When a friend steals your sales job

Published: Wed, 02/08/23

February 8, 2023

TOGETHER WITH

Welcome back. A blowout jobs report last week should give us some confidence halfway through Q1, and remind us to look at the big picture. And since we’re dishing out reminders, here’s another one: you can earn cool prizes just by referring people to sign up for this newsletter, including nicely-designed prospecting memes, stickers, shirts, Yetis (the mug, not the creature) and more. Check the bottom of this newsletter for your unique referral link and we’ll take care of the rest. Enjoy!

NUMBER OF THE WEEK

74% of sales managers oversee their own sales accounts in addition to managing their teams.

Source: HubSpot

SALES ROUNDUP

Here’s what’s happening in the sales world this week:

Microsoft isn’t wasting any time getting ChatGPT up and running, announcing that they’ll use the artificial intelligence software to help salespeople generate replies to customers and prospects through their Viva Sales platform. Viva is a CRM “companion” that works with Microsoft Dynamics and Salesforce. The new feature will generate emails containing personalized text, pricing details, and promotions. You can read more about it here.
Salesforce laid off thousands of employees Thursday morning, continuing its 10% workforce cuts which were announced in January. Insider reports that this round of layoffs affected about 4,000 employees, mostly salespeople. In January, Salesforce’s CEO said that just half of the company’s salespeople were responsible for 96% of all sales. You can read more about the layoffs here.

FEATURE

Elnur/Shutterstock.com

Harvard Business Review study finds more frequent sales quotas help motivate underperformers, but there’s a (big) catch

This week, our crack investigative reporting team is bringing you breaking news that we stole from the Harvard Business Review. The following tell-all will shed light on a vastly under-researched aspect of compensation in the sales industry -- quotas. There’s only one Quota newsletter, sure, but how many quotas should you have to meet in a month? 1? 4? 30?

Harvard Business School conducted a large-scale field experiment at a major retail chain in Sweden to find the answer to this very question. The company in question, which sells mainly consumer electronic goods and small home appliances, has more than 80 locations across the country. At five locations, the traditional model of compensation was kept in place -- a monthly quota in tandem with a fixed salary and a variable tiered commission of up to 2%. At the remaining retailer’s locations, a daily quota was implemented for the entire month of May 2015.

HBS hypothesized that an increase in the frequency of the quotas would provide more steady motivation for people, giving them a chance to start each day fresh rather than despairing later in the month if they weren’t on track to hit their quota. But they were also aware that a daily quota could increase stress among the sales force and sabotage their performance (you may feel your heart rate increasing just thinking about it). Additionally, they considered that, in an effort to meet their daily quota no matter what, people might oversell customers on things they didn’t really need and increase the rate of product returns at the company.

HBS was correct in that overall, daily quotas did lead to a slight increase in sales, especially for the bottom quartile of performers at the company, who managed a substantial 12% boost in productivity. And contrary to their prediction, salespeople -- both high and low-performers -- did not oversell customers on things they didn’t need -- rather, they sold more small-ticket items once they shifted to a daily, not monthly, sales mindset. This actually led to a decrease in product returns. The drawback was that without an eye toward selling big-ticket items, people sold less overall and hurt the retailer’s profitability.

HBS concluded that companies should consider numerous variables when integrating quotas into their compensation systems. Not only are there unintended consequences, as the researchers found, but their study only included goods with short sales cycles. Products with much longer sales cycles, they noted, might yield entirely different results under the same circumstances. For sales managers, this study shows that quota systems are at least partially a question of quantity over quality of sales. More frequent quotas, more sales, lower profits. Less frequent quotas, fewer sales, higher profits.

Interestingly, the research report concludes with this: “Finally, the venue was in Sweden, a country well known for its high tax rate and generous social security programs. Accordingly, fairness and a sense of community in that society is a prominent social norm. One could speculate that our findings and the size of the effect would be more concrete in societies in which individualism is more the social norm.”

If nothing else, this study proves that compensation plans have a huge effect on sales reps' behavior. Therefore, incentivizing behavior you want while disincentivizing behavior you don’t, should be at the top of management's mind when designing the comp plan. And if you believe you can just whip up any old comp plan willy-nilly, this research shows that you might want to think twice.

