Sales Compensation Plans - Sales Compensation Plan

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

December 17, 2022Vangelis Sakelliou

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

December 3, 2022Vangelis Sakelliou

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.

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?