SPIF Tip #21: Why Improving Sales Can Be Counter-Intuitive

Imagine you are a British

official in Delhi, India during the time of British rule. One of your problems is too many people being bitten and dying from venomous cobra snakes indigenous to the area. What can you do?

Answer:

Offer a cash reward for dead cobras. Simple, right?

As farmers in the area started killing Cobras, the program appeared to be working. Unfortunately, those same farmers realized they could raise Cobras to get the reward. It was a new cash crop!

Soon the British had to scrap the program.

This may sound like an obvious mistake, but in any system that involves human beings, serious errors will be made if the nature of humans is not carefully considered. Here are two examples:

• The VP of Finance of a multi-billion corporation began to insist that his Sales VPs start measuring something about their performance so they could start improving. When they had difficulty coming up with something, he insisted they begin measuring the cost of sales proposals.What happened? Sure enough, the cost of sales proposals was improved. Unfortunately, revenue and sales productivity got worse.
• A hot shot executive was awarded the general management job of an operating system software concern. In this business, each sale was worth millions of dollars. Of course, to fulfil his destiny he had to find a way to dramatically grow the business. He observed that when the company conducted an expensive proof-of-concept demonstration with a prospect, the chances of closing a deal were very high. He knew he had found the ticket to his next promotion: He offered salespeople $10k cash bonuses to get more prospects to attend those demonstrations!Naturally, his spectacular reversal of cause and effect did not increase revenues. Instead, profitability tanked, and the division had to be sold within 18 months.

If you think about it, you’ll find examples like this in companies you’ve worked for, such as commission plans, discount promotions, or sales contests that were abused. It happens all the time. Why do they happen? It starts with ignorance of systems thinking.

Any set of elements assembled for a common purpose is a system. Systems thinking requires you pay attention to how the elements or components behave when they interact together – not in isolation. It is cause and effect thinking.

People are a crucial element within any business. Ignoring the nature of human beings is a mistake executives often make. They have their own minds – meaning each one has their own motives and context of knowledge. They are not automatons in any way, and their cooperation must be earned – especially for jobs that require them to think. Sales and marketing job, among many others require a lot of thought.

What do sales and marketing people have to think about? The customer, of course. Successful sales organizations proactively research and debate what their customers want. They do not make assumptions about what customers, or salespeople want. Nor do they initiate training or CRM software that does not explicitly add measurable value to salespeople and customers as well.

Action Item:

At a team meeting, actively discuss what motivates your customers? What motivates your marketing, sales, and service people? Are there any gaps or misalignments? Why?