How advanced data science helped to uncover the link between incentives and driving sales productivity
Between 2010 and 2018 I had one of the most enriching experiences of my career driving Sales Acceleration alongside one of arguably, the best data science teams in the world at Google.
For a sales data geek, Google was an amazing place to experiment with new, data-driven frameworks to accelerate sales. We had an enormous global sales team and I was equipped with unbeatable resources: an excellent team, a mountain of data, access to endless computing power, and lots of free food.
Over the first two years, we created a best in class Business Intelligence infrastructure that allowed sales leaders to drive insights on every rep action in our pipeline… but it was useless. None of those insights drove a real, measurable increase in productivity.
Through experimentation, we learned two valuable lessons:
- The best insights and dashboards in the world are useless if sales reps don’t change their behavior
- The only way to change a sales rep’s behavior is through incentives.
The “incentives drive behavior” principle became the keystone to a new approach that led to a massive increase in sales productivity for Google (>20% increase YoY for 5 consecutive years!)
At the core of our approach was a new incentive system that rewarded the reps not just on closing deals but also on making measurable progress along the sales process. The secret sauce was the way we measured deal progress. Instead of relying on rep self-reporting or management assessment, we measured progress by applying Machine Learning and Natural Language Processing to customer engagement (emails, calendar, chats, etc.) and product signals (usage.)
While the details are quite complex, the core premise seems simple, right? This is common knowledge among effective sales leaders — incentives drive behavior.
A crisis in sales productivity spells trouble for sales leaders
Yet, as I looked outside of Google in 2017, I was surprised by what I saw. In the last decade, the average sales rep attainment had dropped to around 50% and the impact on leadership was brutal — sales leader tenure had dropped to under 20 months. Sales leaders were under intense pressure to drive sales productivity or find a new job.
The bigger surprise was that this was in spite of many companies feverishly focusing on sales intelligence. It seemed they were experiencing a similar challenge to the one we’d spent the last 7 years solving at Google.
Sales organizations were frantically generating insights but it wasn’t improving the way reps behaved and it wasn’t driving measurable sales productivity gains. In fact, it was doing the opposite. Sales teams who historically relied freely on the art of selling were now being stifled with new reports, dashboards, and sales intelligence tools. This ultimately left them expected to act on sometimes contradictory insights into how to do everything from conducting customer calls and following up on emails to updating their CRM systems.
Some organizations had amazing insights while others were still struggling to get their data cleaned up but they all had this in common — they were all wrestling with how to improve the way their reps behaved. Don’t get me wrong, they all said that their insights made them feel good but they weren’t moving the needle.
Something was missing. Sales leaders had stopped looking to incentives as a viable lever to drive sales behavioral change. Instead, they had become part of a business-as-usual, annual exercise with finance.
The challenge with the traditional sales incentive model
A lot of this stemmed from a lack of innovation but not necessarily in incentive management software itself. Incentives had largely become an administrative challenge for the finance and operations teams — a way to potentially save money and not to drive revenue.
Companies like Callidus and Xactly had done a good job optimizing the operational side of compensation like a well-oiled machine and with a level of transparency that helped build confidence with sales reps around the calculation of their commissions, however, on the revenue side, innovation in the incentive model itself hadn’t progressed since the Glengarry Glen Ross days.
The major limitation of the traditional model still remained — there was only one measurable and trusted event in the sales process: the closed-won deal. Teams had introduced stopgap measures like SPIFFs and contests that utilized gamification to try to drive more specific behaviors but companies only saw mixed results. They did change behavior but in sometimes twisted and cannibalistic ways. This was definitely not a way to predictably drive more revenue.
Advances in machine learning and natural language processing allow us to understand a lot more about the sales process in a measurable and scientific way. Using these advanced methods, we can finally understand and measure deal progress and not just rely on the rep’s self-reported progress.
In 2018 we founded SetSail. We saw an opportunity to bring the same level of advanced data science capabilities previously only available to companies like Google, to the wider sales community. Coupled with an innovative way to incentivize progress along the deal journey, this approach became the missing link to unlocking massive sales productivity gains.
So far SetSail has allowed us to consistently deliver 10-20% sales productivity increases to our customers in about 12 weeks.
My team and I will be uncovering the details of how we went about tackling the productivity challenge using this innovative incentives approach in the coming months. Stay tuned. In the meantime, as a thank you for reading, I’d like to offer you a free analysis of what drives win probability and velocity in your sales process and how these achievements are being leverages by your top-performing reps. Get in touch with us to find out more.