Types Of Performance Measures And How To Use Them

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 we’ll take a closer look at different performance measures and how to choose the right one.

Sales Schemes – A Complex Machine

A sales scheme should work to help a company achieve its aims in terms of revenues, market placement, and customer relationships. A correctly-designed scheme motivates sales staff and helps them reach and exceed targets that support those aims. An effective scheme is one that is challenging enough to be exciting, while still giving sales staff a decent chance of achieving their targets. A well-designed scheme fosters excellent performance and company loyalty.

On the other hand, a badly-designed scheme can lead to confusion, frustration, and lack of motivation. This in turn leads to under-performing sales people, and eventually a higher turnover of sales staff.

Because of the importance of the sales scheme, it is essential that management take their time in designing it. A motivation program cannot be drafted and implemented in a few hours. It needs to be unique to the organization and carefully designed to support its long and short term goals.

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The Main Rules Of Quota Setting

Quota, or target, setting is one of the three main elements of a motivation scheme (alongside terms and conditions, and territory allocation.)

If one of these elements fails, the whole plan is likely to fail. For example, if a commission system pays generous commissions, but the quotas are too high or not achievable, the sales staff will not be properly motivated. An effective scheme is one in which all three elements are in harmony.

In this article we will focus on quotas and how best to set them for maximum success. 

Who Is Responsible For Setting Quotas?

Assigning quotas is a skilled task that requires time, careful thought, research, and experience. Quota setting requires both a qualitative and quantitative approach.

The overall responsibility of allocating quotas lies with the sales management team, who must work closely with the incentives design team.

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The Position Of Key Sales Objectives In An Incentives Scheme

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 overall goal of the company, but they are shorter and often more challenging in nature. If you use them correctly, KSO can guide your team in the correct direction.

What Is A Key Sales Objective?

A KSO is a goal that is separate from the sales team’s main long-term targets. They are current key management objectives that are short-term, and there is not usually a target attached to them.

KSO are fully quantifiable so management can assess sales people’s performance against the current KSO.

How Is A KSO Different From A Main Target?

As we have seen, KSO are different in that they are shorter term than main targets. However, just like bigger targets, KSO can be:

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