Does your sales compensation plan deliver the business results you want?
 Compensation Design Overview |
You can design a sales incentive plan that will motivate performance and be cost effective.
A good sales compensation plan is key part of your sales growth strategy.
Fewer than 30% of compensation plans are designed to align sales performance with company goals. However, management often fears that changing the plan will break up the team and high performers will leave. As a result, the staff becomes complacent, comfortable with under-performance and unmotivated toward meeting company goals. With a good sales incentive compensation plan design you can attract, retain and motivate top performers without breaking your budget.
Align your sales compensation plan to company goals.
You need a compensation incentive plan that keeps your sales compensation in budget, your sales revenues on target and your company on revenue plan. An aligned plan clearly communicates your company goals and rewards staff members who assist in achieving those goals. It focuses your staff’s attention on achieving sales results while building a high-performance sales team that is motivated and committed to your company’s success.
High performance salespeople want and deserve to be paid for results.
It is much easier to budget for results, and a good compensation plan will limit your loss for under-performance while rewarding over-performance in a way that produces a fair bottom-line return.
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Typical mistakes seen in sales incentive design?
We see two common categories where compensation plans fail. The first (often designed by ex-sales people) has built in “sales bonuses” and “accelerators” with little tie in to company goals or budgets. These plans encourage over performance but result in high sales compensation that erodes the bottom line benefit.
The second category (often designed by accountants) is designed to keep the “average” sales people happy and control costs. These plans work as designed — average people earning average income, but has little motivation for high performance and little pain for under performance. This results in below average sales results.
Why redesign your sales compensation plan?
Every industry and company has unique compensation needs. Your compensation plan will be customized to meet you unique needs and goals, accomplishing these 5 objectives:
- Maintain close alignment between compensation and the strategic company goals.
- Offer significant rewards for high performance sales people.
- Contain significant penalties for those who underachieve.
- Motivate performance.
- Be easy to understand and administer.
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Take action to update your sales incentive plan.
To learn more about how SGS can help customize a sales incentive compensation plan to fit your needs, goals and industry Contact Us.
