This paper is taken from a section of Media Sales Management, which can be found in Chapter 7 on www.mediaselling.us in the Media Sales Management link.
Many media sales organizations
hold sales contests in an attempt to increase revenue and motivate
salespeople. For example, the majority
of radio and television stations in the
There are several purposes for holding sales contests:
Sales contests should be designed to accomplish specific objectives over short periods. A contest should have only one, two, or at most three objectives. Here are examples of some objectives that sales contests might have:
The underlying goal of a sales contest is to maximize revenue, which can be accomplished in a number of ways, as suggested in part by the nine points above.
There are three requirements for a successful sales contest:
There are two types of contests: direct and novelty. Direct contests are straightforward, such as "achieve 15 percent higher rates," or "write 20 percent more direct business." Novelty contests are ones that "hunt for hidden gold," or "win the Super Bowl." Novelty contests are more fun, but many sales managers feel that they tend to insult the intelligence of more sophisticated salespeople. Novelty contests tend to work better with younger, less experienced, less jaded salespeople. Novelty contests can be fun for selling special inventory, special events, or seasonal packages.
Generally, there are four kinds of prizes for sales contests: Cash, merchandise, travel and special honor, recognition, or privileges. Many organizations use a combination of prizes, such as a cash award plus a trip plus several extra days off to winners, and smaller prizes to other finishers.
Cash. Cash is not the most effective prize, especially if salespeople are reasonably well paid. Their money and security needs are satisfied by their regular compensation, but their achievement needs for feedback and recognition often go only partially satisfied. Contests are excellent ways to satisfy these self-esteem needs. Also, cash does not act as a motivator unless it is between 10 percent and 25 percent of salespeople's base compensation for the period of the contest. Well-paid salespeople will generally not go to much extra effort for just a few hundred dollars. Cash does not fulfill any need for recognition and provides no tangible, permanent evidence of the achievement like a plague, a ring, or a trophy does.
Merchandise. Merchandise is better than cash as a prize; it is more permanent evidence of achievement. Also, companies can often get merchandise through trade deals or at wholesale prices, and thus give larger prizes than if cash were used. Furthermore, if people are allowed to have a choice of merchandise, rewards can be more closely tied to individual needs and preferences, and salespeople and their families can express their individuality in the prizes they choose.
Travel. Travel is becoming more and more popular as a prize, because of the status, prestige, glamour, and fun associated with an exotic or exciting trip. Trips can be promoted well too; they can be glamorized, and people love to fantasize about them. Also, trips can include spouses and partners, which helps get partners involved in contests and in a frame of mind to support the extra work and effort necessary to win a contest (if no extra effort is necessary, contests are a waste of time).
Special Privileges. Special privileges are a good reward, but they are often hard to get approval for in larger, more rigid companies (extra vacation, for example.). Special recognition, like being flown in to the home office to meet the company president or receiving special recognition and publicity ("Million Dollar
Roundtable," for example) are sometimes easier to get approved in larger, more bureaucratic companies than days off.
How Many Prizes?
How many prizes are given in a sales contest is an important consideration. In general, it is best to make it possible for everyone to win something. The smaller the staff, the more important this element is in order to avoid destructive competition. Have several big winners (first, second, and third place), but also have a little something for everyone. Remember, in a six-person sales staff, if there is only one winner, five people feel like losers—not a good outcome.
There is strong evidence that team prizes are more effective than individual prizes. For example, it is a good idea to divide a sales staff into two teams and give a major prize to winning team members and nice consolation prizes to members on the second-place team.
It is also a very good idea to have a prize for all members of a sales staff if a sales department reaches a goal. In this manner a sales staff is competing against itself, and everyone helps everyone else to improve the department's performance. The full-staff contest is perhaps the best type of competition; it reinforces the notion that the enemy is outside, not inside. Full-staff contests are being used by many companies to reward sales staffs for exceeding yearly revenue goals or budgets. Technically these full-staff incentives are not contests, but they can be excellent motivators for staff cooperation and teamwork.
Use Improvement Criteria.
The criteria for awarding prizes should be based on each person's or team's current performance level. Thus, the rookie and the star should have an equal chance of winning, and the criteria for winning should be based on what is excellent performance for each salesperson at his or her level of productivity. Therefore, the rules of a sales contest and the criteria for winning should be based on some measurement of improvement. Give prizes to the people or teams who come the closest to reaching or exceeding a target or goal on a percentage basis. If everyone improves, everyone should be rewarded, and those that improve the most, should be rewarded the most.
Do not have sales contests merely as a device to give salespeople more money. Unless contests are designed to have specific improvement goals that reinforce a sales department’s overall sales strategy for maximizing revenue, they will not force change or require extra effort, which is why you hold contests.
Also, do not design contests that use billing as a benchmark. Contests that reward total billing tend to be won by the salesperson with the best account list, which is senseless, because the person with the best list is already well compensated and probably reasonably well motivated. Base winning a sales contest on percentage improvement, then everyone has an equal chance of winning—a vital dimension for any sales contest.
Contest Duration. The duration of a contest should be no shorter than four weeks and no longer than thirteen weeks. Six weeks is a good duration for a sales contest—long enough to effect behavior and billing and short enough so that the salespeople don't get bored with it. Because contests must be relatively short to maintain interest, it is difficult to run effective sales contests that require long-term, developmental selling.
Contest Frequency. Do not use sales contests regularly, because then they are no longer special. In fact, salespeople come to expect the goodies they get from regularly scheduled contests and to see the rewards not as extras but as a normal part of their compensation package. Also, remember, that the competition generated from a hyped contest can cause morale problems, especially among those who do not the top prize. Spread out contests to avoid too frequent post-contest lulls. Two sales contests a year is a reasonable frequency.
Promote Contests. Promote contests well to keep the enthusiasm level high. Promote them at all levels of the organization, not just in the sales department in order to get everyone in the company involved and supporting the salespeople (even include vital support people in prizes). Promote the progress of contests on a weekly basis. Give feedback on how the individual salespeople or teams are progressing. Weekly bulletins are a vital element of contests in order to give feedback and to create both awareness and excitement.
Fairness. Fairness is the most important dimension in a contest. Participants must believe that a contest is absolutely fair and that no one has an edge at the beginning.
Simplicity. Sales contests should be designed so that they are easy to understand. Objectives must be clear and progress toward them must be simple and easily represented graphically.
Visibility. Contest progress must be visible to everyone in an office. Among salespeople there is often as strong a motivation not to lose as there is to win, so post progress reports daily so that both those ahead and behind will be continually informed.
Standard Setting. Contests help set performance standards. It is vital that non-winners (don't let a sales staff feel like losers) be given clear advice on ways to improve their performance. Offer additional sales training so non-winners feel they have a chance to win the next contest.
Finally, do not depend on contests alone to have an affect on long-term performance. Contests generally provide only a short-term improvement, and no contest can correct inherent sales force or sales management problems—training is the answer to these difficulties. On the other hand, contests do reinforce department values and good selling principles. Furthermore, sales contests can be fun, motivating, and help build team spirit if they are well designed to accomplish a few clear, realistic objectives. A well-designed and well-run contest can make salespeople feel like winners.