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I was thinking similarly. If you pay salespeople only on Sales $, it sounds like incentives are aligned, but you have to watch yourselves.
by mathattack 12y ago
I was thinking similarly. If you pay salespeople only on Sales $, it sounds like incentives are aligned, but you have to watch yourselves.
- IkmoIkmo 12y agoIndeed. Just yesterday a buddy told me of how he knew someone a few years ago (great story I know) who was gaming telephone subscriptions. He'd go into the system and check a box, say 'extra 500 minutes' with a deal that gave the first 3 months for free. This is normally what you do after you close such a sale when a customer buys the extra deal, you go into the system and register it. Only now he'd just do it without the customer knowing. 3 months later he'd cancel it. His sale was still registered and his customer never knew or ever paid, and he got his sales bump. And another friend of mine works at a big software company (SAP, Oracle, those sorts of companies) in sales. Basically he has to generate leads, pass them on, and if they're closed he hits his target. So what most people do is they call the manager and suck up to him, and ask him to register a closed sale's lead as one of his. A lot of these sales are simply recurring sales, or sales closed when a customer called the company, as opposed to closed after a cold-call led to a lead. Long story short, you've got people hitting their targets without generating any leads or sales, making $40k a year and moving into the same closing function two years later without ever having done anything. The idea seems pretty straightforward, once you create a metric, people will game it. And it seems a single person designing the system (the metrics, the governance of the metrics) over time continuously gets outsmarted by the hundreds or even thousands of people that are incentivized to find the loophole in the design of that individual.