What Is Sales Compensation

What Is Sales Compensation And How Does It Improve Sales Behavior

Keeping your sales team motivated and paying them well is one of the top priorities of most companies, whether they are service providers or product sellers. An efficient and motivated sales team ensures the growth of an organization. Therefore, employers develop or adopt several methods to encourage their sales teams and keep them motivated.

Providing sales compensation is the method employers use to align their sales teams with their companies’ sales targets and goals. Sales Compensation is the reward that a company pays to its sales team member in return for his/her services and it may be comprised of basic salary, incentives, bonuses or commissions.

A sales compensation plan is used by the employer to develop and promote ideal behaviors among the members of its sales team in order to make them develop and follow efficient sales strategies and to achieve the company’s sales targets.

A company should customize sales compensation plan according to its unique needs, its level of growth, and finances (affordable for the company and at the same time attractive for the employee).  The plan should attract and retain efficient sales representatives and align sales team’s goals with the organization’s’ goals.

Developers of sales compensation plans need to have complete knowledge of the company’s business, its aim and objectives, targets, finances, level of growth (whether it’s a start-up company or an established organization) and the overall market/industry situation and the company’s place in it.

Sales Behavior

Sales behavior is the set of qualities of sales personnel and strategies they use to sell a company’s products or services and it is the responsibility of a sales manager to observe sales behaviors and develop or promote behaviors that would ultimately increase company sales. However, in today’s competitive market, most managers only focus on achieving the targets and tend to overlook sales behaviors that lead to particular results.

3 Ways Compensation Plans Improve Sales Behavior

Research shows that there is a link between the sales compensation a company offers to its sales personnel and their behavior. Certain features of compensation plans develop and promote positive sales behavior that will ultimately augment sales growth. In order to avoid any drawbacks due to any issue with the compensation plan and to inspire desired sales behavior, companies may make use of following strategies:

1. Reward your employees

Devise a compensation plan that rewards your sales personnel for their efforts and try to pay the reward as early as possible. Employees love being appreciated and rewarded for their efforts and will work harder to help the company achieve its goals if they feel they are being paid and appreciated for their work.

2. Keep it simple

A compensation plan that enlists all the details clearly and specifically leads to improved sales behavior. Employers should design a plan that clearly mentions what benefits an employee will get for which services; there should not be much math involved in it.

3. Provide solutions

In addition to pointing out employee mistakes and shortcomings, also tell them what they lack specifically and what they could have done to increase their sales or to meet their targets. Employers can then develop and promote the desired behaviors among their sales teams.

Sales managers can adopt these ways to improve sales behaviors which will ultimately increase sales results. For discussing specific circumstances of your organization and to devise a compensation plan that will also improve sales behavior, contact CallidusCloud which provides professional services to resolve your problems.

Further suggested reading: Want Sales Performance? Coach Sales Behaviors

What Is Sales Compensation

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