Sales Compensation Plans
Top 3 Ways to Improve Your Sales Compensation Plans
At the start of every year many businesses look to improve their current sales compensation plans or create entirely new ones. This is one of the most important activities carried out by top management during the year. Creating effective sales compensation plans can help you to attract top talent and motivate current sales reps. This will ultimately help you boost your bottom line. However, it is important for you to keep in mind that creating an effective sales compensation plan is a specialized skill.
It is important for you to remember that there is no one-size-fits-all approach for businesses to reward sales reps. This is especially true if you offer a diverse range of products and services. Some businesses pay commissions based on margin while others pay on sales. No matter what approach you use, the most important thing is understanding your company’s overall goals and creating a sales compensation plan that is aligned with them. In short, your sales compensation plan should have a strategic focus.
Unless your expenses are increasing, costs are going up, or margins are under threat, changing compensation plans is not required. However, you will often find your sales team requiring more administrative support, technical resources, and marketing. All of these things require money. Now, if you wish to make a profit then you’ll need to come with a sales compensation plan that adequately compensates your sales team and still leaves you with enough money to fulfill the administrative, marketing, and technical requirements of your sales team. Following are the top 3 ways to improve your sales compensation plans.
1. Reward top performers
The primary focus of your sales compensation plans should be on your top performers. The reason for this is simple—they bring in the biggest revenue for your sales team. According to Harvard Business Review (HBR), over achievement bonuses motivate top performers the most. Therefore, your sales compensation plans should reward the top performers for exceeding their sales targets. Research suggests that the top performers achieve an incredible amount of sales when they’re provided incentives for over achievement.
2. Involve sales people in the process and make small changes every year
Most companies make the mistake of engaging only the top management in the sales compensation plan design process. This is something you must avoid. In order to ensure employee involvement and idea diversity, engage people from the sales team in the design process. Another important thing that can help you to improve your sales compensation plan is making small changes every year. Everything in the world must evolve over time and your sales compensation plan is no different. The purpose of making small changes every year is improving employee motivation.
3. Use a compensation management software
The third and final thing that you can do to improve your sales compensation plans is use a compensation management software. Compensation management software will help you to automate sales compensation and reward your sales reps fairly and accurately. When it comes to Compensation management software, you won’t find many better than CallidusCloud Software Commissions.
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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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