Security, Margin, Vision
My very first ’70-20-10 Rule’ came out of my time at Microsoft managing part of its sales force that worked extensively with partner companies. One of the primary challenges was to motivate both the direct (Microsoft guys and gals) and indirect (partner companies) sales forces to better flog Microsoft products. In getting the messages tuned to sales folk, I really got attuned to the hierarchy of a typical salesperson’s motivations (of course, there are atypical salespeople)…
- Secure– 70% of what drives a salesperson is ensuring close. What approach will most safely, most assuredly secure my deal? What is the path of least resistance that guarantees that I close the target deal?
- Margin – 20% of what drives a salesperson is money. What approach will net me the most commission? What will get me extra accelerators and bonuses?
- Vision – 10% of what drives a salesperson is the ‘vision thing’. What approach has an emotional, social, inspirational or heartfelt dividend? In the technology sector, the ‘vision thing’ is often a big part of the sales pitch. In other sectors, it might be a consideration like ‘green’ or ‘corporate social responsibility’ or ‘buy local’ or other positive brand attributes.
Often the ‘vision thing’ is the sexiest and the thing that inspires the company leaders as well as its company bullhorn marketers. As a result, these people often lead in with the ‘vision’ angle. Such prioritisation is misplaced when one understands that it is a mere tenth of the typical salespersons’ cares.
Also, one would think money is top of mind for most salespeople, and in many ways it is. But really getting the optimising the commission only comes into play when the salesperson is assured of winning the close. The smart salesperson knows that the money starts when the deal closes. The bonus commission might buy a vacation, but the closed deal pays the mortgage. The extra credit questions do no good if you fail the exam. No proper salesperson will jeopardise the sale for a few extra points of margin or bonus goodies.
When all is tallied, salespeople only think of the money side less than half as much as the close side. Such extra incentives will be factored in, but the factor is more like 20% to the total incentive. Such incentives are more effective in getting sales people’s attention and mind share (eg. a bonus for going through training or certification). Then the calculation of extra bucks is not competing with what needs to be done to close the sale. Rather the incentive is taken outside of the sale and is competing with other non-sale activities. While the extra few bucks or prize might not be enough to shift behaviour that might impact the ability to close a deal, it could shift behaviour of attending a seminar or not.
Sales and general managers need to keep this 70-20-10 in mind when motivating sales forces. All too often the managers start with the big vision and conclude with a bonus perk. It is like the starter and the dessert without the main course. The main course for sales people is ‘how is this going to make it easier for me to sell?’ Path of least resistance selling. Conversely, if you offer a proposition with lower margin and no vision at all, but people are beating down the doors for the product, sales people will be putty in your paws.