Jen Hsin
Co-founder and Head of Data Science at SetSail
Table of contents:

Imagine this: you’re the new coach of a youth basketball team. You think they have potential, but they keep losing. So you want to motivate the team to do better and win more games.

Would you say to the team, "whoever runs the most in the next game will get ice cream"?

Ridiculous, right? Running is important, but it doesn't win games!

Running in basketball is like sending outbound emails in sales. They’re important, but they don’t win games or close deals

So why would you incentivize sales reps on how many emails they can send, or calls they can make, as the vast majority of SPIFF programs do?

Fortunately, there’s a smarter way to incentivize for success — both for your basketball team and your sales reps.

[caption id="attachment_1720" align="alignnone" width="1600"]

Running in basketball is like sending emails in sales. Left: A well-intentioned but ineffective incentive strategy in basketball Right: Deriving an incentive strategy for sales through data and analytics[/caption]

Necessary But Not Sufficient

To win a basketball game, running is a “necessary-but-not-sufficient” action. In other words, you have to run to win, but running alone isn’t enough. There are other, more important actions.

So let’s consider another action: rebounding.

Rebounds are a classic stat, and players are recognized (and rewarded) for grabbing lots of rebounds.

What do coaches typically tell their players about rebounds? You have to:

  • Run hard
  • Get in an optimal position
  • Box out

There’s a causal relationship between these events, so we can put them in a sequence like this:

Running → Gaining Optimal Position → Boxing Out → Rebounding → Winning.

Different Degrees of Leading Indicators

Running and rebounding are both necessary-but-not-sufficient actions to win the game. Why, then, do we feel justified to reward rebounding but not running?

Putting them in a sequence makes it clear: rebounding is “closer” to winning the game than running. So while they’re both important, rebounding is a "better," or "stronger," or *ahem* "leadinger" indicator than running.

Choose Your Incentives Accordingly

Because running is also a necessary action for winning, we'd encourage players to run hard, but probably not with a “big” reward like ice cream. When a player shows hustle, we'd clap for them or give them a thumbs up. These are smaller rewards that we intuitively offer for actions that are necessary, but are not as close to the successful outcome as rebounding.

So if we revisit the sequence of events in more detail, it looks like this:

It is now very clear the type of incentive strategy you, the coach, should employ. A strategy that intuitively make sense, and probably is what you would've done as the coach in the first place — ice cream for rebounds, and cheers for hustling on the court.

Sales versus Basketball Incentives

With some basketball incentive strategy under our belt, let's get back to what we really care about: incentive strategy for sales. There’s an immediate difference: everything in basketball is so visible and happens within a big red rectangle. The situation is, literally, "bounded."

A sales motion, on the other hand, has much more subtlety and behind-the-scenes work. There are more players. There are more "courts" or "fields of play." There are no definitive halves or quarters of play time. "Always be Selling" means anywhere, at any time.

Because of the daunting complexity of a sales motion, we don't even know where to begin mapping out the sequence of events. And, truthfully, the "sequence" is probably not linear. Rather, there'd be many twists and turns and "back to square one's."

Our approach at SetSail is to leverage your own data to figure out the events that matter in your sales motion. We’ve built an analytics framework that ingests your CRM data and combines them with engagement activities. In addition, we derive intelligent signals through natural language processing and machine learning, ending up with a library of hundreds of potential leading indicators.

Through this process, events that have meaningful impact to the deal outcome are surfaced to you, and you can use these insights to determine the most effective incentive strategy for your team. Here is an actual example below.

In this example, we are looking at chances of deal winning given that a certain event has occurred. We have sorted the events in increasing order of deal win rate. This presents a sequence of events very similar to the basketball analogy.

Sending out emails is a necessary activity, but it's woefully insufficient.  Actually getting responses back from customers, however, is more promising.

If the email has a specific topic, like a pricing discussion, and comes from an enthusiastic customer with positive sentiment, then we are even closer to the final successful outcome. When a deal reaches the milestone of having multiple contacts from different departments, the win rate, at this point, is more than doubled.

This suggests a clear incentives strategy: encourage reps to send outbound emails, but incentivize them to make contacts in multiple departments. The same holds true for basketball: encourage players to hustle, but incentivize them to box out and get rebounds.

In other words, smaller rewards for things that are necessary but not sufficient. Larger rewards for things that are meaningful indicators of success.

SetSail’s Incentives

We’re no basketball experts here at SetSail, but we do know sales. We designed the SetSail incentives platform specifically to optimize sales productivity. We use machine learning to collect and discover the most important measures of deal progress. From there, we build a custom incentives program tailored to your specific sales motion.

Feel free to get in touch for a deeper dive and see firsthand how it all works.