Blockchain for Sales Motivation and Company Financing – WHITE PAPER DRAFT

Blockchain for Sales Motivation and Company Financing – WHITE PAPER DRAFT

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An employer issued crypto asset can motivate the salespeople to work harder, to have high sense of ownership and to become more loyal to the company during and after the employment. At the same time such distributed ledger technology based system can provide cheap credit for the company.



The audience of this white paper

This document is for VCs, angels, board members and CEOs who are facing challenges in sales motivation and/or short-term company finances. The involvement of blockchain technology can provide new solutions to some old issues specifically in IT related and startup environment.

Typical problems in sales motivation

There can be many issues in sales staff motivation but let me highlight three major problems with salespeople that managements are facing today in sales:

  1. Short-term thinking
    Most salespeople are motivated by tangible motivators such as base salary, commissions, target related bonuses etc. For them the best money is the quickest money even at the price of later disappointed clients. Most salespeople would close a deal as big as possible without considering the long term interest of a client since there are no long term considerations in his motivation system. In high-added value services it often takes a longer period of time for a client to realize that the service sold to him was overpriced or oversized. But when such realisation happens the client relationship suffers an irreversible damage or ceases to exist.
  2. High sales staff turnover
    Depending on the industry it is safe to say that usually the highest staff turnover is in the sales department. Without a deep analysis let’s just say that the average sales job requires less qualification and more depressing workload than other positions at a company. And these circumstances (among others) lead to high HR fluctuation among salespeople.
  3. The lack of sense of ownership
    If an internal employee doesn’t have some sense of ownership that can have a short-term impact on team spirit, reliability, careless usage of tools etc. Such internal attitude is damaging but easy and quick to detect, isolate and solve. But if a salesperson does not have the necessary sense of ownership that can have a long-term impact on client relationships, customer loyalty, brand recognition and revenue. There are many sales communications that are hard, illegal or impossible to quality control. Such as personal meetings, phone calls, instant messages etc. Hence it is hard and long to detect, isolate and solve damages done by demotivated salespeople who does not have regards of the company’s future.

Failing traditional solutions in sales motivation

There are certain traditional ways of solving problems in sales motivations. Below there are some of the most common approaches to tackle sales motivator issues:

  1. MLM-like intangible motivators
    MLM systems are infamous of creating motivation systems made of hypnotizing intangibles. MLM systems make you believe that you can make it if you work hard enough. (Presenting wealthy role-models who made it, celebrating the top achievers in sports arenas, exhibiting your future bonus Ferrari, promising double payouts over sales targets etc.) There are special prerequisites (sales team size, company size, etc.) to create such motivation systems that are unavailable for most companies.
  2. Generous compensation packages
    Money is not always a good cure and often it is contra-productive offering huge compensation packages for salespeople. If the compensation is significantly beyond the average needs of a sales colleague the abundance of money statistically takes away the drive. On the other hand the ever-shrinking margins limit the management’s ability to overcompensate its sales team. (Not to mention that it is not proven that short-term money alone could create the necessary sense of ownership and loyalty towards the company).
  3. Shares, stock options
    Since ancient times the best motivator of the workforce is ownership or at least the promise of it.
    If a salesperson is shareholder of a company he cares about the future of the company and his investment in it. He wants the best things for this company: long-term relationship with its clients, good team spirit and the best use of its market opportunities. Today many companies offer stock options for their salespeople as a compensation of achieving targets. In this case stock option means that the sales invests their work today and the result of the work could qualify them to become future shareholders. This requires partly compensated hard work today, long term thinking and patience (which means trust in the future of the firm). For publicly traded companies this is a way to go.
    But for small companies and startups before an IPO stock options or even upfront shares are shaky promises. There is no or limited market for their shares and definitely no secondary markets for the stock options of such company. (Not to mention the fact that administration of ownership changes of a private company’s shares or stock options require expensive and extensive legal and notary services.) So from the salesperson’s point of view what could be the benefit of holding a microscopic fraction of a company’s stock options or even shares if there is no feasible way of trading? Moreover IPOs are few and far between and it is impossible to predict when they could happen or would happen at all. Anyway most sales people could not care less of a could be IPO 5 years from now. If we want our sales to work hard today we must give them the sense of ownership today. If there is no feasible financial way out (quick exit), then our promise of ownership, the motivator, weakens and fails.

