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Seven Reasons Competition Fails for Sales

Mario hergerToday’s post is by Mario Herger, CEO, founder, and partner of Enterprise Gamification Consultancy LLC and coauthor of Gamification at Work: Designing Engaging Business Software. He will speak about gamification and motivation at the upcoming Sales 2.0 Conference in San Francisco on May 5-6.  

 

 



Conventional wisdom holds that salespeople love competition. They want a challenge, a chance to race against their friends and colleagues, and the opportunity to land at the top of the leaderboard. Sales managers constantly use carrots and competition because this is what motivates salespeople ...but is that true?

In actuality, competition sometimes puts stress on the relationships between sales agents, colleagues, and customers. Here are seven reasons why that’s so:

1. Competition is the opposite of collaboration.

When we work together, we can achieve more than we can working as individuals. If we pit sales reps against one another to compete for a scarce item, such as a bonus or the top spot on a leaderboard, we can also discourage collaboration.

2. Competition motivates only a select group.

If you’ve used competition in the past, have you also crunched the numbers? Then you've likely found that only a small percentage of your sales force actually participates and hits the top. But what about the others? It is nearly always better to find a way to lift the sales numbers of the whole team. A better strategy is to lift 20 sales agents by 10 percent, not just have the first two reps double their sales.

3. If viewed as unfair, competition can undermine morale.

When the competition is considered unfair or unbalanced  (say a certain sales rep has an advantage because he or she happens to sell in a good region, for example) and offers no realistic chance for some people to win, salespeople are less likely to participate.

As I reported in this blog post, Maury Weinstein, president of IT company System Source, mentioned that 20 to 30 percent of his sales managers' time was spent dealing with administration to determine commission and competition. Sales reps kept arguing about why they should have gotten the bonus, why it was not their fault, why the circumstances made the competition unfair. Once they got rid of it, management had more time for business development.

4. Competition can lead to burnout.

After several days, competition loses its power. Competing all the time can lead to burnout. While sales reps focus their energy on closing deals during the competition, they start taking a break once it’s over, and this can lead to a dip in deals. Moreover, the dips may zero out all the gains from the competitive period.

5. Competition can lead to negative interpersonal behavior.

We like to think that we’re not sore losers, but sometimes our ego gets the best of us. In our weaker moments, maybe we harbor negative feelings about someone who won something we wanted for ourselves. Competition can exacerbate this in some sales cultures, and this isn’t an attitude that helps build a trusting and fruitful long-term relationship with clients and co-workers.

6. Competition has the potential to alienate customers.

Salespeople are usually extroverts. Most love socializing, making friends, and being trusted. Now, what happens if they are asked to close as quickly as possible and treat the customer, not as a friend, but as a rung on the ladder of success? A customer might sense that the rep is not looking out for his or her best interests and shut out the rep. When a competitive sales setup encourages reps to ram products and services down your customers’ throats to boost short-term sales, in the long term, they’ll damage the relationship with the customer.

7. Competition leaves you with many “losers.”

How many people can be at the top of a leaderboard? Exactly one. Even with 200 sales reps, you have only one winner, and while you’ve motivated one person, you’ve demotivated 199.

What is the alternative to competition? This is where gamification can help. Using game design elements and encouraging autonomy, feedback, and collaboration, gamification helps sales reps pull off more and on a longer term than competition would ever enable.

What are your thoughts on using competition to fuel sales success? Share your thoughts in the comments section.

 

Comments

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Adam Hollander

I think the premise of this post is flawed. The author is 100% right - if sales contests or competitions are 'designed poorly' they will yield all of the negative results above. This is why you need to design them (a) to be team based so the reps collaborate and push on each other, (b) to have multiple paths/ways to win so if a rep falls behind in one area, they still have a way to compete and (c) to be balanced across the team; generally done by incorporating metrics around activity as well as results. At FantasySalesTeam we've had great success helping dozens of companies design exactly these types of contests. It's the entire reason we designed our sales gamification platform; to help companies run a different breed of contest. One that doesn't just focus on top performers or allow reps to become disengaged when they fall out of contention for a single prize. The solution isn't to eliminate competition. Competition and high visibility of results DRIVES SALES. It just needs to be done properly so you don't fall into the pitfalls of traditionally designed contests or competitions.

Dan Enthoven

"When the competition is considered unfair or unbalanced (say a certain sales rep has an advantage because he or she happens to sell in a good region, for example) and offers no realistic chance for some people to win, salespeople are less likely to participate."

Fair point. Competition can push your sales team to really reach their best, but it has to be an even playing field if you want everyone to participate. Someone will win and someone will lose but let it be based on how hard they work, not just who got the lucky region.

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