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July/August 1995
All Fired Up
Designing a compensation plan that motivates salespeople to meet and exceed their targets
By Rayna Skolnik
Selling is one tough job. You need people who can take it -- who can face rejection after rejection and bounce back each time, just as determined and persistent as before. Some of that toughness and resilience must be ingrained, and it's important to hire people who possess those characteristics. But it's also important to design a program of compensation and incentives to keep motivation high. A look at half-a-dozen show management companies and associations reveals that there are many ways to achieve that.
Building the sales team
If there's one rule of thumb in sales management, it's that there are no rules of thumb for building a successful sales team. The size of the sales staff is not always in direct proportion to the number of shows produced. And the level of experience is not always in direct proportion to the success of the sales effort.
An association that produces only one show, and manages the show itself rather than outsourcing, usually has only one or two people handling booth sales plus other responsibilities. At the other end of the spectrum is giant show management firm Reed Exhibition Companies, with a 100-person sales force -- including salespeople, sales managers and sales directors -- for its U.S. shows alone. Forty-five of those people are allocated to Association Expositions and Services (AES), which manages 16 association events; and 55 to U.S. Trade Events, which handles 22 Reed shows.
Compare that with PEMCO, where eight full-time salespeople and a sales director sell 13 shows. Connelly Business Exhibitions, which currently does two shows, has two full-time telemarketers and a sales manager. Miller-Freeman's Sports Group of Trade Shows produces two Outdoor Retailer and three Action Sports Retailer shows; those two divisions each have five salespeople, a sales manager who is also associate publisher of the industry magazine, and telemarketers who are added as needed.
The National Restaurant Association (NRA) has a sales coordinator, an exhibit sales manager and a director of sales and operations. Eight to 10 telephone salespeople also come in to work the eight months preceding NRA's annual show.
Industry experience needed to join the team varies. What's more important is solid face-to-face sales experience and a willingness to learn and be a team player. Norwalk, CT-based Reed requires both telemarketing and face-to-face sales experience, says Nancy Walsh, Vice President of Sales for AES. Industry-specific experience might also be necessary for selling a technical show but is less important for events like food shows.
PEMCO wants three- to five-years' experience in either telemarketing or face-to-face sales, according to Mark Weber, President of the Carol Stream, IL company. "Trade show experience is a plus," he says.
Both Connelly and Miller Freeman's Sports Group put less emphasis on experience. "We've had the greatest success with people who have some sales experience, but not too much -- about two or three years," says Dan Hamilton, Vice President, Marketing & Business Development for Ottawa, Ontario-based Connelly. His explanation: "We can shape them."
David Loechner, Group Show Director for Miller Freeman in South Laguna, CA, says, "We look for the ability to work as a team player and to understand product presentation." Although his two sales managers had publishing and trade show experience, Loechner says that's not high on the list of requirements. The longevity of the sales staff validates his approach: One person has been there eight years, another six. Loechner himself began as an advertising and booth salesperson just one year out of college and with no relevant experience.
Mary Pat Heftman, Exhibit Sales Manager at NRA in Chicago, acknowledges that she can't demand specific experience when seeking telephone salespeople, who work part time and earn only $6 per hour -- although commissions can double that. Heftman says she seeks "people with good communication skills who are fairly bright." Obviously, those criteria work for NRA: Three people each sold more than 100 space contracts for this year's show.
Organizing the work day
Except for dedicated telemarketers, salespeople often sell more than booth space. Selling time is at a premium, and to meet multiple goals, a good salesperson must have uninterrupted blocks of time to make sales calls.
At AES, the salespeople also sell sponsorships. Miller-Freeman's salespeople sell sponsorships and magazine ads. At Connelly, sponsorships are handled by the vice president of sales, who is also responsible for key accounts. And at PEMCO, sponsorships are sold by the promotion department, leaving salespeople and the director of sales free to focus on booth sales. NRA does not offer show sponsorships to exhibitors.
At Miller Freeman, separate departments handle administrative tasks, including written confirmations and other paperwork. "We ask our salespeople to sell space and service customers, and therefore they spend very little time with administrative tasks," says Loechner.
There is a direct correlation between the allocation of responsibilities and the ratio of phone-to-field selling. Salespeople who sell only booth space spend about 90 percent of their time on the phone and 10 percent in the field, either at customers' offices or at shows. When salespeople also sell sponsorships, that ratio changes to 60 percent phone, 40 percent face-to-face. As Walsh explains it, "We're going to customers with proposals for a higher-ticket total, and face-to-face is more effective."
Salespeople need adequate time to sell. In response to what Walsh calls "a cry from the troops," AES declared 9-11 a.m. and 1-5 p.m. uninterrupted sales time. Meetings must be scheduled outside those times. "Salespeople want to sell, and that's what we want them to do," Walsh says.
But Heftman cautions against overdoing it. Her telephone salespeople work either a 9 a.m.-1 p.m. or 1-5 p.m. shift. "It's hard to do this work more than four hours at a time. They can't stay sharp."
Rewarding salespeople
Sales managers constantly seek the combination of compensation and incentives that is most effective in motivating salespeople. Each organization has its own philosophy and puts its own stamp on the plan it ultimately develops.
Perhaps the only point on which a majority agree is that salary plus commission is more effective than either commission or salary alone. A 1994 survey of the 60 executives in the Society of Independent Show Organizers (SISO) revealed that 80 percent use that combination. Weber, who is among that 80 percent, says, "Straight salary is nice and clean, but it provides little motivation. And few people will work for commission only." It's just too scary.
