What Makes a Sales Contest Successful?

White Paper

Introduction

Most companies offer their employees competitive salaries and benefits. In return, the vast majorities of these employees’ works hard and make a concerted effort to do a good job to justify their compensation package. But in this highly competitive world, a good job doesn’t necessarily do it anymore, especially when industry leaders are using every means available to motivate an extra level of performance from their sales reps.

Managers are commonly using incentives as part of their company’s marketing mix to help accomplish a wide variety of business objectives. They have found that these programs are more likely to accomplish the objectives set for them when reps are motivated by positive, immediate and certain consequences. They have found that these programs - when properly designed and executed - pay dividends in added sales and profits and happier employees.

According to Incentive Magazine, approximately two-thirds of American companies are currently using sales incentives. The key reasons that these contests are used are to boost sales, increase morale in the sales force, and/or meet another outstanding business need.
This white paper will discuss the answer to why sales incentives are important, what makes a contest successful, and what is the psychology behind a sales contest. Additionally, we will look at three sales channels to determine their similarities and differences on this topic. These channels include: Inside Sales, Field Sales, and Partner Sales.

Sales Contest Psychology
In this section, we will focus on the answer to 2 very specific questions:
1. What makes sales incentive programs work?
2. How do incentive programs differ between the following sales channels:
a. Inside sales?
b. Field sales?
c. Channel sales?

WHAT MAKES SALES INCENTIVE PROGRAMS WORK?

Maslow’s Hierarchy of Needs
Maslow theorized that every human being has a specific set of needs, and each level of need must be realized before the next level of need is felt. (See chart for hierarchy.) In other words an individual must have food, clothing and shelter prior to feeling a need to have economic and physical security, and so on. Maslow outlined five levels of human needs:
•The first two levels satisfy basic and monetary needs:
o Physical comfort is our number one priority—food, shelter and clothing
o The need for Security is second. One must feel safe in both physical and economic security.
•The next three levels deal with our psychic income need—our need to learn and grow as individuals, and the development of our self esteem.
o The third level is Social Acceptance. As a member of a group we have specific roles and responsibilities. We look for recognition from these groups.
o Next comes the need for Personal Esteem. This level is a function of our achievements. Awards, job title and importance, and accomplishments are all examples of our personal growth.
o At the very top of our needs is Self-Realization. This is the total fulfillment of our potential. If we are always changing and learning, theoretically we will never reach Self-Realization. BUT, we continue to aspire to greater levels of success and personal satisfaction.
How it Relates:
In a sales environment, the first two levels or Monetary Needs must be realized by existing compensation prior to considering a sales incentive program. Once Monetary Needs are realized, the next levels, or psychic income needs, can be realized with sales incentives.
Additionally, cash as an incentive can be confusing because it can be used to fulfill one’s Monetary Needs. An incentive program should offer unique prizes that are appealing to the individual. These prizes will act as physical manifestations of success, and contribute toward the Psychic Income Needs of Social Acceptance, Personal Esteem and Self Realization.

The Behavioral Model
Behavior can be dramatically impacted by positive reinforcement. Incentive programs are based upon the idea of giving positive results for positive behavior that helps an organization to reach its goals. The rationale for conducting an incentive program is grounded in B.F. Skinner’s Behavioral Model.
Antecedents communicate what you want participants to do
•Make sure you define objectives clearly
•Promote rules and awards
•Create excitement at program launch
•Provide ongoing communications Behavior is what people do in a given situation
•Function of what they think you want them to do, what they have the skills to do and how motivated they are to do it Consequences are the reinforcement of behavior and what determines whether it will be repeated
•Provide a wide range of positive consequences
•Recognition by management and peers
•Rewards that have value, choice and are easy to administer Feedback encourages continuous improved performance
•Provide ongoing measurement and feedback
•Distribute consistent and timely progress reports

How it Relates:
•In order to change behavior, sales reps must have a clear understanding of their objectives (antecedents) and the payoff (consequences). Sales incentive programs create a situation in which a short-term goal (antecedent) and its payoff (consequence) are defined. The behavior will create success if the payoff is in line with the participant’s current needs and/or wants.
•Constant communication is essential for the success of a program (feedback) so that participants know where they stand in relation to the goal.
•Positive consequences can influence corporate goals.

