Sales Contests: Who Needs ’Em?
J.D. Parker May 8, 2013, 3:59 p.m.
I have a friend who runs a conference company down near Wall Street.
Every week, it seems to be having some sort of sales contest; the prizes are trips to Vegas, flat-screen TVs, tickets to sporting events, etc. It’s common practice in a sales business to have some sort of weekly, monthly or quarterly contest to try and motivate your people, to push them for the extra sale. We frequently discuss his latest plans to get his people to work harder, and I always ask him how his salespeople respond to this.
It seems they always compete, and it seems to drive sales. I have tried similar contests with my real estate sales team, with limited results. While my friend’s team is selling conference sponsorships over the phone—what I consider small-ticket sales, completed over a short number of conversations—in real estate, the values are significantly larger, and the relationship is the key. Transactions on the small side can be several millions of dollars, requiring far more than a few telephone calls. Deals happen face-to-face over a number of months or, in many cases, years. So what place does a sales contest hold in my organization?
As the real estate industry is set up, in which most sales and leasing agents are independent contractors working on 100 percent commission, it never made sense to me that I would somehow need to further motivate my agents by offering additional prizes or gimmicks to push them to make the extra call or to show up to the office. Surely living check to check is motivation enough? When I was a sales agent at the beginning of my career, I competed in a few of these office contests, and sure, I wanted to win, but I’ve always wanted to win. I didn’t change my day-to-day routine when these contests came around. I was motivated enough by trying to pay off my student loans and the personal loan my grandmother had made to me so I could survive in New York City my first year in the business.
It never made sense to me that in our business, which is built on long-term relationships, a sales contest could somehow move the bottom line. The average sales cycle of an investment property is four to eight months, depending on the motivation of the seller, and it generally requires an existing relationship of at least six months between the agent and the seller prior to the property hitting the market. So, unless I was running a sales contest that spanned a year or more, it would be very difficult for me to affect the overall volume of sales with short-term prizes.
As a manager of agents, I was taught very early on by my mentor that I was not to be a cheerleader and that the best agents need no motivation. That has aligned with my experience in the business over the last 10 years when interacting with my top producers during the obligatory sales contest. None of them had any desire to compete. They were already running as hard as they could and saw no need to change anything just to compete with other agents, especially those newer to the business. Of course top producers want to be recognized, ranked and awarded for their annual success, as they should be, but most of them seem to have no interest in participating in what they view as a sideshow.
The takeaway here is that successful real estate brokerage requires more than a short-term prize-oriented approach to sales. My agents are focused on understanding their clients’ long-term needs. Their time and resources are better spent solidifying those relationships than they are chasing a flat-screen TV. So, while I still hold the occasional contest for my sales agents, it’s almost always focused on the younger tranche of agents who have not yet established their businesses, as a way of propelling them toward the one thing that will make them money in the years to come: a solid client network. In establishing those connections, the needs of their clients are motivation enough to ensure the welfare of their own bottom line.
If you hire the right people, the best and the brightest, the ones who are truly self-motivated, sales contests are just a distraction on your journey to being a successful brokerage company.