 20 year Account Executives

Incentives: • Do not help drive sales• Can leave salesman seeming cold

and unknowing

What we learned

Knowledge based Programs:

• Create easy selling environments• Help create relationships with clients• Increase revenue

Knowledge is Power

Building Strong Training Program mixed with talented salesmen

Strong business structure than encourages teaching and coaching

Revenue grows

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Short Term Goals vs. Long Term

Quarter 1Quarter 2

Quarter 3Quarter 4

00.5

11.5

22.5

33.5

44.5

5

Business Models throughout a year

SFE LSTI

Summary• Incentives are good

• In small doses• When training is done

well and often• When coaching occurs

daily/weekly/monthly• A good workplace

environment• Designed to focus on skill

improvement in lacking areas

• Tailored to each salesman/sales team

• Incentives are bad• When they are the main

focus• Are part of a new sales

team• Comprise most of the

payment to sales staff• Are short term

focused/lack vision

Coaching/Training

Limited Incentive System

Successful Sales Team

Incentives are not the answer by themselves

Knowledge, training and relationship building