Contests Rule

A good sales contest can prime the pump for better, bigger, more profitable sales. If you plan the contest, promote it, get buy-in from the entire team and reward everyone for notching up at least one level. If you’re not willing to pull out all the stops, however, you’d better hold your horses. A contest that fizzles can really put the damper on your team’s performance.

“Contests can inject a burst of energy into the sales organization, but companies tend to rely on them too heavily at times and neglect the need to balance them with ongoing incentive programs,” says Betty Hartman, director of business development for Barrington, Illinois-based Carter & Carter, which focuses on training and research to achieve business goals.

Indeed, while sales contests may seem like a good idea to motivate the troops, they can have the opposite effect if abused or poorly planned. Sales contests are not one-size-fits-all events. Knowing what kind of contest to plan for each particular situation can mean the difference between roaring sales and burned-out reps.

Establish Goals
What is one of the most important considerations when developing a sales contest? According to Jean Mowrey, president of Emp-higher Performance Development Inc. in Yardley, PA, “It’s important to align the selected contest with the desired performance outcome.

“Say, you see that customers always buy x number of y widgets, and then you learn they buy z widgets from a competitor. So when you can offer z widgets, too, the next time you call you can plan to sell both. And if the contest is for the number of orders taken, the performance system rewards that.”

When planning a sales contest, however, be clear about what you want to reward. Mowrey, whose clients include GEICO, Verizon and Merck, warns that conflicting orders can confuse a sales staff not trained to do more precall planning and strategic thinking while stepping up their calls. “You want to increase the number of orders taken while getting them to think more strategically,” she says. “Better align your programs. In one instance I remember, they offered the contest only to the senior people, who could handle both quality and quantity. But that, of course, frustrated the rest of the staff.”

Panasonic’s Technics Musical Instrument Division, which sells organs, keyboards, digital pianos and ensembles through an independent dealer distribution channel, wanted to capture the discretionary purchase and sales decisions of their independent dealers. “We went to a company that could provide us with a very high-class, legitimate program that would provide a debit card where people could see cash value adding up, and they could use it anywhere they wanted to go for their rewards,” explains Lynda Smith, national marketing manager for Technics in Secaucus, NJ. The company chose Maritz Performance Improvement Co. based in Fenton, MO. “We didn’t have to provide fulfillment ourselves, since Maritz offered an array of merchandise, trips and whatever else the dealers were very excited about,” Smith says.

GeGe Mix, vice president, marketing services at Maritz, says Technics wanted to drive brand awareness and product knowledge among the dealer sales reps as well. “They also wanted to continue their growth as a supplier to small and mid-size dealers.”

“We were looking to increase our share by 3 to 5 percent,” says Smith. “And that was very difficult because the digital piano business cuts into the acoustic side. So one of our goals was to show small increments among our dealers – just to get a foothold.”

Smith admits that there were hurdles to overcome. “The competitive situation at first was very difficult for us because the music industry has been traditionally almost a carnival industry, continuously making deals,” she says.

Furthermore, the company’s contests had become a blur – one blending in to another. “In our case, we provided incentives for so long our salespeople almost began to regard them as expected income,” Smith recalls. “So we stopped it for a few months, revamped the program and gave it a new name.”

Maritz designed a program to reward overall dealer purchases and dealer sales reps’ sales of Technics instruments. A mid-year payout for dealers was added to help them focus on their annual purchase objective.

The result? “Everyone was thrilled to have a program again,” Smith says. “We generally have 800 to 1,000 enrolled, and although we didn’t have huge dollar amounts, we awarded enough and got more power in name recognition without advertising, which typically ran 1½ to 2 percent of sales.”

Participants were equally happy with the program. “We had done small incentives with other companies before Maritz,” Smith says, “but they were not good at fulfilling the rewards. It took so long for the salespeople to get their rewards that they got disgusted with it.

“We are currently at about a 15 to 20 percent share of the market, depending on the product year and the nature of the incentives. A neophyte salesperson in this business could earn $26,000 a year, and a top salesperson selling in a high market can make $100,000 to $120,000, and that would include up to $5,000 in awards from us.”

Reach Even Higher
Andersen Windows, also in a fiercely competitive industry, goes beyond performance improvement with its sales contest. The company turned to the Carlson Marketing Group, a Plymouth, Minnesota-based relationship marketing company. “The first thing is that we have ‘push-pull.’ The second is that we have multiple layers of audiences engaged in the program, including the sales staff itself,” explains John Farrell, Carlson’s senior director of client strategy. “The program is designed to generate incremental sales geared toward a targeted and competitive product. The dealer’s salespeople are rewarded for the sales they make to those builders and remodelers who historically have purchased from competitors, as opposed to being rewarded for all sales they make.

