Want to know what makes a high-performing sales team? Science offers valuable insights for sales leaders at companies of all sizes. Using data as a starting point, sales managers can create easy to use guides for sales best practices — and help their teams sell more and sell smarter.
Here are the key findings from four fascinating sales research papers, covering:
- Sales compensation and bonuses
- Personality traits of top performers
- Key performance indicators
- Performance goals vs. learning goals
1) Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis Of Bonus-Based Compensation Plans
You want your team to crush it. Your team also wants to crush it, but only if they’re compensated appropriately.
But what sort of carrot should you dangle in front of your sales reps in order to bring out their inner sales superstar?
Do bonuses actually inspire salespeople to go above and beyond, or do they not make a difference in the long run?
And is it better to offer smaller, quarterly bonuses, or one big bonus at the end of every year?
Business scientists from Yale and Harvard tackled this important question in their Do Bonuses Enhance Sales Productivity? study.
What They Did
The researchers examined 348 salespeople at a Fortune 500 company from 1999 to 2001.
The company sells a wide range of equipment, from cheap machines purchased by small businesses to massively complex instruments that cost six figures.
They tracked the performance of each salesperson, then they compared that information against the compensation structure.
What They Discovered
The main discovery was that the promise of a bonus does actually motivate salespeople and increase revenue. Specifically, a compensation plan that included a base salary, commissions, quarterly bonuses, annual bonuses, and overachievement bonuses inspired salespeople to raise revenue 17.9% over salespeople who were commission-only.
The study also found that quarterly bonuses are more effective than annual bonuses.
“In the absence of quarterly bonuses, failure in the early periods to meet targets cause agents to fall behind more often than in the presence of quarterly bonuses. Thus, the quarterly bonus serves as a valuable sub-goal that helps the sales force stay on track in achieving its overall goal; such incentives are especially valuable to low performers,” the paper explains.
They also uncovered a fascinating fact about the behavior of salespeople. When they’re far away from a quota, they tend to give up. But when they burst through a quota, they rarely stop there. Especially if they’re offered bonuses for overachievement.
If you want your salespeople to reach for the stars, you’ll need to build a bonus structure to help launch them there. Preferably one that rewards them every quarter. And your comp plan should include accelerators that encourage and reward overachievement.
2) Rethinking The Extraverted Ideal: The Ambivert Advantage
Everyone knows how salespeople appear in movies and in the imaginations of people who don’t talk to actual salespeople that often.
They’re slick hucksters with bottomless confidence who can work a room with ease and persuade anyone to do anything. They’re, in a word, extroverts.
But is that too simplistic?
A study published in the journal Psychological Science suggests so.
Despite a lot of research into the topic, no one has been able to find a strong correlation between high extroversion and sales performance.
Rethinking The Extraverted Ideal: The Ambivert Advantage proposes that the business world has been thinking about sales personalities the wrong way.
What They Did
The author of the study, Adam M. Grant, sent a personality questionnaire to outbound call center representatives. He examined the answers from the 340 employees who filled out the questionnaire in full.
From the answers, the employees were assigned a level of extroversion on a scale of 1.0 to 7.0, with 1 being the highest level of introversion and 7 being the highest level of extroversion.
What They Discovered
The introverts in this study earned an average hourly revenue of $120.10. The extroverts earned an average of $125.19 per hour.
But the “ambiverts,” those who scored between 3.75 and 5.50 on the personality test, blew both groups out of the water, earning an average of $154.77.
And those who scored a “perfect” ambivert score of 4.0 earned an average of $208.34.
Grant observes that while sales requires socializing and assertiveness, it also requires the salesperson to consider the “needs, interests, and values of customers.”
Ambiverts have enough extroversion to seek out prospects and get their attention. But they have enough introversion to consider how their behavior and words affect others. This one-two combo makes them the ideal sales performer.
Stereotypes about salespeople may be all wrong. Star performers aren’t always the brashest, loudest people on the sales floor. They are often people who love socializing, but are reflective enough to sympathize with the needs of clients.
3) Drivers Of Sales Performance: A Contemporary Meta-Analysis. Have Salespeople Become Knowledge Brokers?
What factors influence sales performance most of all?
“Selling” is often called a skill or talent, but really it’s a collection of skills.
Which selling-related skills are most vital for performance?
And which are overrated?