That combination will also be the choice of Sam Lippman, Vice President of Graphic Arts Show Company. The Reston, VA-based company produces shows for three printing industry buyer and supplier associations. Lippman is developing a sales department that is expected to have a director of exhibit sales, sales manager, sales secretary and possibly external sales agents. "Professional salespeople are driven not just by financial rewards but also by the psychological rewards of hitting targets," he explains. "We must give salespeople the target and reward system they're used to." And that means salary plus commission.
Loechner makes an additional point. "The salesperson's job requires day-to-day servicing of an account. That's time consuming, but it doesn't earn commissions. The salary rewards service to the account."
The SISO survey also revealed the average ranges for total compensation. In the lowest range, the average compensation is $28,000. The "average average" is $48,000, and the high average is $75,000.
Structuring commissions
Commission can be flat -- the same percentage, whatever the achievement -- or escalating, increasing as the salesperson passes certain targets. Companies that use escalating commissions have come up with some creative ways to structure them.
At PEMCO, for example, there is a per-person commission dollar pool for each show. The size of the pool is based on three weighted factors -- gross sales volume, profitability and growth potential. New shows are rated higher than mature shows because of their potential, and thus their dollar pool is larger. Salespeople earn escalating percentages of the pool and can even earn more than the total pool.
AES bases booth sales commissions on square footage and sets both individual and show targets. A salesperson must meet his or her personal target in order to be eligible for the show commission, but the show commission isn't paid unless the team meets the square footage target for the show. For sponsorships, commissions are based on gross revenues.
At the NRA, salary plus commission is used for both the inside salespeople and the sales coordinator, who divides her time equally between telephone sales and exhibit administration. Escalating commissions are paid per contract, with the rate increasing after every 20 contracts. There is also an escalating square footage bonus, figured weekly. The square footage bonus has two advantages. It encourages up selling, of course, but also helps retain salespeople. "When we just paid per contract, we spent a lot of time hiring and training people," Heftman says. "Now that we reward good people for selling more, some of our people come back year after year."
Giving sales a boost
Sometimes even salary and commission aren't enough to keep morale and effort high. "People need immediate recognition and rewards," says Walsh. "Ideally, we'd pay commissions monthly, but we can't because of the way exhibitors pay for their space. So we pay quarterly." In between those payments, sales contests provide the boost that salespeople need. Among the rewards: airline tickets, dinner for two or cash.
NRA also offers incentives. Salespeople are expected to close one to two contracts per week. Those who don't make it, don't last. Beginning in January -- the show is in May -- anyone who sells five contracts in a week has lunch with Heftman at any Chicago restaurant he or she chooses. "We've gone to four- and five-star restaurants," Heftman says. There's also a benefit beyond increased sales and a great meal. "It's a relaxing lunch. We share anecdotes, and it's a nice team builder," she says.
Besides the gourmet lunches, there are occasional contests when Heftman buys pizza for everyone if the team sells a specified number of contracts. And at each week's sales meeting, she specifically acknowledges someone's special effort -- for example, making a lot of cold calls. "It doesn't cost anything," she says. "We just thank the person for outstanding effort. It's so easy to do, and so easy to forget."
There's always something happening at Connelly. "Incentives are needed to maintain a high level of motivation," says Hamilton. "But you have to keep varying them. One package won't work for everybody, and nothing remains effective for a long time." Salespeople have had the opportunity to win a VCR or microwave, or a weekend trip for two.
Sometimes there's $50 for the first person to sell a booth that day. "People are competitive," says Hamilton. "By 8:30 a.m., they're all pushing as hard as they can, trying to be first. Other days, they might not be geared up until 9:30 a.m." To promote team effort, there might be a $1,000 prize if the team hits a certain goal, with each person's share of the prize proportionate to his contribution.
Then there's the dart board, which has been used many times in different ways. A salesperson might throw a dart at the board after each sale, or perhaps after a specified number of sales. On the dart board are envelopes naming prizes. "We mix it up -- large and small, fun and serious," says Hamilton. Thus the marksman might win $50 or dinner for two. Or the envelope could read, "Better luck next time," or tell the salesperson he won a chance to hear the office comic tell one of his jokes.
The dissenting voice here is Weber's. "We used to have monthly sales contests, and the winner might get a nice dinner," he says. "But they preferred having that money rolled into their commission. Most good salespeople care about one thing -- money."
Which leads to a simple conclusion: Experiment until you find out what works for your salespeople, and stick with it.
Of all the incentive awards Connelly Business Expositions has offered, the one that worked best was pure gold. Connelly was launching a show for which there was a fixed universe of prospects. Whoever booked the highest percentage of his prospects would win a one-ounce gold coin.
"We often use percentage of accounts to level the playing field," says Dan Hamilton, Vice President, Marketing and Business Development. "We don't want people demotivated right from the start because their list won't yield a lot of square footage."
The twist in this contest, however, was that accounts were assigned not only to salespeople and the sales manager, but also to Hamilton and company president Ron Connelly. "Everyone was motivated to beat the president," Hamilton says. But they also wanted that gold. "We'd pass the coin around every morning. There was something about holding it... ." Daily status reports kept interest high.
"It was the most successful contest we've ever had in terms of visible motivation and results achieved," says Hamilton. "We had the highest percentage closing rate of any campaign." And did anyone beat the president? Well, yes -- Hamilton did.
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