The Bell Curve
The bell curve is a graphic depiction of the normal distribution of employee performance in an organization.
•The majority of employees are average performers
•At either end are the top and bottom performers
•Top performers (10%) will always be at the top. They have the skills and are selfmotivated to consistently perform at a higher level.
•The lower-end performers (10%) will always be at the bottom. There is little anyone can do to move these people to perform at a higher level.

How it Relates:
The objective on an incentive program will have the greatest impact if the focus is on the middle 80%. This will move the bell curve driving more individuals toward greater performance.

10 Sales Psychology Factors
There are ten primary psychological factors that influence the thinking and the performance of sales people (Meredith & Fried). These factors are:
1. Personal Gain: Desire for personal gain is the sales professional’s stereotype. This is what drives the sales rep to work for his/her commission as well as any incentives. While compensation allows the rep to chase possessions, incentives are not quite as simple. They are, however, much more powerful.
2. Family Influence: Maritz Co. claimed that 85% of prize points redeemed from their catalog are for home and family items, rather than personal items. The family influence is multi-tiered. On one level, the family expects a certain level of income to maintain its lifestyle. This is realized through the salary and commissions. On another level, the family gets to take advantage of the incentive itself. Finally, the family and/or spouse can be considered highly effective “assistant sales managers” in many incentive programs – for example travel programs. In an ideal world, the spouse should be invited to kick off programs, included in mailings of catalogs, brochures and other collateral, and invited to the final awards presentation, or on the trip. They should be made aware of the incentive objectives, and the expectation of their spouse.
3. Desire for Recognition: Need for recognition is a strong driving force in most sales professionals psyches. A sales rep can win a contest, but if his/her peers do not recognize it, it looses much of its motivational oomph. A manager can never send praise too loudly or too often.
4. Pride: A good sales contest can create a strong sense of pride in one’s work. As that is the case, if the sales rep is proud of the work s/he is doing, it will affect his/her ability to work more effectively. Additionally, when the rep is sitting in front of a customer, this pride is more likely (than perhaps in any other profession) to attribute to the success of winning the deal. Hence, the residual affect of the contest in this context is more sales, even after the contest is over.
5. Stimulation of Imagination: Sales is a very routine job. An incentive program can help the sales rep to stimulate his/her imagination to find new ways of doing his her job. The residual affect of this is the possibility to uncover new sales opportunities that may not have been noticed before, or finding a new way to approach a prospect that makes them stand up and take notice when other attempts have previously failed.
6. Need to be Desired: Sometimes in the day-to-day sales grind, the sales rep can feel like a cog in a wheel. The incentive program gives management the opportunity to direct the sales force’s attention to the importance they play in the organization, and show appreciation for the part they play.
7. Fear: Both fear and competition bring out the hardest work in individuals. According to Meredith and Fried, “fear is the companion of a surprising number of sales professionals.” A successful incentive program can help to allay a reps fear by showing him/her the road to success, and driving him/her to get there.
8. Competitive Instinct: Competition is also a driving force for most sales professionals. A successful sales contest can drive friendly competition between reps and/or sales offices, as well as create a need to outperform one’s personal best.
9. Boredom Avoidance: Similar to the pride factor, a good sales incentive program can add excitement to the job. This change of pace can drive energy into the sales rep, and sales force, and can create a spark in the way the sales rep handles his/her job.
10. Conscience: Contrary to the bad rap that sales carries, most sales professionals have a very high sense of conscience. If a sales rep is not doing well, not only does it play on their self-confidence, but also they begin to feel guilty. Many times, they feel as thought they are letting their manager down. A good incentive program can help to lift them back up again, creating an upward trend in their sales numbers, and in their self-confidence as well.

