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June 1998

Tropical Fish Theory Of Compensation

BY NADJI TEHRANI

 


To expand upon my February 1998 Publisher's Outlook entitled "Hiring and Keeping the Right People," (and I urge you to please read that Outlook as a prerequisite for this Publisher's Outlook), I take this opportunity to discuss another crucial element of a successful, well-run and well-managed company.

In the February 1998 Publisher's Outlook, I explained how crucial it is to hire "the right people," yet how difficult it is to make the right decision in hiring people time after time. But hiring the right people is only 50 percent of the job. The other 50 percent is keeping them.

In addition to providing a career path, a challenging position and true potential for growth, not to mention, substantial appreciation for a job well done, the next most important thing in keeping call center personnel (as well as other members of the sales staff), is to develop a creative compensation program that is second to none. You see, salespeople are a totally different breed of people. True salespeople are, among other things, motivated by money first, and challenge and advancement second. If they are true salespeople they are confident enough to know they can sell enough to earn a great commission with little or no base salary. Salespeople are often as finicky as cats. Little things bother them a lot, and in most cases, the better the salesperson, the more maintenance they require. It doesn't have to be that way. I have seen many outstanding salespeople who are not difficult. After all, where is it written that a good salesperson needs to be a pain? From my perspective, I would rank the attributes of a successful salesperson in the following order:

   1) A strong ego drive
   2) Empathy
   3) A great listener
   4) Supreme self-confidence
   5) Ability to communicate the benefits of the product or service convincingly
   6) Product knowledge
   7) Industry knowledge
   8) Competitive knowledge
   9) They must NOT ever be satisfied with what they earn...otherwise they are classified as FAT CATS! And...FAT CATS don't hunt!
   10) Last but not least, they must be a great closer.

The above are only the minimum requirements in the keys to the success of a salesperson.

Given the "strong ego drive," salespeople often need to always be the center of attention, and therefore, they can also be the best entertainers. By the same token, these individuals often have extremely short fuses. This situation becomes a double-edged sword because 75 percent of purchasing decisions is based on emotion. Once a salesperson becomes a fantastic entertainer, the job of selling is 50 percent complete, because everyone loves to be entertained. There is no more powerful way to effectively sell than selling through entertaining. But if these flamboyant salespeople do not control their egoist tempers, they will just as easily lose new accounts as they gain them through their lack of emotional control. In my judgment, this type of salesperson must be terminated as soon as possible because in the short and long run, they can create great liability for the sales team and the company.

The Tropical Fish Theory
Among the many peculiar characteristics of salespeople is the fact that you cannot make any mistakes when you pay them, or you will lose them. If you over-pay them and try to deduct the overpayment, you might lose them. If you under-pay them through an honest mistake and try to adjust the payment, you may still lose them. The trick is to pay them precisely and accurately each and every time because the majority of them have no tolerance or understanding for one of the most well-documented flaws in human nature, which is the capacity for making honest mistakes. You will find that many salespeople simply do not understand that making mistakes and learning from them is the fertilizer for success.

Over the years, indeed, we have lost a few great salespeople because we overpaid them. The lesson was so painful that we decided to learn as much as we could about keeping these unusual creatures satisfied. The best theory that I have come up with to describe the peculiar nature of salespeople is what I call "The Tropical Fish Theory."

According to "Water Chemistry," an article written by Mike McEwan from Aquazia Central, the comfortable range for tropical fish to exist without dying is 72 to 80 degrees Fahrenheit. Should the temperature rise above 80 degrees, the fish will die. If the temperature falls below 72 degrees, the fish will die. If you think about it, that is precisely the way salespeople behave. If you pay them more than what they should earn, and then try to charge back the difference or to adjust their pay to where it should be, they will quit. If you under-pay, they will quit even if you try to increase the pay level because of mistakes. That is what I call The Tropical Fish Theory of Compensation.

Obviously, you might find a few salespeople who have a greater capacity for growth, and those are the ones who have a much wider tolerance range than that of the tropical fish's comfort zone. In short, the greater the comfort zone range a salesperson has, the more you should consider them for promotion, assuming they have management capabilities. By the same token, those who have a very narrow tolerance for compensation mistakes should not even be considered for promotions because they could easily destroy the morale of the entire sales department.

Therefore, it is key to come up with the right compensation program (as a guideline, begin with our "16th-Annual Teleservices Compensation Update"). As stated by "The Tropical Fish Theory," if the compensation is within the comfort zone of the salesperson and the sales team, and if the compensation plan is innovative and truly performance-based, one should have no difficulty motivating salespeople at practically any level. Regardless of position, with a fair and generous performance-based compensation plan, capable salespeople perform miracles!

The difficulty lies in establishing the comfort zone because if you miss it, you will lose salespeople. If you go above it, you will lose salespeople, and if you go below it, you will lose salespeople. Therefore, the greatest challenge for management is to find the comfort zone and be correct about it time after time after time.

The Fat Cat Problem
A few years back, I visited the city of Omaha, the home of many giant corporations in teleservices, such as West TeleServices, ITI, SITEL and many others. During this trip, I learned a great lesson about salespeople, which I would like to share with you. In the office of the chairman of one of the most prominent companies, I noted a painting on the wall, showing a huge and vastly overweight cat with a caption: "Fat cats don't hunt!"

Since the level of ambition and drive varies among salespeople, once a salesperson reaches a comfortable level of earning, you will notice a lack of drive and intensity in sales effort on the part of the salesperson. As further proof of the "Fat Cat" problem is stagnant or barely increasing annual earnings of the salesperson. This extremely dangerous problem must be addressed immediately with clear, practical suggestions for improvement. A deadline must be given by which time the problem must be resolved. If the problem is not resolved, a staff change and territory reassignment is in order. If no action is taken, loss of revenue and market share will surely result.

As always, I look forward to your comments. E-mail me at ntehrani@tmcnet.com.

Sincerely yours,
Nadji Tehrani
Executive Group Publisher
Editor-in-Chief
ntehrani@tmcnet.com







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