Motivation – the Key to Sales Success
- Posted on: Mar 12 2014
Motivation – the Key to Sales Success
There is an old adage in sales: Sales Performance is made up of equal portions of Sales Ability and Sales Motivation. And the oft-overlooked truth is this: The most skillful sales person on earth won’t close many deals if she’s not properly motivated, if the incentivization for success isn’t there.
If your practice is interested in increasing sales and productivity, then a staff incentive program will help you achieve this goal. To achieve sales growth, you must ensure that your salespeople are properly motivated – and sales incentives are a great motivator.
This is no secret. Department stores that sell cosmetics and beauty aids learned several generations ago that sales reps and product demonstrators who were properly incentivized – with their incentive (usually a sales commission) tied to sales performance – achieved far higher sales success than is achieved with salaried or hourly sales people. Macy’s, Bloomingdales, Saks, Nordstrom’s and other traditionally successful stores which offered premium cosmetics and beauty aids all motivate their sales staffs with commissions, bonuses and other direct-reward means of recognizing superior sales success.
Spas and physician practices that offer branded or up-scale commercial cosmetics and beauty aids typically achieve much more impressive sales success when their sales reps are financially-motivated by sales. The same is often true for staff members who are responsible for selling – or up-selling – services such as Botox and other injectables, or laser treatments. In fact, any service that is sold based on the patient’s personal desire (as opposed to those based on medical necessity) are more successfully sold when staff members responsible for sales are incentivized and rewarded for closing deals.
In developing compensation plans, it is important that the plans be clear and straightforward, and that they be fair to all concerned. While it is possible to create healthy competition among staff members, too much focus on competition among staff members for commissions, bonuses and other compensation can prove counterproductive in terms of staff morale and overall performance. While sales is important, it is not the only important factor in staff performance. Service quality must also be rewarded.
However, properly structured, competition for staff success and advancement that’s based on an incentive plan can create an environment where everyone works harder and strives to do their best. If staff members understand their incentive plan – and if they recognize that their performance is being measured for purposes of compensation and advancement – then the benefits far outweigh the risks or problems such competition may create. Incentive programs which tie employee performance to employee rewards – whether that performance is in terms of sales or in client service – can produce a win-win system for spas and cosmetic/aesthetic medical practices. As a means of recognition, a carefully thought-out and fairly implemented incentive plan increases employee productivity, loyalty, and morale. By combining performance and reward, your practice attracts and retains motivated and entrepreneurial employees who are goal-driven. This can create a practice that is far more productive – and a far happier place to work – than one where employee rewards are tied to those who just show up to get a paycheck.
As has been demonstrated by both Nordstrom’s-like organizations and profitable aesthetics medical practices and medical spas, well-established methods of paying commissions – and, in the process – holding employees accountable for their performance can work very effectively in motivating performance and profitability in a medical aesthetic business. A key element to this success depends on the quality of the training that is provided to employees, both when they join the practice and on an ongoing basis. For instance, employees who are being incentivized or bonus-rewarded for sales success will require ongoing sales training in order to achieve their personal performance and financial goals. Equally, employees who are being incentivized for the successful provision of patient care services need to be trained – and re-trained – on what it means to effectively deliver those services. “Performance” should never be a given, nor should the ability to perform be assumed of all new employees.
However, while many times employees perform better with incentives, it is important to remember that money doesn’t always have to be the primary objective. There are several ways for employees to know that the harder and more effectively they work the more they can earn.
- Cash bonus: Not surprising, money is the best reward for most salespeople.
- Merchandise: Sometimes people are more excited by the hot item of the moment, than by the equivalent amount of money. This can also apply to services provided by the practice. Some employees will want aesthetic services to enhance their own appearance, and will work harder in hopes of being rewarded with injectables, laser treatments or other services.
- Experience: Offering an experience – such as an all-expense paid vacation, a plane trip, or hot sports or rock-concert tickets – can create memories that last forever.
- Recognition: Taking the time to recognize a leading performer with an award or a special luncheon or party. In terms of expense, for those practices on a limited budget, this will cost less than commission incentives. However, if everyone is recognized, the incentive factor will be minimized – but if some are left out, that too can create morale problems. Rewards are most effective when tied to direct and measurable actions.
- Workplace privileges: Give your top performers their own room, paid education or any kind of workplace flexibility that they would value.
When it comes to any kind of ongoing incentive program, it is important to make keep the incentives simple – and the performance that are tied to those incentives should be easy to understand and track. Complex programs – as well as programs that lack fairness or invite favoritism – can de-motivate employees. To be effective in motivating desired performance, incentives must be clear, fairly administrated and directly tied to measurable performance. Especially when it comes to commissions, how they are earned – and paid out – must be as straightforward as possible. Nothing destroys morale more quickly than an employee thinking she’s earned a commission payment that she doesn’t receive.
The first step in developing a workable and effective incentive program involves defining the minimum gross profit your practice must produce in order to maintain its return on your investment – and that investment includes capital investments and the time you put into creating and sustaining the practice. When considering employee compensation, the amount of the incentive should be calculated based on the gross profit generated by the incentivized performance. For instance:
- If a service costs $100 per procedure in terms of hard costs, including overhead costs; and,
- If that service costs $100 in terms of staff compensation (physician and employee); and,
- If the service generates compensation of $500; then,
- A commission of 10% to 20% ($50 to $100) is not unrealistic – it will leave you with a gross profit of $200 to $250, or 40% to 50%. However, a commission of 40% would generate a gross profit of 20%, and would reflect a relatively poor return on investment.
The way to hold employees accountable is to have a program that rewards good performance and negatively impacts the incentive amount if the performance is below expectations. For example, if an employee maintains production numbers higher than what is established by management, the incentive paid to the employee increases. If the numbers fall short, the incentive is decreased.
Your incentive plan should reward all employees of the practice based on their specific contributions to the overall success – the greater the responsibilities/ or productivity, the greater the reward. This incentive/reward program includes senior positions, clinical employees, aesthetician and administrative personnel. While sales commission may be the basis for the plan, not all employees will be closing sales – but if they are part of the service delivery program, they should also be incentivized.
An example from outside the sales commission world can be found in restaurants where tips – paid to the wait-staff, who have the primary client contact role – are shared with all staff responsible for providing a premium guest experience. In this way, cooks and busboys, as well as waitresses, are rewarded for an overall positive patron experience. This same concept should be included in the overall practice incentive program. The nurse or tech who provides quality services should be in line for compensation in the same way that the sales clerk who sold the patient on the service should be compensated.
To avoid morale problems or conflicts, rewards should be provided on a consistent basis. This could be on a per-unit basis, or on a time – monthly or quarterly – basis. Consistency and reliability helps to maintain motivation – it also reduces the administrative burden on management.
Many have found that keeping incentives flexible allows the rewards to evolve as your business grows. Rigid rewards can become obsolete or even counterproductive over time. However, changes should be positive and not punitive.
Another primary value of incentive plans can include the retention of your most desirable employees by rewarding them for helping the company succeed over time.
If you want your practice to grow, consider the role of commissions, bonuses or other financial incentives can plan as part of the overall package you are offering. Some of the more common packages are
- Commission only
- Commission plus salary
- Commission plus bonus or
- Commission plus salary plus bonus.
Keep in mind that in order to be effective, incentives must be tied to areas that employees have control over, and they must also be tied to those activities which promote the profitability of the practice.
Effective a staff motivation will help you achieve your goals. Beautiful Forever consultants can assess your incentive program … contact us today for a complimentary assessment.