Incentives for Different Sales Channels
When examining sales channels in relationship to incentive contests, there are many similarities and also many differences. More specifically, the type of sale may be an even greater determining factor than the channel itself. A high end product can be sold over the phone, and have a longer sales cycle than some products sold in the field. For example, life insurance can be sold over the phone, and require several calls before someone buys a policy. On the other hand, food products are usually sold to the restaurant market in a one call close. In this case, the field rep would have similar expectations for incentives as a “typical” call center agent, and the insurance agent selling by phone, may have expectations more in line with a field sales rep. This example illustrates the point that regardless of the sales channel, a major issue is to know your audience prior to developing an incentive program. The following paragraphs will outline the similarities and differences between sales channels.

Similarities
1. Doing a job well and being successful at it is a motivating factor for anyone. This is a key driver for any sales rep, regardless of the sales channel. The critical factor here is that the sales rep believes s/he is appreciated for the job s/he is doing.
2. Recognition. Recognition is a key component to a motivation program. As stated earlier, recognition is a key driver for most sales reps. A manager can never tell a rep s/he has done a good job too often, or too loudly. Many times, the recognition is even more important than the prize. A personal theory of this author is that though sales reps are driven by both incentives and recognition, an individual is more driven by either recognition, or incentives (including compensation). For example, one sales rep who has won numerous sales contests that included prizes such as travel, electronics, personal selections from catalogs, cash, etc., said her most memorable incentive was working for and winning the company “Rookie of the Year” award. The prize for that award was a sales plaque, but the recognition she received by her peers and management was unforgettable.
3. Achievable sales goals. Setting sales goals so that they are achievable, but still somewhat of a stretch is important as well. It is very de-motivating to be handed a sales goal that you know is beyond your reach.
4. Ability to measure success. It is critical to set goals that are Specific, Measurable, Attainable, Relevant, and Time Bound (S.M.A.R.T.). If these criteria are not met, the goals tend to become more subjective, and less motivating. They can even backfire and become de-motivating.
5. Communication is the key to success. In order for a program to be successful, it must be communicated clearly, and frequently. Constant reminders through collateral, physical manifestations, email and voice mail messages, and by the manager will help to facilitate a charged environment, in which the sales team is excited by the contest.
6. Objectives are congruent with corporate goals. If this is not the case, mixed messages can confuse the sales team, and management may not support or fund the incentive program.
7. Rewards are specific to the recipient. Awards that drive behavior are only as effective as the prize is relevant to the sales reps. Since it is nearly impossible to have the same prize be motivating to numerous people, the best bet may be to award prizes through a catalog with a large selection, in which each person can find something that excites him/herself.
8. Rewards are meaningful and memorable. The more meaningful a reward is, the more motivating it will be. The more memorable a reward is, the more lasting impact it will have on future performance.
9. Promotion of friendly competition. Friendly competition is thought to be very important in driving a successful incentive program. Whether the competition is between sales reps, sales offices, or against an individual’s previous performance, it will help to drive more energy into the program. As stated earlier, competitive instinct is a driving force in the sales rep’s psyche. Competition can be fostered by the manager, and also by distribution and/or display of stack rankings.
10. Rewards are in line with compensation. If an incentive program is in conflict with compensation, the wrong messages are being sent in either one or the other program. It will be confusing to sales reps, and the result will be a de-motivated sales force.

