{"id":1768,"date":"2012-02-03T14:39:07","date_gmt":"2012-02-03T14:39:07","guid":{"rendered":"http:\/\/www.theweekinimaging.com\/?p=1768"},"modified":"2012-02-03T14:39:07","modified_gmt":"2012-02-03T14:39:07","slug":"goals-vs-quotas-a-new-model-for-motivating-sales-reps","status":"publish","type":"post","link":"https:\/\/www.enxmag.com\/twii\/feature-articles\/2012\/02\/goals-vs-quotas-a-new-model-for-motivating-sales-reps\/","title":{"rendered":"Goals vs. Quotas: A New Model for Motivating Sales Reps"},"content":{"rendered":"
\"\"<\/a>

Scott MacGregor<\/p><\/div>\n

Let\u2019s agree from the get go that the only constant in the office technology industry is change. However, one area in that world that is often slow to change is sales rep compensation, especially as the industry moves towards a services and solutions model. I speak to a fair amount of dealers and even though this transition is well underway, many are still grappling with finding just the right compensation model for this changing business climate. Then there\u2019s Flo-Tech, a Middletown, Connecticut-based office technology provider. They\u2019ve come up with a radical new way of motivating and compensating their sales reps that doesn\u2019t involve quotas. What they\u2019ve done is not for the faint of heart nor is it for every dealership.<\/p>\n

\u201cWe thought about this for a long time because there\u2019s so much complexity that goes into a comp and quota plan,\u201d explains Scott MacGregor, vice president of sales and marketing at Flo-Tech.<\/p>\n

MacGregor along with Flo-Tech\u2019s CFO and CEO typically meet months in advance of an upcoming year to review the companies comp and quota plan.<\/p>\n

\u201cIt just takes forever,\u201d laments MacGregor. \u201cYou always design a plan, hope it\u2019s perfect, and invariably have to tweak it year in and year out.\u201d<\/p>\n

The big issue with traditional comp and quota plans is what MacGregor calls \u201csandbagging\u201d\u2014sales reps holding onto deals or trying to close them in a time frame that\u2019s beneficial to them.<\/p>\n

\u201cThat\u2019s almost never in alignment with the customer and their needs,\u201d states MacGregor.<\/p>\n

After doing some research, Flo-Tech\u2019s executives found a few articles, including one from Stanford University that illustrated the way quotas result in \u2018gaming\u2019, their word for \u2018sandbagging\u2019.<\/p>\n

As Flo-Tech management delved more deeply into it, they discovered they could eliminate hours of discussions in creating a fair plan by dispatching with quotas altogether. The other thing they found is when trying to apply a quota across an organization, particularly a dealership like Flo-Tech who does business nationwide (with primary offices in major cities like Boston, New York, Philadelphia, Washington DC etc) and reps with different experience in the industry, from 14 months to 14+ years, it\u2019s not easy to apply a standardized quota. Often it\u2019s a fairness issue.<\/p>\n

\u201cThe guy in Boston has only been there for six months while the guy in New York City may have a bigger opportunity and has been there for six years, so that creates all kind of problems,\u201d says MacGregor.<\/p>\n

What Flo-Tech settled on, and MacGregor thinks it\u2019s a novel idea, is eliminating quotas and motivating reps to succeed by tying their daily sales activities to their personal goals. Now he and Flo-Tech\u2019s field sales managers sit down with each rep to help the rep identify their goal. \u00a0<\/p>\n

\u201cOne of the things we found in this process is the first few things they think are their goals aren\u2019t really their goals,\u201d reports MacGregor. \u201cThey say what they think you want to hear or it\u2019s things that if they don\u2019t accomplish at the end of the day it wouldn\u2019t be the end of the world. For instance, it\u2019s \u2018My wife has been after me to hire a landscaper and I need it done by September.\u2019 The truth is if it isn\u2019t done by September, it\u2019s probably not going to change their life.\u201d<\/p>\n

A rep\u2019s true goals encompass things like retiring at a certain age, saving a certain amount for their child\u2019s college education, paying off their mortgage, purchasing a beach home or an investment property, or saving a certain amount of money.<\/p>\n

\u201cThings that get you up and motivated every day,\u201d says MacGregor. \u201cOnce we discover those goals, that\u2019s what we manage to. The beauty is everybody\u2019s goals are different and everybody\u2019s goals far exceed the needs of the company.\u201d<\/p>\n

This model has created a more fun and nurturing environment as opposed to making reps rally around an arbitrary number that the company says is a good job.<\/p>\n

