The Future of Seller Motivation: Smaller Reward driving Bigger Result

Sales compensation programs have historically followed one fundamental rule. In order to drive desired outcomes, simply reward those outcomes. Annual quotas, quarterly bonuses and commission checks have long been the currency for sales motivation. While these programs are certainly not going away, new challenges facing modern sellers are making many of these plans less effective than they once were. Accelerated buying cycles, longer sales journeys, increased product complexity, shifting priorities and constantly changing customer expectations are just a few factors impacting sellers today. As a result, many organizations are beginning to realize that waiting months to pay large bonuses and commissions isn’t motivating sellers like it used to. Smaller rewards, provided more frequently and with clear ties to specific behavior are creating powerful motivators to drive behavior change, reinforce priorities and impact performance. If you want to motivate sellers in the future, it won’t always be about paying more, but rather rewarding the right behaviors at the right time.

A. Why Yearly Bonuses and Commission Checks Aren’t Cutting It Anymore

Traditional sales compensation plans have primarily been built around outcome-based incentives. Set a quota. Provide a commission rate. Let the sellers figure out how to hit their goals. For many organizations this worked fine. If your business priorities stayed relatively constant throughout the year and you were not racing to react to new products or shifts in the market, this strategy made sense.

But today’s revenue organizations do not operate in such a static environment. New products are launched several times a year, customer expectations are increasing and revenue leaders are often looking to drive very specific behaviors around cross/up-selling, customer profitability, retention and more. For many of these targeted behaviors, the action a seller takes often happens weeks (if not months) before they receive any tangible reward from their organization.

Let’s use an example. Say a seller books a key strategic product with a customer. It takes months for that deal to get sold, negotiated, signed and recognized. Several months where that seller feels no consequence (positive or negative) for booking that deal. Once the deal passes revenue recognition, that seller will finally earn their commission on that product. Problem is, by then it’s hard to link that payout back to what they originally did. Behavioral science has shown, time and time again, that people are much more responsive when there is a direct and immediate correlation between their behavior and a reward. Drop that window of reinforcement into weeks or months, and your ability to motivate that behavior plummets.

This is why many organizations are rethinking the ways motivation is distributed in sales compensation plans.

B. How are Smaller Rewards are driving BIGGER Results 

Motivating sellers through micro-incentives allows companies to reward specific behaviors in real-time. Where traditional commission plans focus on rewarding outcomes, micro-incentives target the actions that lead to successful outcomes.

Micro-incentives can come in many forms. From a behavioral perspective, it doesn’t really matter what monetary value you place on the incentive. What is important is that you are rewarding certain behaviors with something. A few examples include: 

* Booking an executive level meeting 

* Selling a newly launched product 

* Expanding a customer’s footprint 

* Decreasing discounting % 

* Creating multi-product deals 

* Increasing customer retention 

Let’s take our example above one step further. Imagine our company not only sells AI powered solutions, but recently launched a new solution powered by Artificial Intelligence. Instead of waiting months for revenue results to show up in Excel spreadsheets, what if we rewarded sellers for closing product demos, qualifying new opportunities for this product or driving early stage adoption? Creating real-time rewards for behaviors that align with our strategy creates a feedback loop that reinforces behavior while the sale is happening.

Sure, the dollars paid out for these individual activities may be small when compared to commissions earned at deal closure. But if sellers know they will be rewarded quickly for specific actions, see exactly what behavior earned that reward, and feel motivated for the entire length of their customer engagement, doesn’t that create a better overall outcome for your organization? In many cases, yes. 

C. Behavior Science: Why Smaller Rewards Can Create Bigger Behavior Change

Micro-incentives work because they tie into the way humans think and feel. We like instant gratification. We like to feel like we are making progress towards our goals. The more we see that progress, the more motivated we feel to keep pushing forward. That is why some of the most successful consumer applications use badges, milestones and other forms of instant reward to drive user behavior.

Sales motivation is no different. By rewarding sellers throughout the performance period (instead of just at the end), organizations can begin to drive behavior change in real-time. Instead of waiting until the end of quarter to celebrate hitting revenue goals, what if you incentivized sellers for behavior that helped your organization reach those goals?

If your organization is struggling with excessive discounting, celebrate sellers who hit target margin levels each week. Instead of waiting until the end of the quarter to motivate sellers around revenue attainment, create weekly incentives for sellers who keep their discounts below a certain threshold. Rewards don’t always have to be about driving top-line revenue increases. By recognizing seller behavior that moves your organization closer to its goals, you can drive behavior change every step of the way.

C. But How Many Incentives Is Too Many? 

While there are tremendous benefits to more frequent incentives, that doesn’t mean you should give sellers an incentive every time they brush their teeth. Too many incentives can become meaningless and your sellers will struggle to understand your priorities if they are being rewarded for everything they do.

The key is to be strategic with your micro-incentives. Aligning your incentives to 1-3 critical business objectives and regularly evaluating whether those incentives are driving the desired behavior is the best way to ensure your efforts are successful.

Micro-incentives are not meant to replace your core comp plan. Quotas, commissions, accelerators, etc. will always be a critical part of your overall sales compensation plan. But by adding smaller incentives that target certain behaviors, your organization can be better equipped to respond to an ever-changing business environment.

Conclusion 

As selling becomes more complex and dynamic, waiting months to distribute motivation via commission checks just doesn’t cut it anymore. Accelerated buying cycles, longer sales cycles and increased complexity create tremendous challenges for sellers. Those organizations that continue to motivate solely based on annual quotas and commission checks are going to struggle to move the needle on performance. By adding smaller rewards that target specific seller behaviors, organizations can drive change every step of the way. Stay strategic with your incentives. If done right, smaller rewards can equal BIGGER results.