What Can You Do for Your Customers?

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So you want something from your customers? You want them to advocate for your company, to refer their friends to your products, to share your content online, and review your business on Yelp.

“Why should I?” is the question you should imagine them asking you.

If you want them to do something for you, you need to do something for them.

“But I already gave them my amazing product,” you say.

They paid you for that. They did what you asked. Transaction complete. If you want them to do something to help you, you need to do more than simply deliver what they expected. You need to go beyond their expectations.

Here’s how…

1) Proactively reach out to assist

Most companies work so hard to sell their products and then completely forget about the purchaser immediately after. We think that if they need our help, they’ll ask. But the truth is that most people won’t. They will suffer in silence because they don’t have the time, don’t know who to contact, or they will decide it’s easier just to switch to your competitor than deal with it.

You can exceed their expectations by reaching out to ask about their experience. Ask if they need help with anything. Ask how they have enjoyed your product or service. Did it solve their problems? Address their needs? If not, what can you do to make things better?

2) Give them a free upgrade

Let’s say you have just come out with a new model or have improved the service that you offer. Do you reward your customers by automatically giving them the latest and greatest version?

Perhaps this runs against your business model. Perhaps you rely on customer upgrades as a revenue source.

But offering a free upgrade is a surefire way to exceed their expectations and turn customers into advocates for your business. That might be even more valuable than them purchasing the upgrade.

3) Enroll them into a loyalty program

If you don’t already have a customer loyalty program, consider the opportunity to deliver added value to your customers. You might offer discounts on other products, exclusive offerings, news and information related to their interests, and more.

Getting invited to join a loyalty program provides incentive to continue to engage with your brand in a positive way.

4) Connect them with likeminded people

Many successful brands have built a community aspect into their customer experience. Think Apple, Harley Davidson, and Canon. These companies offer experiences that bring their fans together in the real world.

Customer communities become natural places for new ideas and innovation. By giving your customers access to one another, you help them solve their problems and generate critical feedback for the business.

5) Say thank you

It may sound corny to business-minded folks, but simple acts of gratitude will go a long way with your customers. Think about the brands that you interact with. How many take the time to thank you for your business, really thank you?

Saying thank you is a way to deliver a human touch to a monetary transaction, laying the groundwork to a relationship beyond that one purchase.

Align Incentives with Company Goals

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Some examples of employee incentives that I have come across in the recent past:

  1. A social media manager who receives a bonus based on growth in total followership
  2. A search engine marketer who receives a bonus based on lowering cost per lead
  3. An email marketing specialist who receives a bonus based on open and click thru rate improvements
  4. A sales team leader who receives a bonus based on conversion rate of leads to sales on outbound sales calls

From the list above, do any of the incentives stand out to you? Can you think of any reason why those incentives should not be in place?

On first look, they all seem to make sense. A social media manager should aim to grow the reach of the brand. A search engine marketer should take efforts to lower marginal costs. An email marketer should push for higher engagement. And a sales manager should value his team’s ability to close more sales.

But remember, what you measure matters. And if an employee at any level of the organization has all or part of their pay tied to certain metrics, those are the metrics that will matter to them. Even if they are not metrics that are tied back to the overall performance of the company.

That in mind, let’s find the problem with each of the above incentives.

  1. A social media manager who receives a bonus based on growth in total followership. This is all well and good except that how do we know that followership helps the business? You can increase followership by spending money to promote the brand page, or by buying lists. But that doesn’t mean it’s going to lead to an increase in brand engagement, loyalty or sales. Wouldn’t it be better to measure something that ties revenue back to social media activities?
     
  2. A search engine marketer who receives a bonus based on lowering cost per lead. While it might be good if a business drove more leads for the same amount of money, who is to say that those leads will be of the same quality. You can drive down lead cost by bidding on weaker terms, or spending more money on lesser search engines or content networks. That doesn’t mean that sales and revenue will go up as a result. Wouldn’t it be better to measure profitability of the advertising dollars over time?
     
  3. An email marketing specialist who receives a bonus based on open and click thru rate improvements. One might assume that more people opening and clicking on your emails is a good thing, but not if those people don’t end up becoming customers. The ultimate goal of any email campaign is not just an open and a click. It’s something else – a donation, a sale, a referral, greater loyalty or retention. Wouldn’t it be better to measure those outcomes?
     
  4. A sales team leader who receives a bonus based on conversion rate of leads to sales on outbound sales calls. This one seems like the most reasonable at first blush, but it too has its issues. One way to get to a higher conversion rate would be to pre-sort prospects and call only the easy sales. Another way would be to apply aggressive tactics over the phone in an attempt to pressure more people to purchase. These efforts can lead to lower sales and satisfaction, and higher cancels and refunds down the road. Wouldn’t it be better to measure a lifetime revenue metric and aim for higher total revenue per dollar spent on selling/calling?

Aligning individual incentives to the larger company goals is the only way to make sure everyone is working toward the same mission.

How to Reward Failure but Still Succeed

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Innovation is a term used far too often in the business world. But that does not mean it’s not important.

In order to truly succeed, your company/brand/product must stand out from the crowd. It must offer something, do something, or solve something completely unique. This requires innovative thinking.

In order to recruit, retain, and inspire innovative thinkers, we should incentivize it. While it’s true that many innovations are accidents or random, creative thinking is a skill that can be practiced and honed. And in order to encourage more of it at your company, you must remove the obstacles to it.

