Use sales incentives carefully and honestly

I know of a salesperson who began his career in the industrial supply products industry. He would go from shop to shop, offering his company's line of lubrications, using the same "canned" presentation all of the salespeople at this company used. And one of the most important parts of the script was offering two premiums, or "incentives," at the outset of each sales presentation to influence the prospect.

This salesperson would place two incentives on the table, usually a gold watch and a leather personal organizer, as he believed each had helped him win several accounts during his young career. As he had dutifully practiced hundreds of times while role playing, he would confidently ask the prospect, "If you had a choice between these two gifts, which would you choose?" and then hand the prospect the appropriate item.

This technique worked very well and the young salesperson experienced much success. However, it all quickly unraveled one day when the general manager of one of his customers walked through the shop and into the foreman's office and saw a new gold watch sitting on the foreman's desk. Intrigued, he asked where the watch had come from, and the foreman, now apparently very nervous, said that a salesperson had given it to him as a thank you gift for placing an order. After conducting a little research, the manager soon learned that the foreman had placed more than a dozen orders for products that the company had already contracted to get from another vendor for significantly less, and even more appallingly, several of the orders were unnecessary.

The foreman had been acting out of pure greed, simply ordering products to receive the premiums. And the salesperson, who was either too naïve to know, or too unethical to care, continued selling products that he knew, or should have known, the customer didn't need. The end result was that the foreman was terminated, the salesperson lost his largest account, and the salesperson's company lost a customer with more than 21 locations and enormous buying potential.

The point of this story isn't to condemn the practice of using incentives to win and keep business. I'm well aware that in many industries, using such perks is a very important part of the courting process and, when combined with professional and ethical selling, can secure significant deals.

The point is to demonstrate many of the negative consequences that can result when incentives supersede a company's product/service, a salesperson's competency and/or integrity, or a decision-maker's honesty. To help minimize the potential negative effects, consider these points before offering incentives:

 

  • Be prepared to make similar incentives available to all customers. No two customers are alike as every company has its best customers, good customers and so-so customers. Obviously, then, your company will likely offer bigger incentives to those prospects with more revenue potential. However, how will you handle a solid customer who learns of the perks an "A" customer received to win its business, and now wants the same? You don't necessarily have to make available the same incentives, but you had very well consider the possibility of this request in advance and be prepared for it when it arises.
  • Ask to see the company's policy that governs the acceptance of perks by its employees. This is the easiest way to avoid the situation that evolved in the opening example. Had the salesperson simply asked the foreman to see the company's policy that outlined what incentives, if any, its employees could accept, and under what circumstances, the situation would have been avoided.It's important to realize that as a professional salesperson, you must always serve your customers. And sometimes you best serve your customers not through the products/services your company can supply, but through the care and integrity you personally demonstrate. By asking to see the company guidelines, you're not only protecting your company's relationship with the customer, but you're also protecting your contact.
  • Be clear on expectations. Is this contact or her company going to expect a similar incentive with the placement of every order or the renewal of each contract? When you offer the incentive the first time, make certain that all parties involved understand the nature of this specific incentive and what should be expected in the future. Not knowing can lead to a misunderstanding that may injure the relationship.
  • Make the incentive icing on the cake, not the cake itself. That is, ensure that the decision maker is choosing your product/service because she believes it's the best solution to meet her needs, not because she primarily desires the incentive. If she thinks several of your competitors offerings would work better, but she just can't help picturing her and her friends attending an upcoming, sold-out concert in your company's luxury suite, you had better get your product/service to the top of her values list or you and your company may well suffer later.
  • Management must know what you're offering. Many "maverick" salespeople will pay for customer incentives personally, without the knowledge of management. While this may be enticing during the short term, I strongly recommend that you avoid this practice. You're likely not a lawyer, so you don't know all the legal ins and outs as to why your company's policy on incentives is the way it is. Additionally, if you go it on your own, you have no one - and no policy - to back you if things go wrong. And most importantly, you may be breaking the trust your management has placed in you beyond repair.

 


 

Roy Chitwood is an author, trainer and consultant in sales and sales management and is president of Max Sacks International, Seattle.