The Multi-Product Sales Dilemma (Part 1)

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Welcome to Closing Thoughts - the Sales Performance Management Newsletter from Everstage. Subscribe here to receive our upcoming editions in your inbox.

A few days ago, we got an interesting question in the Uncappd community (be sure to check it out to connect with sales comp experts from around the globe) about compensating reps for multiple products. The questioner’s company had launched a second product, and they were figuring out the right way to incentivize reps for this case.

Multi-product sales can put your reps in a tough spot. If not planned properly, it can quickly lead to chaos.

The first step in tackling this tricky situation is to be aware of the potential pitfalls. So what exactly are those challenges? Let’s dive into it in today’s in-depth.?

And in other news, our in-person mixer, GTM Summer Social, is back! More details on that below.

So that’s it for this week’s Closing Thoughts, I’ll see you in the next edition!

In Depth ??

The Multi-Product Sales Dilemma - Why 80% of Companies Get It Wrong (And How to Be in the Top 20%)

Your firm that’s wildly successful with one product launches a new one or maybe a few. It's great at first: your CRO projects an additional $5M ARR in the first year for the new products, and you deploy targets to all your reps to go sell them and then come back after 6 months. The result? It's a disaster. You are nowhere near where you should be.?

There are different reasons why this usually happens:

1. You've got the product wrong - It doesn't meet anyone's needs and the parity isn't there with the market standard
2. You've got the market wrong - There's no need at your particular price-value offering
3. You've got the operations wrong - Your sales teams don't have the right incentives to sell it or they are having a hard time selling it.?

For the sake of this discussion, I am going to assume that you have Product-Market fit sorted and it's about getting the operations right. Because, if you don't have the product-market fit, no amount of incentives is going to create sustainable sales for a new product.?

Now, let's break down why multi-product sales is a tough game.?

1. The Familiarity Trap - Reps cling to selling what they know best, neglecting new or complex products.

Example: Imagine a star rep at CRM Corp who’s crushing your quota every quarter with their flagship product. Suddenly, the management introduces a new AI-powered analytics tool. It's powerful, but complex.?

Despite training, the rep would gravitate back to the familiar CRM pitches. It's not just about comfort – they’d have got relationships, case studies, and a finely-tuned pitch for the old product. The new one? It feels like starting from scratch, and their pipeline (and commission check) might take a hit while they ramp up.

2. The Effort-Reward Mismatch - New products often require more effort to sell but don't offer proportionally higher rewards.

Example: Let's say TechGiant Inc. launches a new cybersecurity suite. It's cutting-edge, but requires multiple stakeholder buy-ins, longer sales cycles, and intensive demos. A rep might spend three months nurturing this deal, or they could close three of their standard software packages at the same time. If the commission structure doesn't account for this increased effort, guess which path most reps will choose? The path of least resistance often leads right back to the established product line.

3. Mismatched Quota? - Balancing quotas across products can either complicate the plan or lead to some products being overlooked.

Example: SaaS Innovators decides to implement a 70/30 quota split between their core product and new offering. Sounds simple, right? Not quite. Reps would start questioning: "Do I need to hit both quotas to get my full commission?" "What if I exceed one but miss the other?" Some reps might hit their overall number but completely ignore the new product. Others might get paralyzed trying to perfectly balance their efforts. Worse yet, if the 30% feels unattainable, reps might write it off entirely, dooming the new product's chances.

4. The Short-term Incentive Pitfall - Quick-fix SPIFFs create unsustainable spikes without long-term behavior change.

Example: DataDrive Co. is struggling to gain traction with their new data visualization tool. In a panic, they roll out a massive SPIFF – a $5,000 bonus for every sale in the next month. Suddenly, everyone is pitching the new product! Sales spike, and high-fives are all around. But what happens when the SPIFF ends? Sales plummet back to pre-bonus levels. Why? Because reps haven't internalized the value proposition or built sustainable selling habits. They were chasing a short-term cash grab, not developing long-term expertise.

5. Cannibalization - New products might eat into the sales of established ones, creating conflicting incentives for reps.

Example: MarketingPro has a popular email marketing platform. They introduce a new, more comprehensive marketing automation suite. It's objectively better for most clients, but it's also pricier. Reps face a dilemma: either upsell existing clients to the new platform (potentially risking the relationship and requiring more work) or keep them on the familiar, easier-to-manage email tool. Without careful incentive design, reps might actively avoid cannibalizing their own book of business, stunting the growth of the new product.?

6. The Expertise Gap - Selling multiple products requires a broader knowledge base, which can be overwhelming for reps.

Example: CloudMaster expands from infrastructure hosting to offering a full DevOps platform. Suddenly, reps need to understand containerization, CI/CD pipelines, and microservices architectures – on top of their existing product knowledge. Some reps thrive on this challenge, but others feel out of their depth. Without significant investment in training and enablement, you risk having a sales team that's a mile wide but an inch deep, unable to effectively sell the full portfolio.

Got a clear picture on the potential pitfalls of multi-product sales? By being aware of the shortcomings, you’ll be able to craft compensation plans that not only drive sales across the entire product line but also align with the long-term strategic goals of the company. So, how to do it? Let’s look at it in detail in our next edition.

Everstage’s Corner ?

Network with GTM Leaders This Summer!

How about networking with GTM leaders over delicious appetizers and top-shelf drinks? That's right! Join us for our exclusive in-person mixers, GTM Summer Social ‘24! This time, we're hosting gatherings in Houston (August 13), Austin (August 14), Dallas (August 15), and SF City (August 22).You'll also get to meet experts from Fiserv, Gong, Rippling, and more. Don't miss out - RSVP now and secure your spot for an amazing experience!

Pro Perspectives ??

From Consulting to RevOps Excellence: Kristina Kardell’s Learnings on Collaboration & Prioritization

Kristina Kardell , the Associate Director of Revenue Operations and Strategy at Leapsome , joined us on the latest episode of the Go-To-Masters show. Kristina, who moved into RevOps after working as a consultant, shared her insights on using her consulting experience in RevOps. She also spoke about setting up the ideal cadences to enable cross functional collaboration, and how RevOps can prioritize projects and tasks. Tune in to the full conversation below!

Listen Now

RevOpportunities ??

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