This is a continuation of our blog series, Designing Your 2018 Sales Compensation Plan. Want to begin at the beginning? Click here.
In my last blog I wrote about how different types of revenue (retained, penetrated, and new) determine the type of sales role required, and how that fits into the overall sales compensation design. Consider the cast of characters below, each of whom represents a different sales role seeking different types of revenue. (When describing sales roles and personalities, we prefer the canine model to the more common hunter/farmer metaphor because it’s more descriptive and brings the cast of characters to life.)
There is an abundance of sales coverage options for most companies to execute the growth plan, and the canine breeds represent the many options and characteristics of the roles that need to be defined and compensated. The illustration shows how three of the most common breeds are paid.
1. Dobermans are the Alpha dogs, always on the prowl for new opportunities. There are at least two types: the competitive steal Dobermans who are going after next big new account sale, and long term business developer Dobermans. The Doberman is motivated by financial rewards and may respond to significant pay at risk. But with that pay at risk comes substantial upside potential because a Doberman sees himself as a high performer. Many Dobermans will glance at their salary, focus on their target incentive, and base their lifestyle on the upside. In addition to pay, Dobermans are equally motivated by a sense of personal accomplishment and recognition by their peers, although most see themselves peerless. In organizations with good sales compensation plans, it’s not uncommon for a Doberman to make more cash compensation in a given year than his boss or even the president of the company. If he sees his earnings as capped, he’ll probably be prospecting for his next job with an organization that will give him the earnings opportunity.
2. Retrievers are bred as companions in the hunt. Unlike the Doberman they don’t prowl unbounded but instead look for opportunities within firing range of the current customer. They are typically responsible for retaining the base of current customer revenue, and more importantly for finding new growth within the current customer. The Retriever is typically motivated by money and will work diligently to hit her quota. With Retrievers, you don’t want to make the incentive out of balance and produce overly aggressive behavior. You want to weight the incentive to make it motivational enough to drive relationship management and development.
3. Collies are the ultimate lap dogs and the customer’s best friend. Collies are great business retainers because of their depth of customer understanding and level of service. The downside of all this friendliness is that Collies often lack the perspective to see a new opportunity even if it passes before their noses. Sales compensation for a Collie typically focuses on retaining the business and growing it to a moderate degree. Where the Doberman may have significant pay at risk, the Collie will have a significant percentage of base pay with nominal pay at risk to promote long-term relationship development. The caution on compensating the Collie is to make sure incentives drive behavior and that an abundance of base pay does not diminish its hunger.
Are you paying your sales breeds correctly?
Contact me at firstname.lastname@example.org with any questions.