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Sales Conflict

Conflict is not a good characteristic of excellence in any organization, extraordinarily detrimental in sales. Conflict in sales is most often related to how compensation is structured and is heightened by gaps between what the sales representatives thinks they have accomplished versus what sales leadership thinks. If compensation plans are well structured, taking into account as much ambiguity as possible, sales conflict can be minimized.

Sales leadership has to protect the essence of the compensation plan so giving in to conflict too often can undermine the validity of the sales plan itself. What most sales leaders are trying to balance is the cost of sales (including rep compensation) and the gross margins achieved. If compensation gets too high as a result of soft conflict management, great gross margins erode by the time the bottom line is determined. Sales leadership compensation is often measured at the bottom line (as are overall team bonuses), so managing cost of sale and therefore conflict in this context is important to keep an eye on.

We'll look at a variety of conflict situations and possible ways to handle them. We'll also look a bit at how compensation plans fits into the success equation so excellence is achieved.

Basic Conflict (Compensation)

Most sales conflict revolves around how compensation plans are set out. Even the simplest of plans with focus only on revenue can result in conflict between sales management and sales reps. Disputes can occur on what deals are recognized, if they are fully recognized, if other reps (or a partner) helped close the deals, if special projects should provide quota relief and on it goes. How you manage the conflict (CEO or VP Sales) tends to dictate how much conflict you will have as a regular part of running the business.

Some basic conflicts that can arise include:

Keep focused on creating clear compensation plans that fully outline the use cases you believe would occur in your business. They do not have to be written into the actual plan document of each rep (although that is better), but they should at least be clearly known by all participants. When conflict arises, make sure resolution occurs quickly or you risk undermining the enthusiasm of the team (conflict spreads).

Advanced Conflict

If we look away from pure compensation issues towards how the overall sales model is structured, we can identify some additional areas where sales conflict can occur. The following highlights some of the key areas to be aware of when structuring the overall sales model or go-to-market plan for a product:

Testing for Conflict

As mentioned above, conflict is best avoided through clear definition of the compensation plans and the rules of engagement that surround them. You can test in advance for conflict by following the same principals as software development testing -- define the use cases and have someone run through the plans simulating what they can (choosing someone from Finance is a good resource to use) to see what the results would be.

Key use cases to consider include:

Putting some payout examples in the plan itself is a good practice. This way all reps understand what the rules of the game are and ideally what to expect when conflict is a potential.

Healthy Conflict

Some conflict can be healthy. Having multiple reps work on a large account competitively can be ok. It forces them to focus on the opportunity properly although you want to make sure one rep does not sabotage the others reps (same if a partner is involved).

Sometimes you may need to assign the best rep to work on an important deal regardless of the territory issues. Some learning opportunities are probably at play here so the assigned rep should work with the other rep to see how things should be done.

The best is simple and plain competition between reps for short term incentives. It's not conflict as much as it is healthy competition. Keep on eye on things, review forecasts, talk to the reps and things work out.

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