Sales incentives are meant to reinforce excellent work ethic in employees. Rewards, both monetary and otherwise, motivate representatives to sell more goods or services and work toward their company’s objectives. All incentive programs are designed with one goal in mind – increasing revenue. Unfortunately, some agents only view prizes as a means to increase their income and use unscrupulous methods to achieve that end.
According to Destination CRM, some incentive initiatives motivate employees to focus on pushing higher volumes of merchandise or services without focusing on the bigger picture. Agents become so driven by their commissions that they focus solely on meeting their quotas instead of generating quality leads that can become recurring customers. This can be a significant problem as employees engage in risky behavior that can do irreparable damage to the brand.
Representatives will sometimes try to sell unnecessary goods or services on top of other purchases, the news source noted. The strategy is off-putting to consumers who feel that agents are intentionally misleading them about new products. Bad reviews quickly spread and can damage consumer perceptions of the vendors. To combat the issue, managers must develop compensation solutions that reward the efforts of salespeople without promoting negative behaviors.
Realistic quotas, not percentage payments
Agents sell unnecessary items when they have to hit unrealistically high quotas and are paid by commission rates. Employees know that their income is tied directly to the revenue they generate, so they try to sell as much as possible, even if it would hurt the company’s reputation in the long run.
Forbes writes that lump-sum bonuses are possible alternatives to percentage commissions. Managers should create realistic quotas for their staff members and offer flat incentives for meeting those goals. The strategy prevents employees from selling copious amounts of goods or services to prospective clients.
There are some disadvantages to the lump-sum system, but managers can find creative solutions to keep employees motivated. Forbes points out that employees will lose their motivation once they meet their quotas. This can lead to stagnant sales or a decline in business as employees wait for the next payment period.
One possible solution is creating new quotas once agents hit their initial goals. Managers can offer new incentives for the extended goals so that employees will strive to earn the bonuses. Instead of waiting for the next pay period, representatives will be motivated to find new clients. This is important in the fast-paced world of sales – customers will not wait for vendors so agents must act quickly, regardless of whether they can earn incentives.