\u201cSay we say $1 million is a good job, well we\u2019re saying that to the rep in Boston, New York, and Philly, but it\u2019s not always meaningful to everyone to the same degree,\u201d explains MacGregor. \u201cWhen you\u2019re managing to their specific goals, you\u2019re designing behavior plans to help them reach their goals.\u201d<\/p>\n

It\u2019s almost like training for the Olympics.<\/p>\n

\u201cWhatever the event it is you know you need to hit a certain time so that\u2019s your goal,\u201d notes MacGregor. \u201cYou then build a behavior plan, which is a series of exercises and practice that gets you there. It\u2019s something you have a strong desire to do and you have a coach to push you to do the extra wind sprints and things that you typically don\u2019t want to do but you need to be pushed if you really want to achieve that goal.\u201d<\/p>\n

Changing comp and quota plans can be a painful process, but MacGregor says it\u2019s been incredibly well received both by their existing sales force and job candidates.<\/p>\n

\u201cThey\u2019re typically blown away because they\u2019ve never heard of a company that has no sales quotas.\u201d<\/p>\n

He\u2019s not surprised by the positive reaction although he admits it was a scary thing for management to implement.<\/p>\n

\u201cTaking that away as a sales manager can be scary,\u201d he says. \u201cThose folks, including myself, had to wrap our heads around this and understand if you can identify somebody\u2019s true goals and then design a behavior plan to get them there, you\u2019re just there to help them reach their goals. It\u2019s a much better way to do business.\u201d<\/p>\n

Although Flo-Tech\u2019s sales reps are no longer concerned with quotas that doesn\u2019t mean Flo-Tech\u2019s partners, have abandoned their quotas. Those are still there. How does that work out?<\/p>\n

\u201cBecause our goals far exceed anything the company needs or what our external vendors are looking for, it\u2019s really not an issue,\u201d says MacGregor. \u201cWe had a record-breaking fourth quarter with no quota. I don\u2019t think our partners know we have this new system, but I don\u2019t think they\u2019d complain since our numbers are off the charts.\u201d<\/p>\n

The new plan went into effect six months ago and the company began seeing results within two months of implementation.<\/p>\n

\u201cWe saw numbers increase in terms of appointments\u2014things that are part of these behavior plans,\u201d says MacGregor. \u201cYou\u2019re always trying to measure activity even under a quota system, but because you\u2019re driving them to something that isn\u2019t necessarily the most meaningful thing to them, it\u2019s not that they wake up in the morning or go to bed at night worrying about it. It\u2019s more difficult to get people to do all the things they need to do themselves to be successful versus when they\u2019re focused every day and reminded. Say somebody\u2019s goal is to have a Jersey shore beach house, we can send them and their spouse a little something about the beach or a reminder and that\u2019s been very effective.\u201d<\/p>\n

Sales reps goals change all the time and Flo-Tech management monitors those on a monthly basis.<\/p>\n

\u201cOn a daily basis we\u2019re monitoring the behavior plans, but on a monthly basis as a team, sales management, myself and the reps are having discussions as to whether this goal is still the most important thing to them.\u201d<\/p>\n

Twenty employees are participating and MacGregor feels there\u2019s no going back to the way it was. As far as he knows, no other dealership in the industry is doing this.<\/p>\n

