Maximizing Sales Compensation
Jack Welch said “show me the plan and I’ll tell you how the salespeople will behave.”
Over 85% of companies use incentive plans for about 40% of total sales compensation. That's a lot of money. Yet in survey of seven hundred firms only 8.9% believed their comp plans “consistently drove selling behavior” and improved sales results.
NOT ALL REVENUE DOLLARS ARE EQUAL
Think about your sales compensation system. What does it tell your sales reps to maximize? Revenue dollars? Gross margin? If all sales dollars are equally desirable, you don’t have a strategy.
Sales compensation can be complicated and very personal (emotional). We’ll work with you to design a viable compensation plan that serves everyone and preserves profits.
Reasons plans fail
Benefits of Compensation Design
Align Compensation with Objectives
Ensure your business goals are aligned with the sales objectives and behaviors of the sales team.
Ensure Sales Managers Leverage Plans
Comps plan give direction and helps managers lead their teams to accomplish the company’s goals.
The comp plan will determine the quantity, quality, and kind of business developed.
Reduce Sales Turnover
Adequate compensation and incentives allow you to retain high-performing sellers and motivate salespeople.
“the Cobra Effect”
The British were concerned about cobras in India and gave a bounty for every killed snake. Soon, people began to breed cobras. The reward was scrapped and the cobra breeders set snakes free. The apparent solution for the problem made the situation worse.
A call center wanted customers helped quickly. Pay was set to the number of calls they took. Operators started to hang up on customers as soon as they answered the phone, thus bringing up their numbers.
Called “the cobra effect”, it happens because of unintended consequences. A well-designed compensation plan doesn’t have unintended consequences.
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