A sales scheme is a complex system with many moving parts. For example, management must decide how much to pay sales staff, and how much of their pay will be from fixed versus variable salary. One of the key parts of an incentives scheme is the performance measures used by the system. In this article … Read more Types Of Performance Measures And How To Use Them
Anyone who manages a sales team knows that sales activity must mirror the overall strategy of the company. The point of sales activity is to help the company reach its goals – and the clearer those goals, the easier it is to build a strategy that works. Key Sales Objectives (KSO) are related to the … Read more The Position Of Key Sales Objectives In An Incentives Scheme
Defining a sales role is one of the first to consider when designing a sales compensation plan. The individual program one decides to apply, for example a tiered commission plan, applies to a sales role and not (most of the times) to an individual. Now that each role is defined and grouped, it’s time to … Read more Is Every Sales Role Eligible For Compensation?
The sales incentive scheme is key to the success of any company that relies on selling products or services. After all, the sales incentive scheme determines how much sales people stand to earn. The most effective sales incentive scheme is one that truly motivates sales staff to reach or exceed targets (depending on company aims) … Read more Defining The Job Role Might Be The Answer To Any Commission Plan Problem
There are specific facts and points one must consider when trying when trying to sell a plan to salespeople. To create market demand and sell products, salespeople are depended upon by sales organization today to achieve this market input/output. This is an essential part of how the system works in most marketing environments, especially in … Read more Pitching Your Motivation Plan To Your Salespeople
It comes the time when designing a sales compensation plan one needs to decide which performance measures to use and the weight they will curry in the program.
Performance measures are those KPIs a sales person is judged and measured upon and consequently incentives are paid for. Deciding the measures to use needs some thinking with the first rule being that these measures shall reflect the goals of the sales team.
As long as there is more than one measures used in the program, one needs to think about the significance each of them will have in the system.
The below inforgraphic gives some insights to help sales management choosing wisely the weight between the measures.
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.
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.
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