Effective sales compensation plan design is about more than pay
The purpose of a sales compensation plan is to drive specific sales behaviors. Specifically, behaviors that will align with desired business objectives. This seems obvious, doesn’t it? Yet, most companies find a disconnect between sales behavior and anticipated business results. How can this be fixed? According to Frank Cespedes, designing a comp plan isn't just a numbers game. While the numbers are important and sales reps definitely care about their pay, driving behavior is also about the entire rewards picture. Consider the numbers as just the output. Defining the sales role coupled with your customer’s buying journey is the input. When considering what the salesperson must do to succeed, balance the controllable versus uncontrollable factors that impact the sales cycle. As with all things in life, focus on what can be controlled. Then determine if the sales rep’s motivation and incentive compensation is appropriately linked versus the business objectives. Once you have built your sales compensation plan to drive the right behaviors, how can you track if your compensation plan design is working? If you are tracking results on spreadsheets, all you’re seeing are numbers. There are tools that can automate your sales compensation plan modeling and rollout and make recommendations to change behavior in real time. Watch the Harvard Business Review webinar we recently co-sponsored with Salesforce to see and hear Frank Cespedes, Senior Lecturer in the Entrepreneurial Management Unit for Harvard Business School, discuss how companies can rethink their sales compensation plans. Frank looked at the challenges businesses face related to sales compensation and discussed how companies can rethink their comp plans to encourage behaviors that best drive desired business results.