Give Sales People the Responsibility of Setting their Own Targets; and Reward them accordingly

Does the idea sound too disruptive?

Almost any organisation is setting sales targets in a top down way. An executive committee is deciding the next year’s organisation target and then sales management is responsible to split it and set targets for each individual sales person.

Sales management should have a process that identifies and allocates the target level for each region, vertical or even target customer. As you may imagine that for this exercise to be correct and the split of incentives fair, the company must establish tested and validated methods for target allocation.

We all know that the high turnover of sales people in an organisation has mostly to do with the incentives scheme. Either the payout, the targets or its mechanism, are usually areas that upset sales people.

Sales targets are usually one of the main reasons for sales people to leave their job.

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Use of other Managerial Tools rather than Commissions to support Sales

I once sat and listened to a sales management meeting in a big sales organisation.

A few things I heard while seating in that room were, “Let’s give sales people more money, this is the main reason they are leaving the firm” while somebody else argued, “The poor commission plan is the main reason sales people are not reaching targets.

The easier answer to the problems of the firm according to those people was, money!

I wouldn’t disagree that the sales compensation plan is fundamental to a sales team but it might not be the only answer. The problem actually begins when the sales management overlooks the results and they are not looking closely to identify the main reasons behind the problems and the challenges the company faces.

Are you sure the lack of results is routed in the lack of offering fatty commissions? Are the people reaching targets or they are not just get paid regardless of the revenues they bring? If they are not producing, possibly they are not confident with the technicalities of the product they sell or for some other reason.

There are other managerial tools one can use to support sales.

Training – What is more important than understanding inside out the product you sell. Sales people must feel comfortable to understand the product, its value proposition and its Unique Selling Points.

Sales support – How much administrative work do sales people do? A sales team must support sales people to do their job, which is to talk to leads and prospects and work on their opportunities.

Tools – What tools to you provide sales people to do their job? Do they have a paid LinkedIn subscription, a CRM system, automated email campaign tools, etc.?

Marketing and Go to Market – Is the Marketing aligned with the sales effort or whenever the a sales person talks to a new lead, the effort is jeopardised by the wrong messages in the web site?

Coaching – some sales people might be less experienced. They need to be guided and coached. Don’t make the assumption they understand the game.

Other benefits – Do you support your employer’s life? Do they feel valued in the organisation? Sales people are genuinely hungry for success but they also need to feel appreciated as human beings.

My conclusion?

Yes, I still believe sales compensation is a key driver for sales success but as a sales organisation we need to see beyond the money factor.

Factsheet; Four Indicators Showing there is a Problem with your Sales Compensation Plan

It is a fact that sometimes the sales compensation plan in place fails. And this is ok. The question is not to create a perfect system, rather to create one that you can manage properly. That means, you are able to identify why it failed and where it failed; which exactly components are not working.

Only then you will be able to work on the specific feature of the system and change it.

In today’s pictogram you can find four main indicators showing there is a problem with the sales compensation scheme. Once you notice them, go back to your plan and see if the route of the issue starts there.

Then , fix it!

Infographic; 4 Indicators Showing There Is A Problem With The Sales Compensation Plan

Are you not taking the time to assess the sales incentives plan you have in place?

Think again and do it.

A lot of money is spent in a year in many companies according to our research that do not see the impact expected when it comes to motivating sales people to perform and reach targets.

Many of the business/sales problems start from the sales compensation plan that is in place. And some of the issues that are identified can be easily correlated to the incentives plan.

Let’s see some of them below that anyone can spot and associate with the mechanics of the current plan.

Sales Targets; Assigning More or Less than you Should

When it comes to assigning sales targets, we all understand this is a detailed and thorough exercise. As we analysed in previous articles, it is a process that requires the usage of certain quantitative and qualitative factors. 

Targets sometimes can deviate from the strict number that your “system” produces, by allocating to some sales people less and to others more than the ones generated by a formula. Allocating more or less than what you should is not a careless mistake as long as there is a justification behind it. 

Why though allocating different amounts to the calculated ones?

Your objective as a sales manager is not only to make the target of the team but to get the best out of your sales people in a particular moment. You don’t want to upset them but in the same time you don’t want to make things easy for them. Hence, you need to take sometimes into account reasons that cannot be factored in the initial allocation of the targets. 

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