Differences
1. Prize levels vary based upon income levels. Expectations of the prize vary greatly based upon the level of income a sales rep makes.
a. Inside Sales/ Call centers: The manager of a call center said that a gift certificate to the grocery store could be a great incentive for his group. Typically smaller ticket items with higher frequency are appropriate for this channel.
b. Field and Partner Sales: Obviously, this type of prize would not be very motivating to a field sales rep at IBM. Prizes are usually larger in nature, and can range from a catalog to choose gifts from, to travel, to cash, to a new car.
2. Length of the contest. Programs will differ in length by sales channel.
a. Inside Sales: Sales forces with a short-term orientation (most Telesales agents) are more in the mode of immediate gratification. Therefore, a shorter contest ranging from a single shift, to 2 months would be appropriate.
b. Field and Partner Sales: On the other hand, sales forces with longer-term orientations do well with a longer contest, however, there should be shorter term incentives built into a long program. This will keep the momentum going. An example of this is an auction program in which reps can earn “dollars” for specific shorter-term objectives, and then use the “dollars” to bid at a grand finale auction.
3. Communication sources and styles. How a contest is communicated will differ by sales channel.
a. Inside Sales: Communication is much more frequent, and typically verbal or memo formats. Contest may be made announced by memo or on a tally board. Updates could be shouted, or made to a tally board hourly or even more frequently. Physical manifestations, and/or action attention should be present (for example balloons, or themed material hanging from the ceiling, or someone actually leaving their seat to receive a token per sale).
b. Field Sales: Communication is somewhat frequent, but less than Inside Sales, and usually takes the form of voice mail, email, and/or tally boards. Contests may be announced by the manager in a weekly sales meeting, or by a higher-level manager in a monthly/quarterly regional meeting; and/or collateral may be sent to the office, or home. Updates may be sent to the office in a memo, or may be updated on a tally board, or may be posted on a company’s intranet. Physical manifestations may or may not be present in local sales offices, and may include trinkets & trash, pictures of the prize(s), etc..
c. Partner Sales: Communication can be very difficult because the partner company may not allow direct access of their sales force. If possible, announcements are made in person to the sales team. Collateral usually consists of trinkets and trash.
4. Levels of control. There are different levels of control based upon the channel.
a. Inside Sales: Direct control and constant contact.
b. Field Sales: Direct control with less frequent contact.
c. Partner Sales: Little control with almost no contact.
5. Behaviors to motivate: Each sales channel comes with its own set of behaviors that it takes to get the job done. There are many different behaviors you can motivate based upon the result you are trying to achieve.
a. Inside Sales: Behaviors may include areas such as: calls handled/made within an hour, sales made, percentage of sales to calls handled/made, and call quality scores. Additionally, behaviors such as attendance are also used.
b. Field Sales: Behaviors may include areas such as: cold calls made, appointments made/attended, close ratio, revenue generated, and referrals generated.
c. Partner Sales: Behaviors may include areas such as: number of specific item sold, and total revenue generated.
6. Planning and frequency: The amount of time that is required to successfully pull off an incentive program can vary by sales channel as well.
a. Inside Sales: Inside sales is a fast moving environment, with frequent short-term sales contests. Programs are usually developed within a few hours, to a few days. They also tend to be implemented on a regular basis. In fact, it is rare to not have any contest going on at all.
b. Field Sales and Partner Sales: Depending on the size of the organization, and the level of complexity, these channels may require days to a quarter to develop a successful contest.

Case Studies
Inside Sales – TeleSpectrum
TeleSpectrum is an outsource call center with offices all over the country, and in Canada. Brian Bookmiller, Contact Center Manager, was interviewed for this case study. The incentive program he discussed was called “Balloons.”
•Bookmiller was faced with the challenge to raise his Telesales Reps (TSRs) close ratio (gross sales divided by total calls).
•Knowing that the close ratio is meaningless to a TSR, he had to translate the number into a specific number of gross sales. It is important to speak in terms that are understandable to the TSRs.
•In a call center environment, there is almost always some sort of sales contest being run. Because of this, Bookmiller is able to create and roll out contests quickly. This contest took him about 5 minutes to set up, and a day to roll out. He states that it is important to keep them creative. Otherwise the concept gets stale to TSRs, and you lose the effect of an incentive program.
•The contest was announced in a memo to all reps, and handed to them by their supervisors the day before the contest began.
•Each time a sale was made, the TSR would walk to his/her supervisor’s desk, log the
sale, and pick up a balloon. At the end of the day, the TSR with the most balloons won a gift certificate to the local mall. This worked out well, as the contest was very visual –this is an important component in a call center environment.
•Bookmiller reports that the prize didn’t even matter. It was the competition of the contest, and the recognition that got the TSRs “pumped”. The number of balloons that piled up at each TSRs desk created spirited competitiveness. It was embarrassing to have few or no balloons. It made the reps work harder to beat their neighbor.
•The atmosphere it created was lively, and fun. There were balloons all over the place.

