Do financial incentives motivate?
I prefer those sellers who do “everything” for bonuses. We have a bonus system in the Netherlands and our sales agents can earn EUR 100,000 a year fairly easily. We know exactly what they need in order to achieve this: at least 400 (potential) customers, a minimum of 40 appointments a month, 400 calls, 200 emails, 8 lunches and dinners, a customer information session a month and a monthly mass e-mail to a (potential) customer base which is as large as possible. If a sales agent does this over a period of 6 months, he will have a very substantial salary. We know this as our TalentBase? captures all activities and after many extensive analyzes, we have been able to determine the above mentioned KPIs (Key Performance Indicators). What we also discovered is that we need up to 10 relevant contacts with a potential customer to get the first order.
So you might think that our sales team would focus completely on doing just that. Not so. Most of them do not reach their desired commission level as they do not meet their KPIs. Do they have other obligations or activities? No, not really. Do they already earn or have plenty of money so they don’t need it anymore? Again, no. They simply do not do it and apparently the enormous bonuses do not motivate them to take ruthless and focused action.
Are they the only ones? No. From our experience with the recruitment of sales staff in many countries, we often see that they prefer to have the highest possible fixed salary and a bonus is seen as a nice perk. I also know many companies where the sales staff has no bonus at all and these sales departments are certainly no worse than their colleagues who can earn high bonuses.
Only the best, who are convinced of their ability to prefer the highest possible bonus system and a concomitant low (or no) salary. So the remaining sales professionals prefer the highest possible fixed salary. And this has a very motivating effect on the most sales staff. In addition, recognition, small and regular incentives, moral and personal support, and regular training have a much stronger effect on the performance of most salespeople than an enormous bonus. Money plays a much smaller role than you might think.