Sales Lessons from a 6 year old: It's all about the cash

You can draw sales lessons from everywhere in life.  The reason for this is that most of sales is about the interaction of human beings with each other – about the acts of persuasion and communication.  I write constantly about how everyday life teaches me valuable lessons about how to become a better salesperson and sales manager.  First, I wrote about Sales Lessons in a chick flick.  Then I wrote about Sales Lessons from my 7 year old.  Then, sales lessons from my 2 year old.  I also wrote recently about sales lessons from my colorblind brother.

My latest sales lesson came from my 6 year  old son (which fantastically has provided me at least one post-worthy sales lesson from each of my children).  My son is playing flag football this year, and while he told me all spring and summer that he was really looking forward to playing flag football again this year, once it came time to play, he was less than interested.  He whined and complained for the first two weeks of practice, and not surprisingly gave a less than stellar performance on the field during the first game.  After the first game, I tried to remind him how great he did last year.  I made sure he got the proper rest, and the right breakfast before his second game.  Yet, he was a goofball on the field, and in many ways really provided an embarrassing display of antics on the field.  The fact that many of the moms were telling me how cute and funny he was did matter.  It was getting me very angry that he wasn’t trying his best and doing what I knew he could do well.

My reaction was to get angry at him and to punish him for his display on the field.  The next week?  He provided a similar display of antics.  I was infuriated.  But… by this point, I realized that there was a lesson here.  (Indeed – its coming back to a sales lesson).  I realized that I wasn’t providing the correct motivation to get the behavior that I wanted.

After his third game, I sat him down and explained to him about what would make me proud.  I explained to him that I always expected him to try his best at everything he did, and that I expected the same of myself.  If I wasn’t trying my best at QuotaCrush, then the company would not survive, and that would have repercussions on all of us in the family.  In the same way, he needed to always try his best.  I told him that I didn’t care if he got a flag or a touchdown, but that I wanted to see him do his best.  Then after the pep talk, I modified his “comp plan” and told him that he would receive $1 for each flag that he got, and $5 for every touchdown that he made.

The next football game cost me $20.

I’m not sure which part motivated him more, the pep talk or the comp plan, but it worked.  (Ok, he is my son.  I know it was all about the cash.)

So what’s the sales lesson here?  Proper motivation and the deploying the right compensation plan is the best way to get the results that you want from your sales team.

Just like my son, salespeople are wired to perform.  They want to succeed and close more deals:  just as much as management does and sometimes more.  However, since start-up sales is one of those jobs where the daily tasks are squishy, the proper compensation plan makes sure that the salesperson stays focused on what is important.  The salesperson’s drive for closing as many deals as possible in the shortest timespan, is directly related to the compensation that she/he expects to receive.  If your expectations are unrealistic – or comp plan too hard to calculate, you won’t get the results that you want.

When people ask me about building compensation plans, I typically recommend starting with a very simple plan so that it is easy for a salesperson to figure out what they will make with each sale.  I’ve got several half written posts on start-up compensation packages which I plan to finish, but the concept I’m talking about here is not about the mechanics of any particular compensation package, but about the fact that business owners need to understand what moves the salespeople in your organization.

When I needed my son to perform, I gave him two small goals:  Get flags and get touchdowns.  He went onto the field with those objectives in the forefront of his brain and his every move kept him on those two goals.  In your business, you should find those small goals that your salespeople can achieve and have them attack it, and they should feel the immediate results.  (cash in the bank).

As the weeks progress, I may add incentives for other goals like proper blocking, passing, fair play, etc. and likewise, you can start to add other incentives around the goals that you need to achieve, but make sure that the goals you seek aren’t too far out, and that they are achievable.  Recently, I spoke with a very early stage start-up that has an enterprise sale that will probably take several months before any sales are made, and the CEO was frustrated because he just couldn’t feel like he had anything big to motivate his salespeople.  It was clear that the salespeople would probably not make commission for 4-6 months because of the sales cycle plus when it would take to get paid.  I gave him the idea to start by setting aside $5,000 in commissions.  I told him to tell his two salespeople to go and get secured meetings with confirmed decision makers and have him pay $500 for each meeting to the salepeople and tell them that once the $5,000 was used up, it was used up.  The result was that he spent the $5,000 in a little over a month and successfully kick-started his sales effort.  And.. it only cost him $5,000.  He got motivated salespeople, and delivered a win-win.  The lesson here is that rather than just telling salespeople that they would make the money when they made the sale, he got into their head, and gave them an incentive that matched the incentive of the company.  Would the company have paid $5,000+ to get good leads elsewhere?  probably – so why not use it for sales motivation.

If it seems simple… it really is.  Salespeople want to make money – and they will deliver in the easiest and fastest way for them to make money.   So.. make sure your compensation plan allows salespeople to make money in the ways that grow your business in the way you want it to grow.

  • Brian
  • Bad, bad idea, as pointed out in the linked TED video, and in the comments here: http://news.ycombinator.com/item?id=872066

  • Mark I LaRosa

    I don't necessarily disagree, but the point was about salespeople – who ARE motivated by financial incentives and SHOULD be motivated by financial incentives.