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MEME OF THE WEEK

Source: Sales Humor - Instagram

QUIZ

Which of the following billionaire CEOs once sold vacuum cleaners door to door?

A. Reed Hastings (Netflix)
B. Travis Kalanick (Uber)
C. Phil Knight (Nike)
D. Larry Page (Google)

SALES FAILS

Each week, we bring you the most cringe-worthy sales moments from across the web. To submit your sales fail story for consideration, click here. (Don't worry, you'll remain completely anonymous).

My very first day in sales was my most memorable Sales Fail. I still remember it like it was yesterday. It was early 2001, I was 23 years old, just starting out in sales after college working for a wine and beer distributor. I was on my first day in the field, learning my new route of grocery and package stores, while shadowing the rep that was getting promoted. When we arrived at our biggest account, as we got out of the car, he said, "If he asks, DO NOT tell the buyer you’re a rookie." This was the most important account I was inheriting, which had a lot of experienced competitor reps. The buyer was brutal to reps with no experience, and just tough to sell to in general.

Well, we walked in and did our introductions in his office, and the first thing he asked me:

Buyer: "Did you work for another distributor before this job?"
Me: "Yes"
Buyer: "In this area?"
Me: "No, in Kansas."

I totally made that up on the fly. I have no idea why I said Kansas, but I wasn't about to let him know that it was my first day in sales! The incumbent rep I was with looked at me like he had just seen a ghost. I somehow got through that first encounter without the buyer digging into my shady answer.

I proceeded to race home after work, then jumped on my dial-up internet to find and research wine/beer distributors in Kansas for the next couple of hours to cover all my bases, in case he asked me for more details the next time we met! I’ve never felt more sick to my stomach. Luckily, it never came up again, and I did very well on the account for the next couple of years.

To this day, I still can't believe I told him I worked for a distributor in Kansas *facepalm*

Anonymous Atlanta, GA

GRAPH OF THE WEEK

Source: LinkedIn Poll -- January 2023

WORTH A PEEK

When giving us feedback about this newsletter, most of you ask for more memes. But while we can’t stuff any more memes into The Quota, we can find them for you, like this article from Dooly with 30 sales memes your sales manager doesn’t want you to see in 2023. Check it out here.

ASK THE QUOTA

Want to submit a question and be featured in our advice column? Click here. (Don't worry, you'll remain completely anonymous).

Dear Quota Team,

I work in tech sales in San Fran, and have been a (producing) sales manager for the last two years. A few months ago, a recruiter reached out to me about a director-level gig at another fast-growing company, so I took the interview. The first interview went great. I made it to the second round and got to meet more of the team and learn about the company roadmap. It felt like a big upgrade from a work/life balance perspective, not to mention a nice pay bump.

So while I was riding high and super excited about the opportunity, I went out to lunch with one of my colleagues who I worked with at my previous company. We worked together for a few years so we've become friends. We mostly spent the lunch talking about our families and the job market. I mentioned the company and position I was interviewing for. Like I said, I was excited about the opportunity so I was really talking the place up. We finished our meal and went our separate ways.

About a week later, I got an email from my friend who said that he was also interviewing for the role and wanted to let me know about it, and said he hoped there were no hard feelings. It seems like he decided to go apply for the position after I told him all about it and how great the potential was. This is someone who I considered a friend. I haven’t responded to his email yet because I feel like I can’t do it without freaking out on him a bit. What do you think? Is this a total jerk move or what?

Betrayed in California

Dear Betrayed,

Is it a total jerk move? Absolutely! He knew that you were excited about the role and decided that instead of being happy for you, he’d try to take it for himself. There are no two ways about it, he went behind your back and then tried to absolve himself of any guilt by sending you a manipulative message after the fact.

That being said, there are some very hard lessons in sales and business (in life?) that we all must learn. One of those is that you can’t control others, and that you should spend your days and years focusing on what you can control, which is, in almost all cases, only yourself.

By the time this answer gets published, you’ll probably have either gotten the job, lost out to your “friend,” or maybe to someone else entirely. No matter the outcome, pick yourself up, dust yourself off, and do the best you can. After all, it’s the only thing you can do that will have an impact. Good luck! We wish you all the best!