Sales Contests Work If They Are Implemented Correctly

Sales Contests Work if they are implemented correctly

Sales contests provide a great tool for the sales manager to motivate his sales force in both the short and long-term. However, in order to work for the sales manager and provide value to the sales force the objectives of the sales contest must to be carefully defined. Pitfalls, like a "coin operated sales force" and unmotivated salespeople can be the result of a thoughtlessly designed sales contest. Lastly, there are a great variety of sales jobs out in the market of which many would need special attention, but for the purpose of this paper I will focus on the field sales force. This paper will briefly discuss the ingredients of a successful sales contest, provide practical examples, state what to avoid in a contest and provide a table evaluating which type of contest might work for particular kinds of sales persons.

I. Ingredients of a successful sales contest.

In order for sales contests to work they cannot be "stale and predictable." This means that a good sales manager structures a contest around different themes. It is important to understand what drives and motivates the employees engaged in a sales contest. In their article "Sales Contest Effectiveness", the authors point out that field sales people tend to be motivated by the following factors: outcome based goals, limiting numbers of winners to 40 percent of the sales force, 3 months' duration of the contest (with exceptions by industry ), and with cash awards at high value levels (3 weeks' pay).

Outcome based goals can be based on amount of sales transactions or revenue but can also contain improvements in customer satisfaction ratings. Determining the number of potential winners can be a challenge but the key is not to limit the possible winners to only a few. This tends to dampen the motivation of sales people that perceive the competition as too difficult. On the other hand, if everybody can win sales people do not perceive the challenge as special and exclusive and are therefore not fully motivated to work as hard as they could. Therefore, limiting the number up to 40 percent of the sales force provides a balanced number of winners. The optimal duration of a sales contest varies from industry to industry. The contest length should be substantially shorter for consumer sales people because their sales cycles are much shorter than those of industrial sales people. Lastly, cash awards still rank very high as an optimal means of compensation. It is, however, important to point out that high compensation is more important to highly competitive sales people because they attach a greater focus to the extrinsic reward gained by winning. Also, younger sales people and sales people in early career stages attach more importance to high compensation which may be due to a lack in financial security at a younger age and early on in their careers. This is congruent with the lower stages in Maslow's hierarchy of needs, which may remain unsatisfied early on or at a younger age in a sales person's career. The smart sales manager would therefore pay close attention to the aforementioned criteria.

II. Examples of effective sales contests and their implementation

From an article written by Majorie Caballero, "Stepping Up Performance: Incentives in a Sales Force Contest," a sales contests was set up to determine the effectiveness merchandise incentives versus traveling/entertainment and cash awards for motivating sales force performance. The results showed the travel/entertainment performed the best followed by the group with the cash reward. The merchandise incentive group was relatively less effective than the other two groups, however, all treatments increased previous year's production and proved to be highly cost effective for the company.

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