Sales Compensation Plans - Sales Compensation Plan

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.

Factsheet; The Dangers of an Ineffective Sales Motivation Scheme

September 17, 2022Vangelis Sakelliou

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!

The Responsibility of Running a Sales Compensation Plan is Huge!

July 1, 2022Vangelis Sakelliou

A motivation scheme has the potential to bring terrific results in terms of increasing revenues, meeting goals, and spurring the sales team to greater heights.

However, a sales scheme can also have the opposite effect. If not properly designed, a sales scheme can demotivate people, harm the sales force, and have a dramatic negative impact on the sales numbers and productivity of the company.

There are three pitfalls that managers must be careful to avoid:

salespeople incorrectly misinterpreting the system (this is often a problem of lack of clear communication from the management).
salespeople using the system to their advantage when it fits their strengths towards selling certain products, but not using it correctly at other times.
salespeople noticing that the system hardly adds much to their pay packet, and therefore not engaging with it.

Five factors that may distract the design process of a sales compensation plan

June 2, 2022September 17, 2022Vangelis Sakelliou

A sales compensation program depends a lot on its terms and conditions. Its effectiveness depends on how one designs it. There is a specific way and certain guideline how to tackle all the different areas of the program. Some indicative examples are: One needs to decide which sales roles are eligible to be part of the program or find how much in cash that role shall be getting for doing the job, the total cash compensation split between a fixed and a variable part.

All these steps need a decision making process and if one doesn’t think this through, the program might be in jeopardy.