In one of our latest implementations, we had a scenario where we were getting lower than expected sales adoption of the optimized price guidance in one division of our large distribution customer. Initially when we were trying to determine potential causes, all seemed OK – this division had followed the same change management plan, same training schedule, etc. We had recommended two additional paths to help with sales adoption – matching commission rates to the price recommendations, and publishing a weekly ranking of sales reps and their performance against the price envelope.
Our recommended commission plan changes had largely been adopted. These changes allowed sales reps who priced according to the recommended prices to be paid a higher commission, aligning their goals with our customer’s.
However, upon a further deep dive into the details, we learned that the head of the sales force for this particular division was not utilizing our recommended published weekly ranking. These “peer pressure” tools were designed to engage the human side of adoption to foster a feeling of competition among the sales reps.
Each week, the top performing sales reps were noted on their achievement towards the target prices. On this particular implementation, we suggested measuring “value lost” – a metric that measures the number of transactions and associated dollars below the floor price in the price envelope. The top performers had the smallest “value lost”. Similarly, the worst performers had the most margin dollars to gain by following price recommendations. Both lists were posted in a public place each week, without much fanfare, I might add – people catch onto this type of thing pretty quickly.
When we asked why he did not post the rankings, the division sales lead said “I already have the financial alignment; I don’t need the rankings.” This is a common misconception, but an important one. Sales reps in particular are competitively motivated, and using rankings such as these can engage the human side, not just the wallet side. Also, people generally do not share their compensation, so the rankings provide a competitive outlet that can be shared by the team.
After instituting the weekly sales competition rankings, we saw the adoption of prices noticeably improve, and the basis point increase in margin for this particular division actually outpace the remainder of the company, moving from well-below-average to among the leaders in margin gain! It also fostered a sense of competition among the reps, and became a common discussion topic.
I think the lesson here is important – pricing software implementations are complex beasts, and making sure your company realizes the value that was promised via sales adoption is critical. Use every tool in your toolbox to make sure this happens!