The Hidden Risks of Predictable Bonuses: How to Keep Your Sales Team Hungry and Motivated
Performance-based pay (PFP) is designed to reward effort and results, but when it becomes too predictable, it risks losing its effectiveness. In Tapped In Sales Episode 26, Bud and Mikey discuss how PFP can turn from a motivator into an entitlement, and how to shake up incentive structures to re-engage your sales team. Here’s how to keep your team sharp and motivated by making PFP exciting again.
1. The Pitfalls of Predictable Bonuses
While predictable bonuses may seem like a good way to boost morale, they can lead to unintended consequences. If your sales reps come to expect their PFP every month regardless of performance, the incentive loses its power.
Key Risks:
- Complacency: When bonuses are a sure thing, reps may start hitting just the minimum targets needed, leading to stagnant performance.
- Loss of Motivation: If reps feel their bonus is guaranteed, they stop striving for growth, creativity, and excellence.
Pro Tip: Keep Bonuses Tied to Meaningful Results
- Reinforce that PFP is not just a given. Communicate that bonuses are tied to clear and achievable goals that require strategic thinking and effort. By doing this, you maintain the sense of reward without letting it become automatic.
2. Focus on Profitability, Not Just Volume
Bud and Mikey discussed how focusing solely on volume can limit the effectiveness of a sales team. When bonuses are purely tied to how many cases are sold, it can lead to short-sighted behaviors. Instead, shifting to profitability-based goals encourages smarter selling.
Key Benefits:
- Smarter Selling: By tying incentives to profitability rather than volume alone, sales reps start to focus on higher-value products and accounts, leading to long-term growth.
- Increased Engagement: When sales reps feel they can influence profitability, it empowers them to be more strategic, creating a deeper connection to their results.
Pro Tip: Shift to Profit-Based Goals
- Instead of rewarding reps solely for volume, consider goals that are tied to gross profit per case (GP/CE). This approach not only drives revenue but also rewards reps for selling products that generate the most value for the business.
3. Avoid the Entitlement Mindset
The core problem with predictable bonuses is that they can create a sense of entitlement. Once reps start expecting their PFP without putting in the extra effort, the incentive loses its meaning. Bud and Mikey recommend setting clear but attainable goals that challenge reps to use their creativity without setting them up for failure.
Key Challenges:
- Entitlement: When bonuses are too easy to achieve, salespeople stop seeing them as something earned and start viewing them as part of their salary.
- Disengagement: If reps feel there’s no real challenge in earning their bonuses, their engagement with both the company and customers can diminish.
Pro Tip: Focus on Engaging, Attainable Goals
- Set attainable but creative goals that engage your reps’ problem-solving skills. These goals should be achievable, but still push them to think strategically. For example, instead of a blanket volume target, create a goal that encourages reps to prioritize key accounts or focus on specific high-margin products.
4. Keep Sales Teams Hungry with Dynamic Incentives
To keep your sales team motivated and engaged, it’s important to regularly refresh the way you present incentives. Bud and Mikey advise against relying too heavily on static or routine incentives. Instead, focus on goals that keep reps engaged by making them relevant and aligned with the business’s needs at the time.
Key Strategies:
- Adjust Goals Based on Market Needs: Tailor incentives to reflect the real challenges your sales team faces. This might mean shifting the focus based on product performance, market demands, or seasonality.
- Incentives for Creativity: Reps who think critically about how to meet the company’s profitability goals can achieve both higher earnings and long-term growth.
Pro Tip: Keep Goals Dynamic and Regularly Updated
- Rather than setting goals on a rigid cycle (like quarterly), keep them flexible and responsive to current market trends. This ensures the sales team remains engaged and focused on goals that matter. Encourage constant dialogue between sales managers and reps to adjust goals as needed, ensuring they stay both challenging and achievable.
Conclusion:
Predictable bonuses can lead to complacency and disengagement if not managed well. By focusing on profitability, setting attainable yet creative goals, and keeping incentives dynamic, you can reinvigorate your sales team and keep them performing at their best. When reps understand that bonuses are a reward for true performance, they’ll stay motivated to push beyond the basics.
Want to learn more?
Check out the full Tapped In Sales episode where Bud and Mikey dive into how to shake up your PFP structure and keep your team driven and results-focused.