“Victor, I have a salesperson who is content with how much he earns and refuses to push himself to sell more. What can I do to motivate him?”

I’ve had several business owners ask me this same question. But before I jump into solutions, I would like to give you some context.

THE PROBLEM: Let’s imagine the following scenario: the salesperson has a $1M quota, and if he hits his quota, he’ll make $100,000. In his mind, this is great! Every year he puts in just enough effort to hit his quota; no more, no less.  This is a classic example of a salesperson who's a ‘farmer’ (i.e.., tending to his existing customer flock and not a 'hunter' (i.e., going after new business).  The business owner on the other hand, strongly believes that with some extra effort, the salesperson could sell $2M and earn $200,000.

In short, the salesperson is content with his client base and subsequent earnings. The business owner is discontent as the company needs the additional sales revenue to expand and scale the business. The goals of the salesperson and business owner are misaligned, which causes tension in their relationship.

So, what should you do if you were the business owner?

Here are 5 options:

Option 1: Fire the ‘farmer’ salesperson and hire a sales ‘hunter’ who'll aggressively go after new business. I’m not a fan of this option since the salesperson is generating revenue and may have close relationships with his clients/customers. Firing may jeopardize the revenue and damage the existing relationships.

Option 2: Change the pay structure by reducing the commission payout rate. For example, instead of a 10% payout at quota (e.g., $1M = $100,000), you could make it 5%. This means the salesperson will need to sell $2M to earn $100,000 like before. I’m not a fan of this option either, as it will create resentment and foster an antagonistic owner-seller relationship. The outcome will most likely end in the salesperson quitting. Worse yet, he quits, joins the competition, and takes his clients with him.

Option 3: Acceptance. Accept that this salesperson is who they are and there's nothing you can do to change them. No surprise that I’m not a fan of this option either since the business owner will begin to resent the salesperson because the owner feels like they’re leaving money on the table or, worse, losing market share. This type of thinking breeds a hostile environment and devolves very quickly.

Now that I’ve told you what I wouldn’t do, let me tell you what I would do because I have done it.

Option 4: Shift the salesperson’s ‘contentment point’ higher. This strategy involves getting up close and personal with the salesperson and trying to understand what their long-term goals are. For example, let’s assume Ryan (salesperson) and the owner have a chat about goals and family. The owner learns that Ryan has two young children. The owner might ask, “I’m sure you would want to help pay for college and not have your kids saddled with debt after graduation. Ryan, by the time your kids reach age of 18, what do you think the cost of college will be? In fact, at the current rate of tuition inflation, the number could be as much as $XXX,XXX per child.”

Or, you can change tack and say, “Ryan, you’re 35 years old. If you were to retire at 65, how much money would you need to have in savings to make sure you can sustain the same lifestyle?” In both examples, Ryan may say, “I don’t know. I haven’t thought about it.” In that moment you would run numbers to ‘shift’ his perspective on how much he needs to start earning.

Lastly, you could remind Ryan that things change. How much he’s earning today could suffer if the company went under or market conditions eroded. “What would happen if the market crashes? Do you have enough funds to ride out a deep recession? Are other people depending on you?”

In summary, Ryan may be only thinking about today or this year and not focusing on long-term planning. Having these conversations around money, savings, retirement, and market uncertainty may shift his ‘contentment point’ higher and motivate him to sell more.

Option 5: The Takeaway. The last and final option is a hybrid solution of Options 2 and 3. Accept that the salesperson will not change their behavior. Instead of changing their pay structure, change their responsibility. One example would be to change territory assignment.

For example, if Ryan manages 5 regions, take away 1 and assign it to a new salesperson. I recommend doing this at the end of the fiscal year to minimize animosity. I would also have a conversation with Ryan to explain that no growth is not acceptable. Ryan will get the message indirectly that if he doesn’t grow his existing 4 regions, you may take another one away. Loss aversion is a motivator and so is competition (i.e., the new salesperson). If you can't reassign territory, you can reassign key accounts (clients) to a new salesperson. Lastly, you can redirect new business or lead to other more aggressive salespeople (i.e., hunters).

Whether it’s taking away territory, key accounts, or redirecting new business, Ryan will get the hint! Either he steps up his game or risks losing his existing base of business.

I would love to hear your thoughts. Agree? Disagree? Do you have other options that I didn't mention?

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