Designing a sales compensation plan is not limited to just the decision of the commission percentage to give to a sales person when one closes a deal. Is not just the set of a sales target. There are many small areas that the sales compensation and incentives policy should address. Below the most important ones to consider.
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Factors To Consider When Deciding The Pay Mix
When designing a sales compensation program one of the first to decide is the Total Target Cash Compensation for a sales role. That means how much a sales person will get compensated in a year for reaching her quota.
The target cash compensation is split into two parts; the fixed salary and the variable part. A critical question is how much one shall give to the fixed and how much to the variable part? The pay mix, as it is usually called, can be 50/50, 60/40 or any other split one decides to have.
Which are the factors to consider for a larger fixed or a larger variable part?
Use the below infograph to help you understand more this notion.
Infographic; Avoiding an Ineffective Sales Compensation Scheme
One of the worst nightmares for sales management is to design a sales compensation scheme that is ineffective!
Such a program doesn’t align sales people to the strategy of the company, doesn’t make sales people to put an extra effort and makes damage to the sales objectives.
Below’s infographic shows some principles how to avoid such as a system.
Infographic; Incentives Plan Mechanics (thresholds, cap, multipliers, etc.)
A sales incentives plan is designed in a way to mirror the sales management objectives. To meet that, one needs to utilise various mechanics to tailor made the plan to one’s taste.
Find below an infographic showing the various mechanics one can use along with the reason and how to use them.
Infographic; The Backbone of a Sales Incentives Plan
Although a sales incentives plan is a mixture of individual terms and conditions carefully selected to reflect the corporate strategy, there are four base elements that the incentives design team or the sales management should always incorporate.
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