How well is your sales compensation working?
Sales plans can become overly complex depending on how a sales group is organized (product, client size, territory, legacy or new product). The mix of sales channels (direct, VARs, strategic partners) as well as the mix of products or services and the variety of experts needed to "close" the customer can further complicate matters. In some organizations, when it requires significant resources to track sales and calculate the payouts, the "too complex" flag goes up signaling that it may be
time to re-examine how well the current sales plan is working.
When rapid change takes place and the sales program strains to keep up with shifting priorities and new product introductions, or a huge sales success occurs with a new or existing customer bringing into question the fairness of the payout formula across the organization, a review may be warranted.
Are you making progress updating your company's sales compensation program?
If the only constant is change, then it must be a given that your sales and finance leaders are busy revising your company's sales compensation program, that is if they plan to keep the business ahead of the competition.
The one aspect of successful businesses that changes the most frequently is the sales comp plan, flexing to respond to changing business models, profitability forecasts, new product mixes, staff modifications, fluctuating markets and competitive pressures. This year alone we estimate that nearly 88% of companies will revise or change their sales plans in some way to focus behaviors on growing revenues and profits.
Are you getting the greatest return on your compensation dollars?
Getting the most out of your compensation dollars and boosting competitive advantage are two key attributes of effective sales programs. The secret is to achieve the right mix of base salary and incentive pay that is most appropriate for your business while also reflecting the total comp target in the market. This is an internal issue that must be decided. When structured correctly -- taking into consideration the job, product, sales process and what you are asking people to do -- you can strike a competitive advantage over the competition. This then creates the powerful tool you need to attract and retain key talent.