| Optimizing Sales Compensation |
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Sales compensation is the connection between the sales strategy and sales performance. Designed effectively, the plan motivates performance to the plan in a cost effective manner. Designed or implemented poorly, the sales compensation plan can pop like a circuit breaker, resulting in miscommunication, underperformance, and turnover. The sales compensation plan should be evaluated and designed according to a clear set of principles that incorporate:
Sales Roles. What are the most important factors to emphasize in the plan for each sales role? Which should be paid for versus managed to?
Pay Levels. What is the right pay level for each role? When should we match market pay and when should we take a different approach?
Salary and Incentive Relationships. What is the proper proportion between base salary and target incentive? How should this mix vary and what job and sales process characteristics affect that mix?
Upside Potential. How much should top performers earn? Should we cap earnings at a certain level?
Performance Measures. What metrics are most important for each job? What are the priorities and how should they be emphasized?
Pay Mechanics. How should we connect pay with performance? When should we use a quota-based program and when should we use a commission or rate-based program? How can we simplify our message to the rep through clear plan design?
Quotas. What is the best method for setting quotas in our market? How can we avoid penalizing top performers and keep quotas motivational, achievable, and fair?
Sales Globe designs sales compensation programs for the sales organization and channel partners that drive performance. |
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