The Six Basic Steps to Sales Compensation Success
There are a host of different approaches to developing a sales compensation program. Often, they depending upon the size of your sales group, the complexity of your sales and retention environment, as well as the time and effort that you believe it deserves. There is no absolute right or wrong answer.
Based upon our experience however, we believe that there are several basic considerations that generally point to success. Considering these factors are, to a great extent, at the core of an effective effort to either develop or improve your sales compensation program.
STEPRevisit your strategic goals and your company’s short and intermediate objectives. Crystallize what exactly you wish to achieve with the sales compensation plan.
ACTIVITYExamine goals and objectives by markets, geography, product, service, etc.
- Assess your current plan.
- Examine present salary, incentives and benefits. Study performance results and job descriptions. What are the strengths and weaknesses of the plan? What is important to continue and what needs to be changed.
- Assemble an appropriate team to advise on the new plan.
- Select and then gather the individuals and departments (stakeholders) who should participate in designing plan. As appropriate, select sales leaders and include them. Other people are HR, IT, sales operations, and finance.
- Formulate the new plan for management acceptance.
- Develop a draft plan that will meet company and salespersons’ needs. Test the concept and mechanics of the plan in actual scenarios as well as for its financial and cultural viability. Modify as necessary.
- Plan implementation.
- Roll out within company. Have all participants sign copies of plan after either using appropriate training/meeting or communication methods to explain and present properly.
- Evaluate and measure results.
- Assemble results for use in determining any changes to the following year’s plan.