Sales Compensation Plans

Discretionary Bonus – Does it Fit to the Culture of Sales People?

November 11, 2022Vangelis Sakelliou

Among many different options sales management has in regards to the sales compensation plans, there are two main types (and many variations) we observe in sales organisations.

Discretionary bonuses and structured commission plans.

As discretionary bonus, I mean any payment that takes place to sales people that are on a decision of a sales management and is uncoupled by any quantitative measure or KPI. It can still be under them a qualitative approach, where the management can decide on the overall performance of the sales person and decide a bonus. The level of it is decided on generic and personal criteria.

Factsheet; How to Identify whether the Sales Compensation Plan is the Problem to Low Production

October 14, 2022Vangelis Sakelliou

We have all witnessed low production in sales. It happens!

And when it happens sales management blame sales people not producing enough, sales people blame the management that have big expectations, or they don’t support them as much as they should and the fights goes on and on.

What if there is another reason that happened? Have you thought that the compensation plan that is in place might be the main reason sales people do not produce? When was the last time you ran some basic analytics to check your KPIs of the system?

If you have a sales compensation or a commission plan in place, have a process to analyse results. If you notice any of the above, there might be that the design of your current system has a fault. A sales compensation operational person would help you running monthly analytics and evaluate the current system so you can adjust it if and when needed.

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3 main ways to assess your sales compensation plan

October 8, 2022Vangelis Sakelliou

There is no doubt, sales compensation plans which come mostly in the form of commissions plans today are very popular and are used extensively in sales organisations. They take various forms and in some cases we see plans that are well designed to meet the sales objectives of the company and those of the sales management.

In many cases different features and characteristics apply to the program to make it work for the benefit of the firm. If management for example wants to strengthen cross sales of additional products, then they may pay cross sales through the compensation plan.

The question though is whether one assesses the system and how often. Are there the right processes and teams responsible to evaluate the system and its effectiveness on a regular basis?

It is obvious the job is not completed unless there is an evaluation process of the current sales compensation plan in place.

But how can we assess it?

Quota Changes in the Middle of the Year; When and How

October 1, 2022October 1, 2022Vangelis Sakelliou

Does it sound familiar?

Especially for those in sales, we have all experienced the situation when in the middle of the year we realise that we have done already our target. Of course, the opposite many times occurs, whereby we are reaching the end of the year and we understand we will not make our target as we are far from it.

There are situations that justify for an organisation to alter the sales budget in the middle of the year, sometimes more than once. Targets are not settled in stone and it is a vibrant part of the sales organisation.

Here are some preliminary rules we need to follow.

Budget/Targets are there to stay: Changes should not happen, unless there is a very important reason to do so. The fact that a few sales people in the sales force are not going to make targets is not a reason to change them. If you are also realising all of your sales people are overperforming, is not again fair to change targets just because you realised you set the targets wrongly in the first place and you are going to pay more than you thought so.

Applying Different Sales Incentives Factors According to the Maturity of a Company

September 25, 2022Vangelis Sakelliou

One solution doesn’t fit all..

The same applies in the sales compensation world. Every company has different needs and different objectives, so copying compensation programs from others jeopardises the chances of running a successful program.

This also applies with companies that are in different phase of their growth cycle. Different motivation schemes apply to a startup compared to a company at a different growth or maturity stage. Each phase has its own objectives. As we said in many instances, a sales compensation plan shall be aligned to the plans and goals of the company.

A company at a startup phase has the challenge to stand at its feet, get the first couple of clients and start being recognised. In a growth phase organic cash flow is the main objective, the brand is somewhat recognised, the company is looking to expand rapidly. At a later stage when business is matured, customers are already landed, there is a matured brand recognised in the market, people trust the company.