\u201cIt\u2019s made my job much easier and my field sales manager\u2019s job much easier. And it makes our sales reps\u2019 jobs easier. The amount of time a sales rep thinks about how to game or sandbag is completely eliminated. This plan frees them up to sell and focus on what\u2019s important to them. Before we were kind of telling people what\u2019s important to them. Now they\u2019re telling us.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Let\u2019s agree from the get go that the only constant in the office technology industry is change. However, one area in that world that is often slow to change is sales rep compensation, especially as the industry moves towards a services and solutions model. I speak to a fair amount of dealers and even though this transition is well underway, many are still grappling with finding just the right compensation model for this changing business climate. Then there\u2019s Flo-Tech, a Middletown, Connecticut-based office technology provider. They\u2019ve come up with a radical new way of motivating and compensating their sales reps that doesn\u2019t involve quotas. What they\u2019ve done is not for the faint of heart nor is it for every dealership. \u201cWe thought about this for a long time because there\u2019s so much complexity that goes into a comp and quota plan,\u201d explains Scott MacGregor, vice president of sales and marketing at Flo-Tech. MacGregor along with Flo-Tech\u2019s CFO and CEO typically meet months in advance of an upcoming year to review the companies comp and quota plan. \u201cIt just takes forever,\u201d laments MacGregor. \u201cYou always design a plan, hope it\u2019s perfect, and invariably have to tweak it year in and year out.\u201d The big issue with traditional comp and quota plans is what MacGregor calls \u201csandbagging\u201d\u2014sales reps holding onto deals or trying to close them in a time frame that\u2019s beneficial to them. \u201cThat\u2019s almost never in alignment with the customer and their needs,\u201d states MacGregor. After doing some research, Flo-Tech\u2019s executives found a few articles, including one from Stanford University that illustrated the way quotas result in \u2018gaming\u2019, their word for \u2018sandbagging\u2019. As Flo-Tech management delved more deeply into it, they discovered they could eliminate hours of discussions in creating a fair plan by dispatching with quotas altogether. The other thing they found is when trying to apply a quota across an organization, particularly a dealership like Flo-Tech who does business nationwide (with primary offices in major cities like Boston, New York, Philadelphia, Washington DC etc) and reps with different experience in the industry, from 14 months to 14+ years, it\u2019s not easy to apply a standardized quota. Often it\u2019s a fairness issue. \u201cThe guy in Boston has only been there for six months while the guy in New York City may have a bigger opportunity and has been there for six years, so that creates all kind of problems,\u201d says MacGregor. What Flo-Tech settled on, and MacGregor thinks it\u2019s a novel idea, is eliminating quotas and motivating reps to succeed by tying their daily sales activities to their personal goals. Now he and Flo-Tech\u2019s field sales managers sit down with each rep to help the rep identify their goal. \u00a0 \u201cOne of the things we found in this process is the first few things they think are their goals aren\u2019t really their goals,\u201d reports MacGregor. \u201cThey say what they think you want to hear or it\u2019s things that if they don\u2019t accomplish at the end of the day it wouldn\u2019t be the end of the world. For instance, it\u2019s \u2018My wife has been after me to hire a landscaper and I need it done by September.\u2019 The truth is if it isn\u2019t done by September, it\u2019s probably not going to change their life.\u201d A rep\u2019s true goals encompass things like retiring at a certain age, saving a certain amount for their child\u2019s college education, paying off their mortgage, purchasing a beach home or an investment property, or saving a certain amount of money. \u201cThings that get you up and motivated every day,\u201d says MacGregor. \u201cOnce we discover those goals, that\u2019s what we manage to. The beauty is everybody\u2019s goals are different and everybody\u2019s goals far exceed the needs of the company.\u201d This model has created a more fun and nurturing environment as opposed to making reps rally around an arbitrary number that the company says is a good job. \u201cSay we say $1 million is a good job, well we\u2019re saying that to the rep in Boston, New York, and Philly, but it\u2019s not always meaningful to everyone to the same degree,\u201d explains MacGregor. \u201cWhen you\u2019re managing to their specific goals, you\u2019re designing behavior plans to help them reach their goals.\u201d It\u2019s almost like training for the Olympics. \u201cWhatever the event it is you know you need to hit a certain time so that\u2019s your goal,\u201d notes MacGregor. \u201cYou then build a behavior plan, which is a series of exercises and practice that gets you there. It\u2019s something you have a strong desire to do and you have a coach to push you to do the extra wind sprints and things that you typically don\u2019t want to do but you need to be pushed if you really want to achieve that goal.\u201d Changing comp and quota plans can be a painful process, but MacGregor says it\u2019s been incredibly well received both by their existing sales force and job candidates. \u201cThey\u2019re typically blown away because they\u2019ve never heard of a company that has no sales quotas.\u201d He\u2019s not surprised by the positive reaction although he admits it was a scary thing for management to implement. \u201cTaking that away as a sales manager can be scary,\u201d he says. \u201cThose folks, including myself, had to wrap our heads around this and understand if you can identify somebody\u2019s true goals and then design a behavior plan to get them there, you\u2019re just there to help them reach their goals. It\u2019s a much better way to do business.\u201d Although Flo-Tech\u2019s sales reps are no longer concerned with quotas that doesn\u2019t mean Flo-Tech\u2019s partners, have abandoned their quotas. Those are still there. How does that work out? \u201cBecause our goals far exceed anything the company needs or what our external vendors are looking for, it\u2019s really not an issue,\u201d says MacGregor. \u201cWe had a record-breaking fourth quarter with no quota. I don\u2019t think our partners know we have this new system, but I don\u2019t think they\u2019d complain since our numbers are off the charts.\u201d The […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[82],"tags":[],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/1768"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=1768"}],"version-history":[{"count":0,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/1768\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=1768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=1768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=1768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}