One of my favorite movies is Wall Street. Near the end of the movie, Gordon Gekko (played by Michael Douglas) tells Bud Fox, “It’s all about the bucks, kid. The rest is conversation.”
I was reminded of that this past week at the gym. In the midst of my regular workout, I had the pleasure of meeting a salesman for a large system integrator. Let’s call him Alex. While Alex’s expertise was not primarily with enterprise systems anymore, we had an engaging talk about technology sales.
Alex works for an organization that revamped its incentive program for salespeople a few years ago. Rather than being paid when a client signs a contract, he’s now paid at the end of each quarter based on milestones and accounts receivable (AR). In other words, if a client is not satisfied with his organization’s performance and/or has not paid its invoices, then Alex in effect is penalized.
A New Way to Do Sales
I must admit, this is a novel way to approach sales. In my experience, many salespeople act as if they’re in another one of my favorite movies, Glengarry Glen Ross. As personified by Alec Baldwin’s Blake, many salespeople lamentably still adhere to an “Always Be Closing” mentality. I have seen some sell a client as many products and services as possible without regard to the long-term ramifications of their sales. Getting products to work in the budget and time allotted is typically the responsibility of people like me: consultants. This mindset is troublesome and tends to stereotype all salespeople.
Incentives drive outcomes–both good and bad.
This intraorganizational disconnect between sales and delivery has caused many a project to fail. While the salesperson has pocketed the check, the client and consultants are put in an untenable situation. Alex’s firm has essentially aligned the incentives of clients, consultants, and salespeople. In theory at least, Alex will not make questionable deals because he ultimately won’t get paid.
To be sure, this approach is not without potential difficulties. Satisfied clients do not always pay on time, as I am very well aware. What’s more, it’s entirely plausible that different vendors will try to poach salespeople from these organizations with the lure of being paid immediately, not based on these goals.
I realize that this represents a slightly simplistic view of the world. I’d argue, however, that misaligned incentives essentially inhibit successful long-term relationships. It might be hard to do, but as your prospective vendors during the sales cycle how they are paid. If they are paid upon completion of the sale, then understand that their interests and yours might diverge. That’s never good.
What do you think?