Companies regularly seek to increase the revenue without a bogus increment in the expenses. Motivation scheme is one suitable way for achieving this, and we have discussed the pros and cons of the plan in earlier chapters. Even in cases where targets are challenging, this scheme can work magic and shoot up revenues.
What you will learn in this article
- Big Incentives Don’t Guarantee Big Results
Simply spending more on commissions doesn’t ensure higher sales. If incentives aren’t strategically aligned with realistic goals and individual performance, they become a liability—not a growth driver. - Misaligned Targets Undermine the Entire Strategy
When sales goals don’t reflect broader company objectives, even a well-funded incentive plan will fail. Proper alignment is essential to drive the right behaviors and achieve sustainable growth. - Retention Starts with Fair, Motivating Plans
High turnover among new sales hires often signals unrealistic expectations or poorly structured rewards. Companies must invest in thoughtful, flexible plans that reward effort and promote long-term loyalty.
Companies pay huge commissions (in any form including bonuses as I analysed HERE) to the salespeople to achieve this aim. A good question to ask is; is it worth it? Well, maybe yes, maybe not. Nevertheless, all companies pay commissions or bonuses which might either be in the form of incentives or not, to all salespeople. Whether or not it all works as intended depends on the planning and execution of the plan. A dedicated team should be formed to oversee the strategy. Specific measures should be taken to ensure the efficiency of the system and task the sales management when necessary for further actions.
The analysis by this team is meant to expose the loopholes in the system and fix it fast. Well, it’s not all about the error part; stakeholders need the analysis to decide if a change in the scheme is required. Generally, all problems could be identified through this analysis.
While problems are different for companies, let’s have a look at four significant challenges almost all companies face.
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1. Huge incentives not yielding the expected result
When the total amount spent on incentives on the salespeople and the expected result is not one to be proud of, problem sets on. This is a widespread issue amongst major companies that adopts the motivation scheme as a tool to boost revenue. In most cases, the company has budgeted the amount to be spent on incentives and commissions. Therefore, if the planned budget is exceeded significantly without a significant rise in the revenue, it shows the incentive scheme has become a liability to the company. Without further ado, the company needs to make swift amendments to the issue.
2. Sales targets are not aligned with the company’s objectives
At the start of a business year, a company normally sets targets. These targets may be hard or soft and regularly reviewed to see to its absolute achievement. The design of the motivation scheme must be one that aligns with the set target and can go in line with each other. In the case one diverse from the other, issues set in. If the review at the end of the business year shows that budget was wholly spent and target is not achieved, then there is a manifest error with the system. This eventually runs the firm into a pool of loss risks.
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3. Exit of Salespeople just after they joined the company
Like the company, salespeople are looking to get some income that covers their needs. When a company invests on a salesperson, it will be a disaster if he leaves the firm. It is a plus for the competitor because he comes to them with loads of knowledge and skills he gained from the previous company. No company ever wants this!
The company must give salesperson time to settle and observe while at it. It is even more important to provide realistic targets that could be met. Asking too much of a salesperson demotivates him and may, in turn, seek for a job somewhere else. A company should only implement a motivation scheme that is juicy and flexible enough to keep salespeople around for a long period. In some cases, it might take up to 2 years before the investment manifests, and it will be unfruitful if they leave during this period. The reason for the displeasure that might cause salespeople to go could be the unfair nature of the incentive plan, or they feel their efforts are not rewarded accordingly.
4. Success is a randomness
Each salesperson has a unique skill and ability that makes him useful in its right. The sales management put in so much effort to improve the skills and make it useful for the sales process. However, they need to be studied well to determine their unique selling point. It is also crucial to keep all salespeople moving at a similar pace. Consistency is vital in getting the best out of salespeople. Failure arises as a result of inconsistencies in results. Generally, companies have teams that are turning up and one that is lagging. That randomness is a worrisome situation for all companies.
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