Tag: Sales Compensation Plan – Analysis

I once sat and listened to a sales management meeting in a big sales organisation.

A few things I heard while seating in that room were, “Let’s give sales people more money, this is the main reason they are leaving the firm” while somebody else argued, “The poor commission plan is the main reason sales people are not reaching targets.

The easier answer to the problems of the firm according to those people was, money!

I wouldn’t disagree that the sales compensation plan is fundamental to a sales team but it might not be the only answer. The problem actually begins when the sales management overlooks the results and they are not looking closely to identify the main reasons behind the problems and the challenges the company faces.

Are you sure the lack of results is routed in the lack of offering fatty commissions? Are the people reaching targets or they are not just get paid regardless of the revenues they bring? If they are not producing, possibly they are not confident with the technicalities of the product they sell or for some other reason.

There are other managerial tools one can use to support sales.

Training – What is more important than understanding inside out the product you sell. Sales people must feel comfortable to understand the product, its value proposition and its Unique Selling Points.

Sales support – How much administrative work do sales people do? A sales team must support sales people to do their job, which is to talk to leads and prospects and work on their opportunities.

Tools – What tools to you provide sales people to do their job? Do they have a paid LinkedIn subscription, a CRM system, automated email campaign tools, etc.?

Marketing and Go to Market – Is the Marketing aligned with the sales effort or whenever the a sales person talks to a new lead, the effort is jeopardised by the wrong messages in the web site?

Coaching – some sales people might be less experienced. They need to be guided and coached. Don’t make the assumption they understand the game.

Other benefits – Do you support your employer’s life? Do they feel valued in the organisation? Sales people are genuinely hungry for success but they also need to feel appreciated as human beings.

My conclusion?

Yes, I still believe sales compensation is a key driver for sales success but as a sales organisation we need to see beyond the money factor.

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? 

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