“Their rewards are custom-designed, whether it be catalog, individual, gift certificates or debit cards. And there are some financial, budgetary implications associated with each award. Clearly, group travel is much more expensive on a dollar-for-dollar basis, so a participant needs to generate more sales on that basis than with a point-based program or a debit-card award.”

Carlson also conducts extensive education and programs that complement their clients’ skill- and product-based programs. “The trend today,” Farrell explains, “is to conduct them online in a type of virtual education environment, a Web-enabled learning system that people can take 24/7, that provides immediate feedback and instantly correlates what you know with what you should know. It’s one thing to tell people what they need to accomplish and what they get for accomplishing it. It’s another thing to tell how to accomplish it and give them the tools and the knowledge and the resources to succeed.”

Steve Sherod, an Andersen marketing manager based in Bayport, MN, says he’s not aware of a program “of this magnitude from our general competition. We’ve also developed another program for our dealer sales reps to encourage them to sell more, so we’re working with the dealers on their overall company business. But then we’ll also have some incentives for their sales reps.”

Maintain Momentum
There is probably no industry more competitive than those that provide facilities-based integrated communications, including the ferocious, must-have DSL (digital subscriber line) segment of the business. Marty Clarke, marketing vice president of BTi, a regional company based in Raleigh, NC, says, “Our short-term goal was to get out of the blocks in 2000 with very, very high sales and have a breakout first quarter. And we wanted a program that would allow us to sustain that momentum through the year. We needed something to grab their attention and keep it throughout the year.”

BTi now has sales reps scattered through 28 sales offices in the Southeast. “Six words guide our sales-incentive programs: ‘Give the people what they want,'” says Clarke. “And because we’re dealing with a sales force of well over 200, those wants are going to be as diverse as the people themselves, which is why we felt Maritz, with its catalog, was such a great fit for us.”

How does the contest work? “The sales force racks up points by selling the products we dictate,” Clarke explains. “We design the program and Maritz helps us operationally by fulfilling the prizes. Together, we designed a program to motivate our salespeople to sell the products we wanted them to concentrate on.

“As for the prizes, some will rave over a Rolex; others would be lukewarm about it. If you pick any one thing as your grand prize, you’re going to hit only some of your staff. With a catalog, we can give them what they want. We’re emphasizing travel. We’re also holding out a grand prize that emphasizes travel, because as you earn points, you also earn what we call passports, which go into a great big hopper, and at the end of the year we’re going to draw a name.

“So, there are two ways to win. You win points and you cash them in, and you get whatever you want out of the catalog. At the end of the year, those who’ve earned what we call passports along the way are going to win either a land prize, such as a car lease or a trip overland, an air trip or a cruise. So ‘Land, Sea and Air’ became the theme of the contest. It provides the sizzle.”

Avoid Pitfalls
While contests are indeed designed to provide sizzle, they sometimes can leave participants and companies feeling burned. According to Carter & Carter’s Hartman, the decision to implement a sales contest “depends on whether you’re engaged in a transactional type of selling environment, which focuses on a shorter selling cycle, in which you can demonstrate the product and either win or not win business rather quickly. A consultative salesperson wouldn’t try to close just to meet the contest criteria.”

Hartman speaks from personal experience. “We created a new department to support regional sales managers by prospecting Fortune 1000 executives,” she explains. “Their role was to introduce our offering, determine whether there might be a need and eventually set an appointment to meet with them. And they were making significant progress with some very high-level individuals.

“But we were also then hitting a cycle when we needed closure on some business. So we made the mistake of installing a sales contest for the salespeople making those calls. And that caused them to press for the appointments too soon, before fully developing their relationships. As a result, we lost some of the very opportunities we were seeking.

“That experience taught us to link sales contests directly to the type of selling involved, and you have to know whether your sales team has the level of judgment to know when to make that call. Contests sometimes cause salespersons to unduly focus on themselves instead of their customers.”

Another potential danger, Cichelli points out, is that contests or incentive programs can have a narcotic effect and can become addictive. “The more you use them,” he points out, “the more you need to use them.” And that can lead to contest overload.

Technics’ Smith says it’s necessary to avoid a constant stream of incentives. “You need to give it a bit of a break,” she advises. “You need to revitalize the program, perhaps give it a little different direction.”

In fact, Cichelli adds, “Established companies with different types of customers and an array of products are frequently trying to find a balance of ways to get the sales force’s attention.

“Recognition programs are for story-telling, and having multiple winners is best. But in contests, you should put up a bar and allow people to exceed it, whether it’s three or 30. The important thing is to use the right program for each situation.”