This article originally appeared in Telecom Reseller.
By Mark Donnolo
December 26, 2017
Sales compensation programs are powerful and can be complicated, especially for the telecom industry. The reason? There has been a move away from being utility providers to providing a range of communications and technology services. Because of this shift, sales leaders in the telecom industry are facing unique challenges-changing sales roles, pay competitiveness and selecting the right performance measures.
Consider our list of three “dos” below and several important “don’ts.”
You also have to understand what type of sales talent you need to accomplish these goals. Telecom sales roles have expanded to specialized roles (acquisition, account management, renewal, win-back) and sales support roles (system engineers, customer care). Each of these roles will require a separate sales incentive plan.
For each measure, the organization must define the level at which that measure will be tracked for the plan. For example, the organization may define a revenue measure for a sales rep at an individual level or a region level. Each measure will also be measured and paid on a certain timeframe, for example monthly or quarterly. The decisions around measurement levels and timing can have a direct impact on rep behavior. Measure too high and the rep may have little control. Measure too frequently and the cycle may be out of synch with a long sales process.
Mechanics create the connection between performance and pay; they can be divided into three types. A rate-based mechanic (also known as a commission) usually pays a certain percentage of revenue or gross profit, or a certain dollar amount per unit of sale. A quota-based mechanic typically pays a target incentive for reaching a specific quota or goal and may scale its payout above and below that performance level. A link creates a relationship and interdependency between two measures or mechanics.
Even though telecom sales leaders are facing unique challenges, following these three critical steps will ensure your plan withstands the ups and downs of the industry. Yes, sales compensation plans are powerful and complicated, but preparing a solid plan will reap rewards both short and long term.