How to use Incentive Compensation to Improve Sales Performance
Why is incentive compensation important? The key to your business’s success is sales and sales are dependent upon the performance of your sales team. The sales performance of your reps is directly linked to their motivation levels. Reps with higher motivation levels will perform better than reps with lower levels of motivation. Incentive compensation is a great way to motivate the sales team and ultimately improve sales performance. Therefore, using it is extremely important. You can improve the motivation of yours reps and the resulting performance by appropriately using incentive compensation.
Compensating the sales team effectively is one the biggest challenges that most businesses face today. You need to design incentive compensation that motivates your reps to win new customers and continue upselling to existing customers. However, coming up with the effective ways to compensate your sales team is easier said than done. You must provide them commissions that they find motivating enough.
Often, businesses find it difficult to appropriately measure sales performance. Under such circumstances, an automated compensation plan might be the best solution. Why? Most manual compensation plans fail to reward reps according to their performance. This causes the reps to feel underappreciated and ultimately their performance level goes down. By designing incentive compensation that rewards reps according to their performance, you will improve sales performance and ultimately come closer to achieving your company goals.
You’re bound to incur costly errors if you rely on manual spreadsheets and do not use incentive compensation. Ultimately, this will lead to unmotivated reps. You will be able to keep your reps engaged and motivated if you use automated incentive compensation with tangible rewards. Automated incentive compensation will also prevent the reps from questioning when and if they will receive their compensation. It is important that your compensation plan is desirable enough for your reps.
Your incentive compensation must reward reps for meeting/exceeding their sales targets. By doing this, you will motivate your team for sales success. You can significantly boost the performance of your sales team by providing them incentives. It is a known fact that management support and financial incentives significantly motivate sales reps. By making these two factors part of your incentive compensation, you will be able to drive increased sales and profitability. You can significantly influence the behavior of the reps by offering them financial incentives.
If you want your incentive compensation to be successful then it should be based on what you want your reps to achieve. For example, you may offer commissions based on the profitability of sales rather than on revenue. Another example of this would be offering higher incentives for winning new customers rather than for generating repeat business from existing customers.
A great way to improve sales performance is using incentive compensation. However, it is important for you to know the appropriate ways of using it. You can find out more about the ways of driving sales performance by clicking here.
Suggested Reading: Ending Commissions Overpayment: How Incentive Management Pays for Itself
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Top 10 Questions to Ask Your ICM Vendor
- How do I settle comp disputes?
- How many people can be credited for a single sale?
- Can your application keep up with my fast growing needs?
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