May 20, 2020

How to Motivate & Incentivize Sales Reps During Economic Uncertainty

Molly St. Louis

Molly St. Louis

Molly St. Louis
Molly St. Louis

Senior Producer

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Budget freezes, top of funnel slowdowns, and overall uncertainty are three of the major obstacles that revenue teams are facing in the age of COVID, making the effectiveness of sales reps more imperative than ever.

Through the turmoil, your sales reps are on the front lines, driving the business forward by deftly communicating your unique value propositions, breaking through objections, and finding ways to creatively get the deal done.

And let’s face it: this can be frustrating and demoralizing at times.

So, how will you keep your team motivated as they look for new ways of solving these complex challenges every day? Start by checking out this video:

Rethinking Your Compensation Strategy

“In this time of change and uncertainty, one area we’re focusing on is our variable compensation strategy and making sure that it aligns with our evolving business objectives,” says Alyssa Filter, CFO of Clari. “CROs and CFOs have to work together to make sure we are motivating sales reps with incentives and comp plan structures.”

Pulling this off takes collaboration — that’s why having a true partnership between the CRO and CFO is so important.

“The main objective during this time should be to align GTM and sellers around targets that motivate them towards company goals,” says Kevin Knieriem, Clari’s CRO.

Knieriem outlines three ways that CROs can develop programs to keep their sellers motivated. And it all begins with:

Realigning Quotas

Leaders have to be mindful of the territories, the coverage, and the market trends in this new environment. “You’ve got to make sure you have territories that make sense, that are equitable, and that all sellers have a chance to succeed in,” Knieriem explains.

COVID has certainly changed the way most sales pipelines look these days, but a great way to gain focus on the right targets is by classifying them into headwinds and tailwinds. “Headwinds” classify as companies that have been negatively impacted by recent events (such as travel or in-person event businesses) and “Tailwinds” are those companies whose services are more in demand than ever (think Zoom and Slack).

By doing a deep-dive into both the existing pipeline and the recent rate in which opportunities have been created under this lens, you can more appropriately assess if there has been any outsized impact to a specific cohort of industry or region that requires a more nuanced approach to adjusting the associated quota. Sellers with an outsized proportion of either “Headwind” or “Tailwind” companies in their territory will likely require additional review to ensure the associated quota is appropriately right-sized.

Try segmenting your pipeline this way and begin to base your quotas on the areas where your sales reps can see the most success in the shortest amount of time. This will improve their morale and strengthen their determination to keep pushing through the uncertain times.

Leveraging Accelerators and Decelerators

If your company is like most companies, your sales priorities have shifted as of late. A mechanism for increasing both focus and performance is the incorporation of accelerators and decelerators.

It’s important to identify programs that yield the most value along with those which may not be as promising. Based on this analysis, teams can then use accelerators to increase focus and incentivize a specific type of behavior, while also shifting sellers away from lower priority areas. Particularly during periods of challenge for sellers, you may even consider making your accelerators more aggressive than usual to heighten reward for overachievement.

In periods of economic strength, decelerators, or “gates” may be incorporated into plans as an effective way to incentivize the performance of strong sellers, while weeding out lower performers. However, in the current environment leaders may want to consider either lowering achievement gates or removing decelerators from a plan when the ability to adjust the broader operating plan or right-sizing quotas isn’t available.

This type of adjustment to the plan structure allows the Company to continue to manage against the original plan while mitigating the downside risk in compensation for sellers.

Nuanced Incentives

When constructing a compensation plan, it’s important to consider not only the type of account (new vs. existing) that sellers should prioritize their time against, but also how best to create long-term and valuable relationships with accounts. Kickers are often part of the compensation plan itself and align deal structure with longer term strategy.

During times of uncertainty, it's important to quickly identify how to prevent sellers from becoming demotivated along with mitigating downside risks to the operating plan. When a compensation plan is built with growth in the market being it’s highest priority, how can you also drive home the importance of retaining the existing customer base?

By incentivizing specific actions, you eliminate the guesswork for sellers and allow them to know exactly what is expected of them. Positive change happens when everyone is working from the same sales playbook and you’ll find that the more specific you can get in your direction, the better your outcomes will be.

Aligning Comp Plans to Business Objectives

Once you define the programs that will effectively incentivize your reps, you need to ensure your comp plan adjustments continue to stay in alignment with your business objectives and operating plan.

“One thing we do on the finance side to support the process is we really look at different sensitivity analysis to understand how each of the possible comp levers in the plan can impact the business and what the potential cash outlay associated would be,” says Filter.

In addition to understanding the cash impact of comp plan changes, Finance can also support how changes, such as quota realignment, impact other factors such as quota capacity and resulting staffing needs.

As you go through this exercise yourself, consider how much certainty you have over the business and for what period of time. This will help you determine how the term of the plan can drive incentives.

“There’s always an opportunity to change the length of the compensation plan to align with the current macroeconomic climate,” Filter explains. For example, you could consider moving to a 6 month plan instead of a 12 month plan to give you more control and flexibility over the compensation plans while adjusting your operating plan and gaining more confidence over your long-term forecast.

Supporting Your Team

Through this process, it is important to remember the value of your team; they are ultimately the people that will get you through this time. Invest in them thoughtfully, and they will be motivated to invest back in your business through their creativity and hard work.

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