For most businesses, their sales team forms the crux of the organization. Yet, it is determining the adequate compensation for the sales team that poses the greatest challenge for most businesses. Pay checks alone don’t work – we’re all aware of that. In order to keep the sales reps motivated, as well as reward them appropriately for their efforts, businesses need to figure out the best ways to compensate them.
This is where a sales incentive plan comes into play. They have the power to regulate the future growth of the business. However, that depends on how well-designed, and properly executed they are. The main purpose of introducing these programs is to create a high performance sales culture in the organization that is aligned with individual goals of the sales reps and the collective goals of the organization.
A well designed sales compensation plan allows you to set your sales strategy in action. It should include the following elements:
- A Strategy: This is the basic element of this entire formula. It will include the company’s sales strategy: what is the company looking to achieve, and how does it plan to achieve that?
- Performance Measures: You need to set performance benchmarks so the team knows what will be evaluated, and how will it be evaluated to determine their level of performance.
- Payout Procedure: What’s in it for the staff? This is where you essentially put down the compensation formula for payout – commissions, rates, prizes, straight compensation etc.
- Execution: This part details out how the procedure works, who is responsible, how are conflicts to be dealt with, and the things that aren’t covered in the plan.
All sales compensation plans need to be documented and distributed to the entire sales team. It should be used as a tool to effectively put the overall sales strategy into effect. When designing an effective sales compensation plan, make sure you consider these:
Your Star Performers Need Recognition
Your high achievers deserve recognition and appreciation for their efforts. When they perform above and beyond the average, they should receive compensation above average. Consider using uncapped commissions or overachievers commissions to keep them motivated.
Contests are Healthy!
When deciding the budget for sales compensations, make sure you set aside some amount for additional bonus. It could be anything from a paid weekend trip to Lake Tahoe, to a gift voucher for a clothing store. Make your employees compete for the extra incentive, and see them working for it!
Strive To Make It Better
Your job doesn’t end once you design a comprehensive plan for sales compensation. In fact, it has just begun! Like everything else, the first attempt may have loopholes, inconsistencies, mistake, and inequalities that may emerge once the plan is put into action. Consult an expert for a critical analysis of your model – work on improving the plan. Also it is a great idea to ask your sales reps for a feedback, and possible suggestions that may help in making positive changes to it.
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