•Bookmiller states that in this environment, number of sales, call quality scores, and attendance are the objectives most frequently used for incentive programs.

•He also states that prizes of lower value go a long way. For example, gift certificates to a local grocery store are a big incentive, as is paid time off. Other good incentives are: money, computers, electronics, and vacations.
•He advises to make goals achievable so everyone has a chance. He also likes drawings for this reason.

•A critical factor for success is good communication, and regular updates.

•Finally, he mentioned that in this sales channel, keeping contests short and simple is best.
He suggests keeping contests within a one-month timeframe. Otherwise, TSRs forget about the contest, and there will be too much turnover before a contest ends.

Field Sales – Sprint
Sprint is a leading provider of Long Distance service. They sell their products through a variety of channels, including Field Sales for business to business services. Jim Spillane, Branch Manager of Major Accounts in Rochester, NY was interviewed for this case study.

•Criteria for success that Spillane typically uses are either sales activity, or percent to plan. Though his preference is sales activity. He explained that if the activity is being generated, that the sales were sure to come. It also leveled the playing field of newer, or less successful reps, and those who are very successful.
•The objective for this contest was to boost activity in the typically slower summer months.
•The contest took one day to put together
•The prize included a weekend getaway to a resort in Lake George for the entire sales team, if the team goal was met.
•Given the prize, both the contest, and the prize itself doubled as a team-building event.
•The contest was announced in a monthly sales meeting. Ongoing communication was
provided by email and voice mail, as well as in staff meetings. A white “leader” board strategically placed in the front of the office was used to track results.
•Results were tracked and updated on a weekly basis.
•Competition was not promoted actively. However, the rankings were public, so
competition was implied. This worked in that nobody wanted to be on the bottom, and responsible for the not winning the prize for the whole team. As a residual effect, team members actively helped the struggling reps, so that all could attend.
•Spillane stated that the biggest mistakes he has seen in sales contests include: poor communication, timely communication, and running concurrent contests which takes the steam out of both of them.
•He also stated that peer recognition is the most motivating factor. The prize could just be a plaque, or it could be a trip to Hawaii, but the recognition goes the farthest. Also, keeping contests simple is best.

National Accounts – Sprint PCS
Sprint PCS is a leading provider of PCS phones and service. They use multiple sales channels including National Accounts. Brian Campbell, Manager of Compensation and Incentives at Sprint PCS, was interviewed for this case study. The program he outlined was named “Give Me Shelter.”
•The objective for this contest was to motivate the entire team to penetrate larger sized accounts, and increase the number of term plans being sold. Until that time, mostly smaller accounts and/or small numbers of phones were being sold.
•The prizes that were being offered were catalog gifts from an internal Jostens catalog for ongoing contract sales, rewarded at specific levels. The grand prize (there were 4) was payment each of the winners’ mortgage or rent for one year (there was a cap of $2,000 per month).
•The contest was announced at weekly sales meetings, and was reinforced with weekly stack rankings posted to the intranet, as well as in the weekly meetings. Additionally, mouse pads and note pads were distributed at different points during the contest.
•Tracking of the contest was manual, and took about 40% of one individual’s time per week.
•Sales reps received this contest very well. There was a lot of discussion, and friendly competition among reps, as the grand prize was so exciting.
•The Sr. VP of Sales, John Garcia, announced the winners of the contest in an article of his monthly newsletter. Included in it were photographs of each winner’s house. Additionally, the article was posted to the intranet so that all employees of the company could recognize the winners.
•Campbell explained that a compensation plan should be used to establish long term objectives and regular daily behaviors, and an incentive program should be used to motivate short-term behaviors.
•He commented that it is imperative to start with good data prior to initiating a sales contest, so that you have a benchmark.
•He also commented that most frequent mistakes he has seen made in incentive programs include: too complicated, difficult tracking, benchmarks set too high or low, undercommunicating the objective to the sales team.
•Campbell explained that catalog programs are the most successful programs because a rep can get what s/he wants. Variety is important in prizes. Cash is easily forgotten. In the case of this contest, the house payment was a reminder for a year of the success of the rep.

