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NZSALES JULY 2011 / Issue 52

Is Your

Incentive Scheme in Distress?

Why you must master financial conversations

How to eliminate worry Show your discount

Plus! Check inside to see if you've won cool prizes from our awesome new supporters! NZ’s e-mag for sales leaders

CONTENTS JULY / Issue 52 6

THIS WEEK'S MUST READ Is Your Incentive Scheme in Distress?




Some sound advice 10

Why you must master financial conversations And how to do it


Quick Fix It’s not what you sell, it’s how you sell.


TWO MINUTE TOP-UP Be Happy, Don’t Worry How to handle worry


RESOURCE CORNER Strengths based selling










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From the Editor


’m just back from a fabulous weekend working with 72 of the country’s brightest business minds at the 2011 Global Enterprise Challenge in Auckland. These students, aged 16-19, had just 24 hours to develop and present a business plan for a complex business challenge. It was a truly rewarding experience for me, let alone the students, and I saw several future sales stars during the weekend. While recognising sales talent, I note that this, and the importance of sales to the economy, has the attention of Prime Minister David Cameron in the UK.

"The professionalism, creativity and flair that you have all shown are to be commended. I truly believe that your achievements will help ensure that

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EDITOR / Paul Newsom

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ART DIRECTOR / Jodi Olsson

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GROUP EDITOR / Trudi Caffell

success in New Zealand, I hope the


words of Mr Cameron soon rub off

Phone Paul on 04 586 4733 or email

on our Government and recognition

of the importance of the sales


profession to the economy becomes

Phone Richard on 09 522 7257 or

common place here.

email ADDRESS / NZ Sales Manager,

Following the UK BESMA sales awards, The Institute of Sales and Marketing Management (ISMM) report this from Cameron: "You are the front line of our economic

Enjoy the variety of interesting and

C/- Espire Media, PO Box 137162,

help articles from our contributing

Parnell, Auckland 1151, New Zealand

authors this month, and remember


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recovery, demonstrating that Britain is very much open for business," said Mr

Happy Selling

Cameron in a letter from Number 10.



NZSM / JULY 2011 / 4

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T H I S W EE K ’ S M U ST R E A D Susan Doughty is a director of DSD Consulting Ltd, specialists in remuneration and rewards management. To find out more, visit

Is Your

Incentive Scheme in Distress? Some sound advice By Susan Doughty


he effectiveness of incentive schemes is an ongoing issue for most organisations. Constantly evolving business strategy, volatile market conditions and the desire to drive outcomes create a minefield for good incentive design. Therefore getting the design right and achieving an effective return on the incentive dollars spent is a top priority. Here are our responses to some of your questions on this issue. I’m a cynic about incentive schemes—I think they never deliver real results. What are the signs of an incentive scheme in distress? The ‘gaps’ in incentive design can be quite subtle, but collectively have the ability to derail a good incentive scheme.

NZSM / JUNE 2011 / 6

Typical symptoms often include some or most of the following: • • • • •

There are too many performance measures and the reward pool is sliced too thin; Scheme calculation methodologies are excessively complex; There is an ‘industry of administration’ keeping track of scheme results; Measurement systems are flawed and fail to support the scheme adequately; Targets and goals have become unrealistic and

unachievable; • There is a disconnect between the cost of the scheme and profitability—the organization is paying most of the profit on sales to staff in incentives; • The performance measures are out of alignment with a new business focus or market conditions; • The scheme is acting as a disincentive in the workplace and isn’t engaging and motivating employees; • Employees have adopted poor behaviours, for example, heavy discounting at the expense of profit to ‘make the numbers’.

There are a number of key steps in designing any type of incentive scheme whether short- or longer-term. It’s a bit like following a recipe where every step is critical to the final product. Just where do you start when you want to design an effective incentive scheme? There are a number of key steps in designing any type of incentive scheme whether short- or longerterm. It’s a bit like following a recipe where every step is critical to the final product. Consideration of the following points will provide a road-map for good design. •

Performance measures Decide which measures should be part of the scheme and which ones should be reserved for the performance management system. Avoid making the incentive scheme a proxy for assessing overall job performance.

