How to Keep Salespeople Motivated Online

(Bloomberg Businessweek) -- How do you motivate salespeople? You could pit them against each other as in Glengarry Glen Ross, where first prize is a Cadillac, second prize is a set of steak knives, and third prize is you're fired. Or you could tailor compensation to different types of people. Says a 2012 article by Thomas Steenburgh and Michael Ahearne in Harvard Business Review: “Stars seem to knock down any target that stands in their way—but may stop working if a ceiling is imposed. Laggards need more guidance and prodding to make their numbers (carrots as well as sticks, in many cases).”

A company in China stumbled on a solution that's highly relevant to the Covid-19 era because it involved a sales force that communicated entirely online, which is pretty much all of us these days. “Stumbled” is the right word because the discovery happened by accident when four of the company's human resources managers unexpectedly resigned, creating a natural experiment: four sales offices without HR managers vs. 24 sales offices that still had them.

The unnamed company, which sells cloud-based software to retailers in China, was studied by three researchers at the University of Texas's McComb School of Business in Austin: Haoyuan Liu, Wen Wen, and Andrew Whinston. They found that a big part of the HR managers' job was to motivate salespeople by selectively sharing success stories. In the four offices that lost those managers, salespeople stopped getting the motivational messages, and their effort sagged: “On average, a sales worker pulls 3.5 fewer potential new customer profiles from the company database and makes 8.4 fewer phone calls per day.”

The University of Texas researchers also found that all salespeople were motivated by success stories that focused on salespeople's effort. When the messages focused on salespeople's ability, they motivated only those peers who were socially close or who had historically better performance.

Then again, you could just hire Alec Baldwin to berate everyone.