Blockchain and the sense of ownership

Many companies use point systems to measure and motivate their sales team. Such points can be achieved by closed deals or the sales of preferred portfolio items, etc. and can be lost by time or not meeting certain quotas… etc. These points can be regarded as IOU tokens of those companies where the point-system administration depends on the company. Hence trading and secondary markets are limited or restricted.
With blockchain technologies a company can issue a crypto asset based point system that represents certain quasi-share like promises of the company. Since all related characteristics of a crypto asset can be made transparent a trustless environment can be created. (quantity of issued tokens, number of holders, market price, trading history etc.).

At each period of payouts salespeople can be offered the choice of receiving their due commission in cash or in a quasi-share like company IOU. In the days of negative interests and unpredictable bluechips many salespeople would take the opportunity to invest (leave their money) in a company where they can actively influence and benefit from the success of that enterprise. Beyond having the most means to increase revenue salespeople have the most information and the most accurate estimation of any possible revenue growth of their own company.

Beyond creating the sense of ownership among our sales staff the crypto asset issuing company can get cheap financing for its operations.

Use case (example)

Acme Inc (fictitious entity) had 1 million USD revenue last year. Acme Inc has 10 salespeople and quarterly 5% of its revenue is paid to the sales team as sales compensation (commissions, bonuses etc.).

Acme Inc issues (1 million) Acmecoin, a token of IOU, that represents certain promises of Acme Inc toward any holder of the coin (crypto asset).

Acmecoin promises

  • The number of issued Acmecoins are always limited to the amount of last year revenue of Acme Inc. (preventing diluting the value of the crypto asset)
  • Annually each Acmecoin holder receives the proportionate amount of Acme Inc profit – a sharelike – dividend payout feature. (Even if Acme Inc has a very weak EBIDTA margin of 5-7% that is way beyond most available market ROI for small-investors hence it is likely that most employees go for such investment opportunity with their surplus income.)
  • Quarterly Acme Inc offers to purchase back Acmecoins at face value.
  • Sales people can freely decide if they want their due quarterly commissions paid in Acmecoins or in cash.

Ways of trading Acmecoin

  • Salespeople can earn Acmecoins by regular sales activity as the quarterly commission payouts can be partly or fully in Acmecoins.
  • Salespeople can freely trade their Acmecoins among each other or with any third party at any given price.
  • Anybody can buy Acmecoins from any Acmecoin holder who is willing to sell on crypto-markets or OTC.
  • Acmecoin can be exchanged for anything that the two parties can agree upon
  • Acme Inc purchases Acmecoins at each quarter by offering face value price, this would offer the minimum of 90-day free credit for Acme Inc.

Summary of benefits

Such sales motivation crypto asset system can create:

  • the necessary sense of ownership among salespeople
    (long term thinking, loyalty, interest in smooth operations, team spirit, interest in sales team development etc.),
  • stable passive income for asset holders at a verifiable profit rate that they can positively influence by working harder and most efficient,
  • short-, mid-, and sometimes even long-term finances for the company
    (if 20% commission is paid in Acmecoin that is 1% revenue worth of free credit for the company at the price of 1% profit),
  • a first hand feedback for any board about the reliability of sales forecasts,
  • disciplined ex-employees (as long as they remain asset holders they maintain their interest in the success of Acme Inc)…

Crypto assets

Crypto assets are blockchain based unforgeable, tamper-proof digital tokens that can represent any promise of an entity. (Such as a bond or a share or any type of IOU.) Easy, fast hence cheap to trade or exchange. Easy and fast hence cheap to check their quantity and velocity (number of issued tokens, number of holders, trade history etc.) Basically a crypto token based company IOU can offer all the benefits of an IPO without all the expenses and fuss.

Further considerations

There are many variables and decision points in such blockchain based sales motivation system that must be structured and fine-tuned during a consulting project before the launch:

  • Blockchain readiness – assessment (IT culture, legal concerns, HR survey etc.)
  • System introduction to sales team (internal PR),
  • Suitable crypto 2.0 platform selection,
  • Jurisdiction compatible naming conventions
    (investment vs reward system, loyalty points vs. crypto assets, dividend payouts vs. revenue share, etc.),
  • Secondary market regulations,
  • Fiat currency vs. crypto asset exchange facilitation,
  • Best and most feasible ways of revenue share / dividend payout,
  • Introduction of a fiat pegged crypto asset for trading in crypto-exchanges with 24-7 exchangeability,
  • General risk assessment,
  • Cyber security,
  • etc.