While there is continuing debate about the role of money in motivating today’s sales teams, compensation remains one of the largest factors in determining whether your sales team will perform to expectations (presupposing, of course, that you have the right people on the team in the first place). Many organizations regularly modify their sales compensation plans in an attempt to drive the right results which is stressful on an organization and points to an inability to find a plan that works. If you are wondering if your sales comp plan is the right plan, ask yourself these questions:
Performance – Are the majority of reps hitting their sales targets? This is a sign that the compensation and incentive plan is working, particularly when combined with other signs below.
Behaviors – Do your reps consistently demonstrate the behaviours that will make them and the sales team successful? Some comp plans have the unintended consequences of triggering self serving actions from the reps. Look beyond your top line results to see how the comp plan contributes to the right behaviours.
Margins – Is the cost of the sales function in line with the revenue? A high cost of sale will result from low sales, but can also arise when reps commission plans are too high relative to performance.
Employer of Choice – Are you able to attract the best in your business? When reps are set up to succeed and are paid well for performance, word gets out and the best talent in sector are interested in getting on board.
Manageability – Do you need someone working full time to administer your comp plan? If the answer is yes, that is likely a sign your plan is not working. Effective sales comp plans are simple to understand and easy to manage.
Devise the right sales comp plan and put it to work.
To your success!
Eliot received his B. Comm. from Carleton University and has been honored as a Top 40 Under 40 Award winner.
He co-authored Sales Recruiting 2.0, How to Find Top Performing Sales People, Fast and provides regular insights on sales team management and hiring on the Peak Sales Recruiting Blog.