Factsheet; The Dangers of an Ineffective Sales Motivation Scheme

Business problems are sometimes not visible at once. And especially when we are talking about sales organisations, such problems show up with delay. Unfortunately the damage is already done!

Designing a sales compensation plan is an important and responsible work. Not only because a company relies on it to drive sales people to achieve targets but also to avoid unpleasant situations.

What I call as “ineffective” sales motivation scheme, is the one that doesn’t drive sales people towards behaviours we want. The dangers of an ineffective plan are a lot and undesirable.

Design your company’s compensation plan with care, think about every single aspect of it, from the terms and conditions to its operation. Only then you will minimise the risk of having a scheme that is…ineffective!

Factsheet; Consequences of an Indifferent Sales Compensation Scheme

What is worse?

A badly designed sales incentives system or an indifferent one? And how one could know that a sales compensation program doesn’t work?

The system needs to do its work; that of motivating sales people to sell more and meet the objectives of the team.

Watch out for the below problems/alerts that may occur when your sales incentives system is indifferent; that means it has no impact.

Factsheet; Setting The Right Level of The Target Cash Compensation

When you hire a sales person you need to do your maths before; that means deciding how much you are going to offer to this person. And when we talk about offering, we mainly refer to the level of the OTE (on target earnings) the sales person will pocket in a year. This is the sum of the fixed salary and the variable part (as for example commissions) the sales person will get.

It is called on target earnings because the variable part will be granted in full only if the goals are met, whatever these are! The total target cash compensation, in many publications seen as TTCC is always in cash.

The target cash compensation is different for each sales role (its range differs per role) and sometimes per sales person. The question though is how one decides how much to give to a sales person in TTCC? And which are the factors to decide that level?

There are various scenarios and methodologies to use depicted in the below factsheet. Reach out to us to discuss a methodology that fits your company.

Factsheet; Errors To Avoid When Designing A Sales Compensation Plan

The design process of a sales incentives and reward program includes a mixture of terms, conditions and rules that apply. I would argue that the process is very specific and its steps shall be followed and thought through carefully. If the process is followed, the chances are that these common mistakes will be avoided.

Look below for some of the most common ones that are commonly seen in the market. Those are key ones to avoid when implementing a system.

Factsheet; High Turnover Of Sales People And The Sales Compensation Plan

Are your sales people leaving the job after a change in the motivation plan? Do they show signs of being demotivated?

The Sales Compensation Plan in place is evidently one of the main reasons sales people change jobs. It is also quite common that many organisations do not face the fact.

It is not just because the commission rates have been reduced that annoyed sales people. There are many other factors that lead to dissatisfaction. See below our factsheet with some key reasons associated with the compensation program that cause high turnover.

Start by assessing your program; watch and study data associated to performance and payout. Then you will find the individual aspects of the system to fix.