Charles Eames, the American designer who might be responsible for the chair you’re sitting in right now, once said, “The details are not the details. They make the design.” Eames also said, “Design is a plan for arranging the various elements in such a way as to accomplish a particular purpose.” Judging by those comments, Eames would have made a great (if perhaps somewhat artistically unfulfilled) compensation plan administrator.
His words are right on target when it comes to comp plans: the details of the plan are what determine the plan design. Managing those details – and there can be many – is not something best left to manual means or disconnected spreadsheets. Without automation, it becomes easy to miss details and thus have your plan design fall apart. And if you don’t begin the process of plan design without recognition of your objectives, you’re not using compensation management to its maximum effect – you’re merely employing it as a payroll system for your sales force – in other words, you’re doing it wrong.
As customers change – they do more research on their own, they feel time pressures more intensely, they want answers to more specific questions, they expect responses quickly – the sales behaviors of your sales force must change. We’ve all seen how the wrong behaviors can damage sales performance; it’s only logical, then, that the right behaviors should improve them. And since we know that incentives drive salespeople’s actions, it makes sense to use the commission plan to modify their behaviors – to their benefit and to the benefit of your company’s revenues.
Are you getting the most from your commissions structure? Probably not. Most businesses use commissions on a fairly shallow level, and in many cases even with automation they’re just employing a streamlined version of an earlier manual process. But automation provides agility, flexibility and speed that allow you react quickly when you spot areas where sale behavior must change; if you don’t use that lever to up your sales team’s game, you’re missing out on significant ROI and holding back your sales team’s performance.
The behaviors that commissions can drive are many and varied, and often all it takes is an idea to let loose the creativity in sales managers and compensation administrators. Here are five often-missed opportunities to incentivize behaviors – they may not be ideal in your particular circumstances, but they should help you start thinking about the behaviors your business needs to see from its sales team.
1. Training, training, training
To stay relevant, salespeople need to become subject matter experts – in other words, they need to work hard to ensure they know more about their products than the people to whom they’re selling. That means they need to make training part of their regular routine, a requirement that runs smack dab into the notion that training takes away selling time. Yes, it does – but it also should reward salespeople with better win rates and larger commission checks. Offset the perception that training is costing salespeople money by incentivizing training. Just as a pilot is required to train to maintain his or her license, salespeople need to keep learning throughout their careers. A bonus or accelerator based on the amount of training they do – especially when you introduce new products or versions – can encourage a knowledgeable sales team and ensure that customers’ questions are answered – especially the tough ones.
2. Use the tools
The one thing that most often ruins CRM, marketing automation, lead management, alerting, customer intelligence, and all other technologies purchased to help sales performance is not bad code, nor is it long implementations, or even bad data. It’s adoption: the simple refusal of the people technology was supposed to support to use that technology. Regardless of whether that reluctance was caused by a poor roll-out or the lack of sufficient pain to motivate change, bad adoption is not tolerable: management made the investment – hopefully through a thorough and thoughtful process – and sales needs to put them to use.
A small bonus for the use of technology solutions – especially newly introduced solutions – can help motivate salespeople to do the right thing. This is an incentive that need not be permanent – once your sales force has reached a threshold, move the incentive to support a new behavior. As with most incentivized behavior, it should become evident to salespeople that the use of the technology itself is a bonus that helps them make more and close more deals.
3. Create customers for the long haul
As the subscription economy grows in size, length of customer lifecycle is becoming vital for profitability. That’s going to result in new performance KPIs focused on different factors: customer experience, margin and customer advocacy (we’ll hear more about that in item five.). Although marketing usually makes the initial contact, sales plays a big role in laying the groundwork for long, profitable relationships with happy customers. They ought to be incentivized to not simply get the signature on the contract but to establish a relationship that leads to lots of signatures in the future. Since it’s hard to pay out compensation based on conjecture, and often impractical to pay it continuously over the customer’s entire lifecycle, find something you can base a bonus on. Use a survey at the end of the deal that explores issues of satisfaction, value added by sales and the quality of the relationship as judged by the customer – in other words, criteria that suggest a longer relationship. If your sales rep scores high enough, the incentive gets paid. (However, make sure that sales reps don’t advocate for a good score during the sales process – not only does that tend to skew the data, it harms the relationship and can backfire.)
4. Capitalize on up-selling opportunities
Salespeople already benefit from increased commissions paid on sales where they take advantage of up-selling opportunities. But as product mixes become more complex, it becomes harder for salespeople to carry the inventory of up-selling and cross-selling opportunities in their heads. That means a guided selling tool, like CPQ, is very useful in getting the most value from every deal – but it only works when salespeople use it. Take steps to encourage the use of these tools; incentivizing up-selling is not just about finding the up-sell but in successfully explaining it to the customer and getting it included in the deal. Bonuses or sales contests can help reinforce the one-two punch of guided selling and sales ability.
5. Help marketing with references and resources
Salespeople love having case studies and customer references at their disposal to help close deals. But these great resources don’t just materialize – they’re cultivated, created and curated by customer marketing teams, who depend on help from sales to identify likely candidates for this content. Without sales recommending likely customers, marketing is left sifting through a list and hoping for the best. If you can place a bounty on customers who would be ideal references, sales will have the idea of connecting them with marketing in mind when they hear about a successful customer or a unique use case. Not only does such an incentive boost the number of case studies and reference customer is your arsenal but it helps sales close more deals and, hopefully, turns into a virtuous cycle.