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!

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

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.

Visit my Amazon store here, and get a book that will show you how to design and assess your plans!

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.