Easing the Transition to a New Sales Compensation Plan
So you’ve created a new sales compensation plan; one that addresses the challenges you’ve been having and fills in some of the holes in your sales team’s efforts. Good for you! Now, get ready for a transition period that may make you wonder whether this whole sales compensation plan update was worth it.
Trust me, everyone goes through this. Almost every sales manager I’ve talked to says they are shocked at not only the resistance they met when they rolled out a new sales compensation plan, but also at the length of time it took for the sales team to transition successfully and comfortably to the new plan.
From the very beginning:
- Go over specific numbers with your sales team.
- Show them how the new sales compensation plan will pay out for each of them.
- Host team meetings and break-out sessions with individual sales reps.
- Supply each salesperson with a detailed explanation of what you expect of them and why their support is important to the overall company goals.
For sales managers who are having a particularly tough time with helping their sales staff adjust to a new sales compensation program, I often suggest a time-limited transition period. This eases the burden of change that every sales team feels, especially when the sales reps weren’t involved with the development of the new sales compensation plan. This kind of time-limited transition plan might offer a middle ground between old sales compensation goals and expectations and those under the new plan.
Remember that your job as sales manager is to keep your team motivated and engaged, even during times of transition. So don’t be afraid to make a few allowances for them for a limited time if necessary.
For more information on transitioning to a new sales compensation plan check out my sales compensation e-book, Compensation Compass.
P. S. I’m still looking for participants for my survey on how business leaders are approaching the upcoming year. I’d appreciate if you’d take a few minutes to complete my sales management survey. Thanks!
Selling Your New Sales Compensation Plan to the Sales Staff
Introducing a new or updated sales compensation plan to your sales team can be a stressful event. You were probably involved in developing the plan, and based it on the challenges you’ve been facing. You’re aware of company policy, and you can see the goals the new sales compensation plan will ultimately help your company meet. You’re looking forward to the benefits and new challenges your team will face.
But your sales team doesn’t necessarily have this kind of insider knowledge of the upper management plan. One mistake I see all the time among sales managers in the roll-out of a new sales compensation plan is underestimating the need to sell the new plan to sales staff in an enticing manner.
It was tough for you to hammer out a fair and ambitious plan for the company. It will be even tougher for your sales team to implement a plan that they didn’t have a hand in creating or conceiving. So as you roll out the new sales compensation program, I suggest you get ready to do some selling of your own.
A good way to prepare for the negativity you’re likely to encounter is to list some of the objections you might have in their position. Are sales quotas higher than in the last sales compensation plan? If so, anticipate some resistance to this. Anticipating objections and planning your counter arguments and the reasons for the sales quota adjustments in advance will add value to your plan and instill confidence with your team.
Even if the income potential under your new sales compensation plan is increased by 50 percent, you will likely encounter objections. So be prepared for this from the beginning and spend some one-on-one time with each team member until all objections are answered. Little by little, you’ll narrow down your sales team to those who are willing to work under the new sales compensation program and those who aren’t.
Want more tips on getting your sales team exciting about your new sales compensation plan? Get my free ebook, Compensation Compass.
P.S. This week I’m collecting trending data on how businesses are approaching 2011. I’d appreciate your input on this short sales management survey. Thanks!
How to Motivate and Engage Employees with Sales Incentives
Keeping employees motivated and engaged is a constant challenge for sales managers, and sales incentive plans are a great way to accomplish this ongoing goal. An appropriate sales incentives can help you sales team to focus on achievement and easily overcome obstacles with an end goal in mind.
This type of sales incentive plan is essential for those sales reps who have key customer contact roles. I’m not saying that account managers aren’t an essential part of your sales team’s success every month, but most sales managers recognize that the sales reps who are on the front lines bringing in new business have unique challenges and needs. To meet these needs, establish a sales incentive plan that recognizes their extra efforts and unique skill set.
If you run into resistance from the non-sales staff when it comes to implementing the sales incentive plan for sales reps, make these employees aware of how important reaching new customers is for the growth of the business, and help them see the essential nature of the front line sales rep for their own job security.
Focus sales incentives on activities that will encourage sales reps to develop, to be part of a team, and to pursue career development, regardless of their experience or skill levels. I’ve seen many forms of sales incentives, including cash bonuses, recognition, gifts, trips, or time off.
Whatever form the sales incentive plan takes, it should help you to keep our sales team motivated and engaged on an ongoing basis, and if handled properly, will not ruffle too many feathers among support staff.
If you want more tips on leveraging an effective sales incentive plan check out my free compensation ebook, Compensation Compass or call me at (612) 267-3320 today.
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How to Set Realistic Sales Quotas in a Sales Compensation Plan
Sales quotas in an updated or new sales compensation plan have multiple benefits. First, they act as motivation and step-by-step guides to goal achievement for the sales team. They also offer a means of measurement so both the team and sales managers can keep track of progress, or lack of it. These measurements are vital to the success of your sales strategy and important information in terms of keeping the right staff on board.
