Dear Scott: We are establishing a small in-house team to set up meetings. In addition to the base was thinking of giving a bonus based on a percentage of deals that close. What do you think?
Dear BB: Bottom line, I really don’t recommend basing appointment setter compensation on deals that close. There are three main reason why I really don’t like this idea.
1. That money is too far away and not related to what they do, to encourage the caller to maximize productivity right now.
As an owner or manager, your goal is to generate leads of a certain caliber at the most reasonable cost per appointment. Your incentive system should encourage callers to manage their behaviors for best productivity. You would much rather have your caller book 10 meetings a week rather than 7 meetings rather than 4 meetings a week.
Your incentive system should be the carrot always dangling in front of the caller.
As they book 3, 4 and 5 meetings they should be thinking “Hey, if I book one more I get X more in my next paycheck, if I bear down and 3 more I get xx in my next check. I’m focused.”
Your comp system should encourage your callers to do the things necessary to increase their weekly productivity. They should constantly be thinking “Hey, if I am more careful about who I call, stay true to my scripts, do a better job at overcoming objections, screen out the time-wasters better, yada yada yada, I can book an average of 8 meetings a week rather than just go through the motions and book 4 a week.”
Focusing on their calls and what they do and seeing the results of good behaviors hit their next paycheck keeps them focused on what they can control.
As your callers book more meetings per week on average, they should make more money, but also your cost per meeting should be going down. You win twice when average productivity goes up with your callers. More meeings in the pipeline. Lower cost per meeting.
2. Another reason I don’t like basing incentive pay on deals closed. That pay is based upon someone else doing their job well.
These call jobs are rough. Repetition. Constant rejection. Boring snacks. If a caller is doing a great job and booking meetings only to see them not closed or mishandled, their motivation to do a good job and make the extra effort plummets.
Why would they push push push to get more when their bonus pay is in the hands of someone else. Many times they feel that the sales team is not closing deals that should close and costing them money. Morale plummets. That money is too far away and beyond their control. It has very little positive impact on their behaviors day to day. It often has major negative impact on their enthusiasm and willing to dig in.
3. There is also a management issue.
Appointments set that meet certain criteria have a certain value. It is the appointment setters job to create those meetings and they should be paid based upon how well they do that. It is the salesperson’s job to take meetings that meet certain criteria and convert them to paying accounts. They are paid on how well they do that.
As managers we should know the value of these steps and pay accordingly. If you focus on appointment setting as a distinct step and manage well, including compensation, you will max out on the meetings set.
As sales managers there are times to hit the easy button and times not to. This is one of the times the easy button is not the best button. When it comes to lead generation you get more when you actively manage the behaviors that lead to the closes, rather than the closes itself. That takes more time and more focused effort, but pays big divididends to the organization.
If it was my money, I would not base incentive pay on deals closed. I feel it is a motivation killer and does not encourage focus and skill building.
I would encourage you to think of a system where they get an expanding bonus as number of meetings set per week increases. Base plus X for 3, 2x for 5, 3x for 7. Something like that.
If the team exceeds expectations in terms of booking meetings and closing them you can always give an additional bonus to the players you feel deserve it.