That means first recognizing that not everything you do will be a success. Failure is far more common. Organizations and leaders must acknowledge this fact, and convince their teams that failure will not be punished.

In fact, in many of the leading innovative organizations, failure is rewarded. When you reward failure, you incentivize people to try new things, come up with creative solutions to problems, and take initiative. You eliminate the stigma that comes with failure, and get people thinking about things in bold new ways.

At this point, a lot of managers and team leaders will be shaking their heads. The concept makes sense, they’ll think. But won’t this lead to a lot more failure? What if the big breakthrough or success never comes?

These are common fears, and completely natural. The key is in the message, and in how you reward employees who think outside the box.

You are not paying people to fail. What you are paying them for, is to try. Failure is just a step on the road to success. So you must be willing to invest in the process, not just the success.

Do’s and Don’ts

  • Do reward employees for new ideas
  • Do highlight all the behind the scenes work that goes into successes
  • Do spread the word throughout the organization
  • Do train people on how to harness their creativity
  • Don’t fire people for trying

Bad Sales Incentive Practices

Finding the right sales incentives is critical to building a more effective sales organization. But regardless of the incentive system you have in place, there are things management can do to injure its effectiveness.

Let’s review three of the worst sales incentive policies I’ve seen. They are:

  1. Capping incentives
  2. Treating all salespeople the same
  3. Not measuring and adjusting over time

Capping Incentives

The idea behind capping incentives is short-sighted, and goes something like this. “What if Salesperson X gets all these sales, that will mean we have to pay him all this cash. Let’s put a maximum on the amount we have to pay so we can save on the cost of this program.”

It doesn’t take much time to recognize the flaw inherent in this solution to a problem we should all be so lucky to have. If Salesperson X gets all those sales, those sales equal revenue for the company. So long as the incentive structure is built in such a way that the company profits from the sales after the incentive, there’s no reason to cap it. All capping it does is tells Salesperson X and the rest of your sales team not to work so hard.

Treating All Salespeople the Same

No two employees are the same. And we should not expect them to respond to incentives in the same way. Nowhere is that more true than in sales.

Your high performers might need different incentives than your more average salespeople. New hires might require more support and therefore a different set of expectations than more experienced staffers. People selling different products or to different client types might see starkly different performance.

Your incentive structure should be flexible enough to allow for these kinds of differences. The key is clarity and fairness, not rigidity.

Not Measuring and Adjusting Over Time

Putting an effective incentive plan in place for your sales organization is a time to “Set It and Forget It”. Just like most other marketing practices, it is important to continually optimize the incentive structure over time. Test until you find the one that leads to the maximum benefit for the company and then monitor it for staleness or slippage over time. You may need to inject a little excitement every once in a while if you have a sales team that gets used to the status quo.

Finding the Right Sales Incentives

Sales is an area where many companies still offer performance-based incentives – both monetary and non-monetary.

Why? It works. Multiple studies tell us that the right incentives motivate a higher performance than no incentive at all.

With sales, it is very easy to measure performance. Either you get the sale or you don’t. You know how much the sale is worth. And you can see if the value a salesperson is bringing in changes over time.

So setting incentives makes sense, if they improve performance. The company wins, the salesperson wins. Everyone is happy.

So how do you find the right incentive?

The truth is there is no one-size-fits-all incentive model. Each organization, each industry, and indeed, each salesperson is unique. What works for one won’t always work for another.

The key, as with anything else, is to test different models to find the one that works the best. Here are some possible incentive structures to get you started:

Make It a Competition

If you have a sales team that is all on equal footing, adding a competitive atmosphere can be an effective way to create incentives. Reward your highest performers relative to the rest of the group with monthly or quarterly prizes or bonuses.

  • Pros: incentivizes above average performance, gamification can make for a spirited atmosphere
  • Cons: may lead to distrust among salespeople, no incentive for mid-level performers who are not on top, poorer performances may hold a grudge, too much competition can be unhealthy

Flat Fee Commission

With a flat fee commission, each sale will lead to a financial reward. No matter how many sales a salesperson gets, they will get a financial award for each one. So the more they sell, the more they make.

  • Pros: clear and fair incentive, no competition among salespeople, incentivizes more sales
  • Cons: does not take value of sales into account, no incentive for personal growth, no limit to potential cost

Percent Based Commission

This is the same as a flat fee commission, but it solves for the problem of differing sale values. If each sale is worth a different amount of money to the company, there is no reason why the commission should be flat. A percent of each sale takes the size of the sale into account.

  • Pros: clear and fair incentive, incentivizes higher revenue, no competition among salespeople
  • Cons: no limit to potential cost, might sacrifice lower value sales to chase the higher commission

Tiered Commission

Whether flat fee or percent-based, a tiered commission structure incentivizes growth. Assign salespeople a monthly quota (or quotas) they must hit. Every sale above and beyond those quotas carries higher commission potential. They are still getting rewarded for every sale, but the higher their sales get, the more those sales are worth.

  • Pros: incentivizes growth, no competition among salespeople
  • Cons: no limit to potential cost

Mix and Match

The four models above are just a start to the possible sales incentive programs that companies can use. It’s possible to combine them, and alter them to meet your needs. For example, you might have a commission structure with a competition built in, so that everyone gets paid but the top performers get paid the most. Or you might have different incentives for each individual, based on whatever motivates them.

There are three keys to creating a sales incentive program that works:

  1. Make it clear and easy to understand
  2. Make sure it incentivizes the right behavior
  3. Make it flexible enough that you can tweak it over time to find the right balance between revenue and cost