But good sales quotas are also in place because as a sales manager, you must base your budgets on the sales revenue. This is a critical, non-negotiable number.
So when setting sales quotas, it’s vital that you set realistic goals for the sales team. Here are a few tips I’ve learned over the years in terms of setting and maintaining realistic sales quotas.
- Make sure your quotas are high enough so they are profitable to your company but still realistic for your sales reps to accomplish.
- Set the rewards for meeting your sales quotas high enough that sales reps will push themselves and work hard to meet goals.
- Keep your sales quota period short so that goals are measurable on a regular basis.
- Evaluate your sales quotas on a regular schedule so you can make adjustments or answer questions and concerns as needed.
With these steps, you should be able to establish sales quotas that are realistic while still effective at motivating your sales staff and helping you meet your revenue goals.
Read more about setting realistic sales quotas by getting my complimentary sales compensation eBook, Compensation Compass, now.
P. S. – When you purchase the book I co-authored, Business Expert Guide to Small Business Success, between December 14-16 you get bonuses worth thousands of dollars. Check out this great deal here.
Avoiding the Negative Effect of Sales Quotas in a Sales Compensation Plan
I’ve found that establishing a new sales quota as part of a new or updated sales compensation plan is an excellent idea. As you roll out your new sales compensation program, having effective and motivating sales quotas will help ensure your sales team reaches their goals and you reach your target margins.
Unfortunately, introducing new sales quotas isn’t always easy. You may find that some members of your sales team will have a difficult time accepting the new guidelines and goals. To help ease the pain of change among your sales staff, try to position your sales quotas as a part of what the company is doing to help them each achieve their personal sales goals.
In addition to positive positioning, you can also ensure an easier transition by creating sales quotas that are realistic to your sales team. Quotas that seem unachievable are de-motivating to sales reps, causing them to feel discouraged or even defeated before they even pick up the phone to the first prospect. On the flip side, when you set sales quotas too low your sales staff will easily exceed the goals and your budget will be blown.
If your new sales quotas are significantly different than the previous quotas, make a point to clearly communicate the details of the sales strategy with your sales team. Lay out the activities that are required for each individual to reach their goals. Don’t be afraid to trust your salespeople with information that will help them get on board with your strategic goals.
You should walk away from team and individual meetings feeling that each member of the team believes they can meet their goals and understands what is expected of them. As you implement the new sales quotas, keep the team informed of progress on a regular basis and watch them adjust to new goals with ease.
Need more information on how to set up effective sales quotas in your sales compensation design? Get my sales compensation eBook now.
Setting Realistic Sales Quotas in a Sales Compensation Plan
Assigning sales quotas as part of an updated or new sales compensation plan doesn’t have to be as difficult as people make it out to be. I’ve seen people get way too nervous about this process. It’s really quite simple, as long as you do your homework.
The basic idea is to assign sales quotas based on two major factors: historical sales and the responsibilities of each salesperson. First, you should take a look at the salesperson’s historical sales over the last two years’ revenue. Do they have a history of consistent strong numbers or do their results fluctuate depending on their state of mind, the changing times of year, changes in staff or policy, or other factors? This is important to consider so that you set quotas that are attainable while motivating the salesperson to perform at their highest level all the time.
Next, look at the responsibilities of the salesperson. Each person has a different role on the sales team, requiring different skill sets, training, and experience levels. One person may be more of a hunter, out full time on the front lines, while another sales rep may split their time between bringing in new business and managing accounts. The quotas for these two individuals should be different.
In addition, a salesperson’s territories may affect their numbers, and should therefore impact their sales quotas. A territory analysis will shed some light on the variations among territories that should impact sales quota levels.
I suggest that you meet with your sales team and discuss their expectations before you roll out new quotas. Afterwards, pull each one aside individually and discuss monthly, quarterly, and yearly goals. How can you set quotas to help them meet or exceed their goals?
Need more tips on setting sales quotas for your team? Get my free compensation ebook now!
Remembering Sales Managers in a Sales Compensation Plan
An effective sales compensation plan can motivate an entire sales team. It can patch up holes in a sales strategy, improve overall morale, and even turn around a failing department. However, without your people, the best sales compensation plan in the world isn’t going to do you any good.
As you create a new sales compensation plan, it’s vital that you remember your sales manager in the sales incentive program. Your sales manager is the driving force for the entire sales team, providing leadership, training and motivation. As you plan your updated sales compensation plan, be sure that you consider how best to reward your sales manager.
Fairly compensating and motivating your sales manager will not only trickle down to positively impact your entire sales team, but it will also garner the full support of your sales manager, who will feel appreciated and valued. Without the support of your sales manager, you are unlikely to achieve your overall goals.
