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Aligning Sales Performance to Sales Strategy
The sales compensation plan is one of the most significant drivers of performance in the sales organization and represents one of the single largest expenses a company will incur, commonly tens or hundreds of millions of dollars. It’s a thin line that connects corporate growth and the rep on the street. It guides and motivates the actions of the sales organization more than any other single factor, trumping leadership messages, sales strategies, sales management, and sales training.
But if the plan’s message isn’t clear or to their liking, sales reps will interpret it in their own financial interest. As a corporate leader, you’ll get what you measure and what you pay for – and it may not always be what you expect.
Everyone has an opinion about sales compensation and everyone is an expert, yet few agree on the details. Sales, sales operations, human resources, and finance regularly engage in battles over questions like:
- Does the plan represent our business objectives?
- Are our highest paid sales people actually our top performers?
- Is the plan too expensive?
- Can we better motivate our organization to pursue the sales strategy?
- How can we promote more of a performance-oriented sales culture?
- Can we make the plan simpler to understand?
- Can we make the plan easier to administer?
- Are sales quotas penalizing our best performers?
- How can we set quotas that better represent the sales potential in our markets?
One of the first things our firm does when we look at sales compensation is understand the sales strategy. We ask: How should the priorities of the business be represented in the sales compensation plan? Once we understand the strategy and the C-level goals, we look at the data to see whether the incentive plan is driving performance, or undermining it.
I’m heading to the IBM World of Watson 2016 conference later this month to be a part of their Sales Performance Management discussions. IBM has combined their sales performance management solutions and built in the cognitive capabilities of Watson Analytics. They’re using the power of data to strengthen the connection between sales strategy and sales performance, leading us into a new era of cognitive business.
If you’re planning to be at the conference, I’d love to connect. Stop by the IBM Incentive Compensation Management booth. I can also be found in the IBM mobile app. Or as always, you can reach me at email@example.com.