Performance components Consider whether the scheme should focus on individual, team, company performance or a combination of these components. Line of sight and your ability to measure effectively will typically determine which components are best.

Thresholds At what percentage of target should payments commence? What performance message does this send? A lower threshold may communicate that you are willing to pay for under-performance and/ or the target is unachievable.

Objectives Consider the need for the scheme and what it is there to achieve. Focus on this as the foundation for your scheme design and avoid any attempts to compromise these objectives. Eligibility Question who should be eligible to participate in the scheme and why. Not everyone’s role has an impact on the desired objectives, and if they don’t, they should not share in incentive rewards.

7 / JULY 2011 / NZSM

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Target setting How difficult is it to achieve the desired results? An overly ambitious target will quickly become a disincentive.

Maximums Decide whether the payment scale should be capped or left open-ended, to encourage ‘sky’s the limit’ performance. Your approach will be determined based on the type of measures used and your appetite for risk.

Payment cycle As a rule of thumb, if measures are annual in nature then they will be paid annually, whilst KPIs that can be measured more frequently (such as gross sales) may be paid monthly or quarterly.

Scheme rules and governance Often overlooked but critically important to a good design. Ensure that all contingencies are covered and well communicated.

Communication and implementation An appropriate communication strategy is vital to the successful roll out of your scheme. Keep it simple, simple, simple!

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We are just embarking on a new scheme design. What are some of the traps we should look out for in our design process? One of the most frequent traps is the tendency to develop schemes that are ‘all singing and dancing’.

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Some organisations use their incentive scheme as a proxy for performance management and create schemes that have excessive numbers of performance measures and highly complex formulas for calculation. If your scheme document resembles a small novel—it is time to streamline your approach. Another common trap is to try to implement an ‘ideal’ model design (that usually someone has used or seen elsewhere) and then try and leverage your business priorities into this model. This approach is bound to create a disconnect, often resulting in unsatisfactory compromises and a flawed design. Our advice is to start with the business strategy and keep your design simple and transparent.■■

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Kendra Lee is a top IT Seller, Prospect Attraction Expert author and president of KLA Group. Specializing in the IT industry, KLA Group works with companies to break in and exceed revenue objectives in the Small and Midmarket Business (SMB) segment. To find out more about the author, read her latest articles, or to subscribe to her newsletter visit

Why You Must Master


Conversations And how to do it By Kendra Lee


hile these are admittedly challenging times for many, I still see a lot of sales being made among the companies we are working with. The biggest difference in selling today is the amount of time it takes for sales to close, especially compared to the last few years. But some sellers aren't feeling any pain - their sales aren't taking longer in spite of the economy - and yours don't have to either. It used to be that companies would choose to move forward with a solution within a few weeks, or months, at most. Yes, some sales processes could still take a year, but on average, it wasn't as hard to close the sale if you'd done your due diligence and stayed focused on the opportunity.

NZSM / JULY 2011 / 10

Financial justification is the biggest blocker in today's economic environment, especially considering that companies have become ultra conservative with their spending. It's for this reason that most sellers shy away from asking tough financial questions, when in reality this could be a key to their success. People are looking for answers. The executives and principals of the companies you work with want you to help them financially justify their decisions. If you can help answer their important financial questions - in a responsible and informed manner you'll close the business. Now is the time to master financial conversations. You don't have to have a Masters degree in Accounting like I do to do it, either!

With some specific questions, you can gather information and provide well informed answers as to "why" a company should spend money with you right now. You can help decision makers validate the expense, prove to them that you're cognizant of their fiscal responsibility and help them make solid business decisions. If you feel you aren't at your best during financial conversations, don't worry. Follows is a quick example of how things might be handled more effectively. Recently, a new prospect was making the decision to move forward. He had three choices: us, a competitor, or do nothing. The prospect had a specific business objective in mind based on the

To hold the financial conversation, help your clients identify the business results they need. Question for: •

The cost of avoiding the business issue or initiative you are addressing. Establish what the issue is currently costing the client's business. Identify how much of the organization is impacted, how significant the issue is, and the cost to the client's business in not resolving the challenge. This is what the client will save.