Base the compensation for your sales manager in the new sales compensation plan on measurable performance and keep it in line with the sales’ reps plan, only scaled to illustrate the added responsibility of the sales manager. Keep in mind the abilities of your sales manager and use your sales incentives plan to motivate him or her to achieve a higher skill or productivity level.
As you create a sales compensation plan that values and rewards your sales manager, you will create a loyal team leader that will help motivate your entire organization toward higher profits and higher achievement.
Want to learn more about how to approach sales management compensation? Get my free compensation ebook Compensation Compass now!
Be Open to Splitting the Pie in Your Sales Compensation Plan
A new sales compensation plan is the perfect opportunity to examine your approach to compensation and the distribution of that compensation across your sales team. If you’ve previously run the sales team with a sales compensation plan that distributes commissions separately between various team members, you might want to consider a new sales compensation plan that allows the whole team to share in sales success.
This kind of shared sales compensation program can be highly effective in building a team mindset and helping sales team members motivate each other. I’ve seen standard sales teams that consists of a hunter, who brings in new accounts, an account manager, who develops and maintains the client accounts in a hand-off from the hunter, and a staff of customer service reps. Let’s use this fairly standard sales team as an example to take a look at how a sales compensation split might work.
Since the hunter is the primary driver of improved margins, you might pay 55% of the commission to this top performer. The sales account manager, who is vital to the maintenance of accounts and customer loyalty, even referrals, deserves another big chunk of the pie. But make sure that you are not compensating the sales account manager at the same level as your salesperson out on the front lines. You might compensate the sales account manager at a rate of 35%. Finally, the customer service rep might receive 10%.
Remember not to make this sales incentive plan too complicated, and be sure to monitor behavior and contributions so that one person isn’t being compensated unfairly compared to someone else who is contributing more to the sales team effort. But overall, a sales compensation split often works to create a sales team that is self-managed and motivated toward growth.
To learn more about setting up sales compensation plans for a team be sure to check out my free eBook, Compensation Compass.
The Benefits of Targeted Incentives in a New Sales Compensation Plan
When you update sales compensation program, you should incorporate some targeted sales incentive. It’s vital to recognize the efforts of your sales team, especially those that are hunters, bringing in the desired new business growth and selling targeted products.
But in addition to monetary bonuses and sales incentive plans, have you also left room in your sales compensation plan for non-monetary recognition?
If you don’t know what I mean by that, let me give you a few examples. First of all, it’s important to keep in mind that you can motivate salespeople with more than just money?. Most people, in fact, are motivated by praise, recognition, and intangible rewards. I see sales managers who regularly praise their sales team members or offer public recognition, but there are other ways to recognize the sales team’s hard work.
A training event at the beach with spouses, an extra day off work, a trip that can be won at a certain sales level—all of these are incentives that often motivate a sales team to a higher level of performance than money alone. Sure, a trip might cost you the same as a $10,000 bonus check, but the thought of celebrating with family or of having a fun time at a destination is appealing in a way that a simple check can never be.
Building in non-compensation rewards in your updated sales compensation plan is a great way to ensure that you regularly use these motivational tools, as well as a great way to let the sales team see what’s in store for the high performers above and beyond great commissions. Be sure to have a system for follow-up and clearly communicate the rewards to your staff and watch them strive to achieve their goals.
Want more ideas for incentives to motivate sales performance? Check out my complimentary sales compensation eBook!
Restructuring Your Sales Team with a New Sales Compensation Plan
Today I want to talk to you about a tough subject: restructuring your sales team. I wish this weren’t true, but sometimes, when you roll out a new sales compensation plan, you will see some areas needing major change that involve staffing changes.
A good sales compensation plan should address the issues you’ve been having with your sales team in terms of motivation and lack of results, as well as your overall revenue and profit margins. It should fill in some gaps, tie up some loose ends, and tighten the belt of the sales team, so to speak.
But in doing so, it may also call attention to some holes in the sales team’s performance. One instance I’ve often seen with a new sales compensation plan (in underperforming teams) is not having enough business to support everyone on staff. Many cases require downsizing the sales staff by 10 to 20 percent is necessary to make the new numbers work.
Often, the staff members affected by the downsizing are account managers or customer service types, people who maintain accounts but aren’t out on the front lines bringing in new business.
But let’s face it, your numbers weren’t what you needed them to be or else you wouldn’t have rolled out a new sales compensation plan. The new sales compensation program just highlights the areas that might have been increasing your costs or draining you budget. And often, this is the staff that believe they are sales pros but are really are order takers.
In some cases, you may also need to promote some salespeople or demote others role with lower compensation. Just remember that when it comes to making these kind of tough decisions, your company’s future depends on motivating the right behavior and getting the numbers you need. In the end, the price of discomfort is needed for the company’s survival.
To learn more about how to effectively restructure your sales team around your sales compensation plan get me complimentary sales compensation ebook now.
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