    You can criticize my parenting for sure – but I claim to be an expert sales guy – not an expert parent!

    In this talk, Dan says that when you put certain incentives on – you narrow the focus of thinking. EXACTLY!! You WANT to focus the salespersons thinking and have them focused on MONEY. Both for themselves and the company.

    Salespeople are not like the rest of you. If you want to motivate a salesteam, you need to re-do all of these tests with only salespeople.

    If I was presented with the candle problem, I'd sell the candle and use the money to buy a dripless candle!

  • Brian
  • Bad, bad idea, as pointed out in the linked TED video, and in the comments here: http://news.ycombinator.com/item?id=872066

  • Mark — nice post. Just curious, have you seen any examples of long term successful sales comp plans that were not commission based?

  • I I don't necessarily disagree, but the point was about salespeople – who ARE motivated by financial incentives and SHOULD be motivated by financial incentives.

    You can criticize my parenting for sure – but I claim to be an expert sales guy – not an expert parent!

    In this talk, Dan says that when you put certain incentives on – you narrow the focus of thinking. EXACTLY!! You WANT to focus the salespersons thinking and have them focused on MONEY. Both for themselves and the company.

    Salespeople are not like the rest of you. If you want to motivate a salesteam, you need to re-do all of these tests with only salespeople.

    If I was presented with the candle problem, I'd sell the candle and use the money to buy a dripless candle!

    Sales people are NOT NORMAL!! We operate on a different frequency. Sometimes 100% of what we do is based on financial rewards. True – may not work for most people – and maybe I'm screwing up my son (although I think he is a future salesguy), but I stand by my position that the right financial rewards drive sales.

  • Mark — nice post. Just curious, have you seen any examples of long term successful sales comp plans that were not commission based?

  • Mark I LaRosa

    John,

    There are a rare breed of salespeople that value things like equity in exchange for sales, but its not typical – and it would be more focused on the high-end VP of sales type. The big issue is that a salesperson might only make $40,000 / year – but he/she actually expects to make $150,000 or more based on performance. What you can't do, it expect that person to make $40,000 and then equity because they just won't be able to live on it easily and the competing offers out there that will make them actual cash will be too tempting.

    The problem with the criticism of this post is the fact that they are pointing out a major difference in the compensation structures and motivation of the general workforce and salespeople. Dan's video talked about how financial incentives narrowed the thinking of the creative people. This is the whole point of sales compensation plans. You want to channel the efforts and activities of the salespeople to drive the business results of the company – and you are willing to pay for it.

    I think you can get somewhat creative with a compensation plan that provides non cash incentives (i.e. equity, trips, etc) but I don't think that these will work in the long term – unless you are prepared to pay a much larger base salary than normal.

    I actually think that the confusion over this post is enlightening as to why many non-sales management can't provide the correct incentives to a sales team. They think we are like the rest of the work force, and we aren't.

  • John,

    There are a rare breed of salespeople that value things like equity in exchange for sales, but its not typical – and it would be more focused on the high-end VP of sales type. The big issue is that a salesperson might only make $40,000 / year – but he/she actually expects to make $150,000 or more based on performance. What you can't do, it expect that person to make $40,000 and then equity because they just won't be able to live on it easily and the competing offers out there that will make them actual cash will be too tempting.

    The problem with the criticism of this post is the fact that they are pointing out a major difference in the compensation structures and motivation of the general workforce and salespeople. Dan's video talked about how financial incentives narrowed the thinking of the creative people. This is the whole point of sales compensation plans. You want to channel the efforts and activities of the salespeople to drive the business results of the company – and you are willing to pay for it.

    I think you can get somewhat creative with a compensation plan that provides non cash incentives (i.e. equity, trips, etc) but I don't think that these will work in the long term – unless you are prepared to pay a much larger base salary than normal.

    I actually think that the confusion over this post is enlightening as to why many non-sales management can't provide the correct incentives to a sales team. They think we are like the rest of the work force, and we aren't.

  • John,

    There are a rare breed of salespeople that value things like equity in exchange for sales, but its not typical – and it would be more focused on the high-end VP of sales type. The big issue is that a salesperson might only make $40,000 / year – but he/she actually expects to make $150,000 or more based on performance. What you can't do, it expect that person to make $40,000 and then equity because they just won't be able to live on it easily and the competing offers out there that will make them actual cash will be too tempting.

    The problem with the criticism of this post is the fact that they are pointing out a major difference in the compensation structures and motivation of the general workforce and salespeople. Dan's video talked about how financial incentives narrowed the thinking of the creative people. This is the whole point of sales compensation plans. You want to channel the efforts and activities of the salespeople to drive the business results of the company – and you are willing to pay for it.

    I think you can get somewhat creative with a compensation plan that provides non cash incentives (i.e. equity, trips, etc) but I don't think that these will work in the long term – unless you are prepared to pay a much larger base salary than normal.

    I actually think that the confusion over this post is enlightening as to why many non-sales management can't provide the correct incentives to a sales team. They think we are like the rest of the work force, and we aren't.

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