Channel Partners – Borland
Borland is a Java solutions provider. They market their services through Channel Partners such as IBM. Karen Schopp, former Channel Development Manager for Borland was interviewed for this case study.
•The contest objective was to increase sales in its Partners sales channel.
•The contest took approximately 30-60 days to create and execute.
•The prizes included a spiff of $500 per unit sold, and a grand prize for the top performer of a Porsche Boxter.
•The contest was announced through meetings (face time) with the participants where the value proposition was outlined. Ongoing communication was created through distribution of flyers, and conference calls with updates.
•The contest was managed by the account reps. Tracking was accomplished with sellthrough reports and manually plugging numbers on a spreadsheet.
•Results were communicated weekly.
•The contest was fun for participants, however, Schopp suggests that incentive programs are less motivational with this type of target audience, than with a retail sales target audience. Her opinion is that the norm is becoming not to spiff this type of sales channel, as it presents a conflict of interest for the management of the company being spiffed.

•Conclusion: Common Themes of Success
Throughout this paper, the following continued to present themselves as the common themes of success. When executing an incentive program, if these factors are all taken into consideration, and executed effectively, the contest will be a success.
•Recognition is as important as the prize itself
o Reps should be recognized at every opportunity. Recognition cannot happen too often, or too loudly, as long as it is sincere.
o Publishing stack rankings is a subtle way of recognizing top achievers, and promoting competition.
•Communication is key
o Communication must be constant, or reps will forget about a contest.
o Stack rankings act as a reminder of the contest, and keep participants in the loop on where they stand versus the objective. Also, as a rep gets closer to the goal, s/he is more motivated to achieve that goal.
o Rules must be created, presented, and written down up front, in order to avoid confusion after the end of the contest.
•Incentives should be tailored to the individual
o Knowing your audience is essential. It is nearly impossible to motivate all your reps with one prize (except cash – which is not recommended due to confusion with monetary needs, vs. psychological needs, as well as creating the memory for a lasting effect).
o Catalogs are recommended, as it gives the participant the freedom to choose his/her prize.
•A good contest design is critical
o Themes must be congruent with the objective, and the culture of the organization
Creativity and variation are two essential elements
o Simple is better
o Goals must be Specific, Measurable, Attainable, Relevant, and Time-Bound (S.M.A.R.T.)
•Budgets must be established successfully
o Budgeting is not on target: Planning a budget can give the manager a good idea of what needs to be invested in a rewards program.

Sources
1. AEIS.com
2. Incentivemag.com
3. Salesdoctors.com
4. Meredith, George and Robert P. Fried, Ph.D. Incentives in Marketing & Motivation. Kendal/Hunt Publishing. 1999.
5. Wilson, Thomas B. Rewards That Drive High Performance. American Management Association, with American Compensation Association. 1999.
6. Worman, David L. Motivating with Sales Contests. Business Phone, Inc. 1999.
7. Interview: Brian Bookmiller. Telespectrum, Buffalo, NY. 11/6/00
8. Interview: Jim Spillane. Sprint, Rochester, NY. 11/6/00
9. Interview: Brian Campbell. Sprint PCS, Kansas City, MO. 11/7/00
10. Interview: Karen Schopp. NaviSite (formerly of Borland), Pheonix, AZ. 11/7/00
11. Interview: Brad Brown. Reward Strategies, Sudbury, MA. 11/13/00