What They Did
In Drivers Of Sales Performance, the researchers examined a broad swath of published research from 1982 to 2008. They looked at the effect of around 20 performance indicators. Then they identified the performance indicators that actually have the greatest impact on sales success.
What They Discovered
They found that there are five factors that significantly correspond to sales performance.
1) Selling-related knowledge
This had the greatest impact. The researchers discovered that the relationship between sales performance and selling-related knowledge, when measured as a standardized coefficient, is .28.
Selling-related knowledge simply refers to a salesperson’s ability to size up a sales situation. Someone with a high amount of selling knowledge can answer questions like: Who are the best prospects? Who are the real decision makers? What solutions are the prospects really looking for?
2) Degree Of Adaptiveness
The relationship between degree of adaptiveness and sales performance is .27. Does the salesperson make the identical pitch every time? Or do they adapt their pitch to the prospect? Salespeople who displayed a high degree of adaptiveness were found to be more successful.
3) Role Ambiguity
Role ambiguity is a lack of clarity about your role. This was the only factor in the top five to show a negative correlation with sales performance. The significance was calculated at -.25.
When salespeople don’t know what they ought to do, they (understandably) perform much worse.
4) Cognitive Aptitude
Cognitive aptitude is raw brainpower. How well can the salesperson think, use words, and understand numbers? The significance here was measured at .23. This proved to be important, but not the most important factor for successful salespeople.
5) Work Engagement
How enthusiastic and motivated is the salesperson? Not surprisingly, salespeople who threw themselves into their job performed much better. This factor was found to have an identical amount of significance as cognitive aptitude.
The researchers state that this model can account for 32% of the variance in sales performance.
The ideal salesperson understands the sales process inside and out, is flexible, knows exactly what is expected of them, is smart, and loves what they’re doing.
4) The Influence Of Goal Orientation And Self-Regulation Tactics On Sales Performance
No one knows the importance of goals better than salespeople. But what kinds of sales goals really drive revenue?
The Influence of Goal Orientation and Self-Regulation Tactics on Sales Performance tested two kinds of goal orientations against each other.
The first is performance goals, or goals that achieve certain outcomes.
These are outer goals. People who value performance goals want to hit big numbers that impress their managers and colleagues.
The second is learning goals, or goals to achieve a certain level of skill or knowledge. These are inner goals.
What They Did
The study examined salespeople from a medical supplies distributor in the Southwest. During a quarterly meeting, the sales team completed a questionnaire that asked them about their goal orientation and self-regulation tactics.
The researchers then compared their answers to how they actually performed by the end of the quarter. They also tested how well the salespeople performed on three key self-regulation tactics: goal setting, effort, and planning.
What They Discovered
Surprisingly, a focus on performance goals was not positively related to sales performance and self-regulation.
However, those who focused on learning goals performed much better.
In other words, those who were dedicated to growing their talents outshined those who merely wanted to put up big numbers.
According to the abstract, “a focus on skill development, even for a veteran workforce, is likely to be associated with high performance.”
The learning goal orientation was positively related to the level of goal setting, with a standardized coefficient of .30. However, performance goal orientation was not, with a standardized coefficient of .11.
People who valued learning goals also put in more effort.
Those with a performance orientation fared a little better when it came to territory and account planning. The researchers actually found that it had a positive relationship in these areas. Territory planning had a standardized coefficient of .17 and for account planning it was .20.
However, the relationship was much stronger between a learning orientation and planning. The standardized coefficient for the relationship between learning and territory planning was calculated at .44. For account planning it is .37.
Why is this?
According to the researchers, “Individuals with performance goal orientations view a challenging task as a threat because there is the risk of failure that would demonstrate their inadequate ability.”
On the other hand, “Individuals with learning goal orientations … view a challenging task as an opportunity for growth and development.”
If you want your team to do their best, it’s not enough to give them ambitious quotas and praise their success. You should also provide training opportunities and give them opportunities to grow professionally and intellectually.
Your most valuable team members are the ones who are humble enough to know that they don’t know everything, but ambitious enough to stretch themselves at every opportunity.
Getting Sales Down To A Science
Sales leaders usually draw from three sources to make decisions for their teams: their experience, their gut, and hard data.
The next time you’re unsure of how to guide your team, you can turn to the data in these four valuable sales research studies for answers.
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