The financial benefit in addressing the business issue or initiative. Determine any new revenue the client will realize, no matter how insignificant it may seem. Look across the whole organization, and project it over the next 3 years.

The financial threshold of the issue. This is the amount they're willing to continue losing to live with the issue instead of resolving it. Demonstrate how your solution will yield positive business results more attractive and less risky than the financial threshold.

company's long term strategic direction: increase their new customer base year over year. During a financial conversation, the client and I determined their new customer target needed to be 27%. We estimated the revenue increase the company could expect from a 27% increase in new customers. Then we designed and financially justified the project with this business objective in mind. Needless to say, we won the opportunity! By having a financial conversation early in the process, I was able to establish an important business results goal for the client, tailor our solution recommendation, and financially justify our proposal based on the client's own challenges and needs. You can do the same.

By having a financial conversation early in the process, I was able to establish an important business results goal for the client, tailor our solution recommendation, and financially justify our proposal based on the client's own challenges and needs. You can do the same.

Now that you have a piece of my accounting background you can conduct financial conversations that will show your clients the value of moving forward with your recommendations! You'll find yourself selling in spite of the current economic environment, and your client's business will reap the rewards. ■ 11 / JULY 2011 / NZSM


Quick Fix

It's Not What You Sell, It's How You Sell

Show your discount


f you discount a price then be sure to quote your full price on your invoice, together with the discount and final price.

This will maintain a record in front of the client of the value that you are providing through the price reduction. We live in a world conditioned to

discounting, particularly when buyers are offering their repeat business. If you give a 20% discount but only show the discounted price on the invoice, the customer is more likely to come to you the next time seeking a discount from the price shown on the last invoice. Showing your discounts will help you to communicate value and maintain your pricing. ■


  


The Rev Sales Network invites you to join us for

Auckland Rev-Up #3 Tuesday 19th July 2011 Guest Speaker Linda Coles RSN Rev-Up Series AUCKLAND 2011

The Topic "Digital Networking– Prospecting in the 21st Century”

With thanks to

Linda founded Blue Banana to train other professionals in the expert use of social media tools as a viable strategy to grow their brand or company online and develop an additional way of doing business. Linda has helped many companies and businesspeople in New Zealand to gain a competitive advantage in their industries through inventive use of social media. Find out how to use digital networking to prospect outside the box.

Linkedin • • • • • • •

Is LinkedIn the new “Wine and Cheese evening”? What is it, who’s using it? Why is it important to have a presence? How do I utilise the tools to prospect? Do’s and Don’ts? What benefits can I get? What do I do with my connections?

Digital Networking and Prospecting in the 21st Century find out how...

The Presenter Linda has worked with professionals at major New Zealand companies including Wolters Kluwer, Telecom, ICONZ, Bayleys Real Estate, EBOS, and University of Auckland Business School. She has presented to Microsoft, the Her Business Network, MIT,, HRINZ, William Buck and staff of the University of Auckland. Linda's work has been published by the NZ Herald, NZ Business Magazine, Her Business Magazine, Human Resources Magazine, Social Media Examiner, Start Up magazine and she is the resident social media expert for

The Details RSN Rev-Up Series 2011 Auckland Rev-Up #3 With Linda Coles 12pm—2pm, Tuesday 19th July 2011 OfficeMax Training Centre 30 Sir Woolf Fisher Drive, Highbrook, East Tamaki Auckland Rev Sales Network Members: Free Non-members: $49.95 incl gst pp Includes light lunch

How To Register To register your attendance for this event send an email with “Linda Coles” in the subject line and the number of tickets required to Or for more details visit us at Hurry! Registrations close Friday 15 July! Spaces allocated on first reserved, first served basis. Limit 80 attendees only.

Visit us at


Jamie Ford, the Director of Foresight, is a specialist in mental toughness and emotional resilience and helps sales teams to unlock their potential. To find out more, visit



Don’t Worry How to handle worry

By Jamie Ford


n interesting survey was done a few years ago on what the average person worries about. The survey found that forty percent of what people worry about never happens. And thirty percent of what people worry about had already happened so they were powerless to do anything about it. Twelve percent of what the average person worries about is what others say about them, which most of the time is untrue. Consider the idea that other people’s opinions about you are none of your business.

NZSM / JULY 2011 / 14

Finally, according to this survey, ten percent of worry deals with your health and worrying will only make that worse! That leaves about eight percent of the things that are considered to be real problems, and worry will not do these any good either! In other words, we worry about a lot of things that are not going to happen or have already happened. That is a vast amount of misdirected emotional energy. "Worrying is like a rocking chair, it gives you something to do, but it doesn't get you anywhere." Author Unknown

In the wonderful book “How to stop worrying and start living” by Dale Carnegie there is an excellent technique to handle worry. It’s called the ‘ Worry Buster’ and here’s how it works: The Worry Buster: This technique has four simple steps. 1. Define in writing exactly what you are worried about. In medicine there is a saying that accurate diagnosis is 50% of the cure. So write down exactly what you are worried about. For example “I am worried about whether I will hit my sales target this month,” Or “I am worried about a retaining a business client.” 2. Define in writing the Worst Possible Outcome (W.P.O.) of this worry.

If you have concerns about hitting your sales target, the worst possible outcome is that you won’t make the target. If you have concerns about retaining a business client the worst possible outcome is that you lose that client, (for the time being anyway). If you have concerns about your losing your job, the worst possible outcome is that you lose this job. 3. Decide mentally to accept the worst possible outcome should it occur. This will mentally relieve a lot of stress. Ask yourself will this outcome kill me? Will losing your job kill you? Will losing a client kill you? In vast majority of circumstances the answer is no. (Asking this simple question allows you to put your worry in perspective.)

We worry about a lot of things that are not going to happen or have already happened. That is a vast amount of misdirected emotional energy

4. Take action immediately to make sure the worst possible outcome doesn't occur. Action is the antidote for worry • If you are worried about your job, talk to someone in your organisation who can give you more accurate information about your concerns. • If you are worried about losing a client, perhaps you get some of the sales team together for a brain storming session on strategies to counter the competitive threat. John Paul Getty, who became one of the richest men in

the world, used this strategy in every business situation he faced. He called it The Mini Max Regret Analysis. In other words how do I minimize the maximum regret? He would ask in every business dealing, "What is the worst possible outcome of this situation?" He would then work on minimizing this possibility. Action Exercise: Use the Worry Buster technique on any worry you have right now. It’s an excellent tool to eliminate worry quickly. And the more worries you eliminate the happier you will feel, you will be more positive in front of your clients, and much more likely to retain that key client! ■

15 / JULY 2011 / NZSM


Strengths Based


Author: Tony Rutigliano and Brian Brim Publisher: Gallup Press $37.97 from


ales experts Tony Rutigliano and Brian Brim, deliver a compelling new perspective on building better sales forces by using the strengths of each sales person more effectively. It includes access to Gallup's StrengthsFinder. Sales people are constantly told that the key to high performance for every salesperson is to be found in following a programme of specific steps and techniques. The truth is that sales people are most successful when they use an approach that fits them best. Of course, specific selling techniques can help, but only by those salespeople who are able to successfully apply those techniques. Some are, some aren't - and the difference is talent. "Strengths Based Selling" explains talent and how to identify and maximise it, and then covers the basic steps of the selling process, including prospecting/cold calling, assessing opportunity, identifying solutions, building advocacy, negotiating, closing, and servicing/retaining/growing. â–

NZSM / JULY 2011 / 16


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NZ Sales Manager Issue 52  

Short and sharp, NZ Sales Manager is New Zealand’s e-Magazine for sales professionals and is read by thousands of high performing business p...

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