Sales Compensation Plans - Sales Compensation Plan

Infographic; Performance Measures In Compensation Plans – How To Weight Them Effectively

October 28, 2020October 28, 2020Vangelis Sakelliou

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.

Is Every Sales Role Eligible For Compensation?

October 13, 2020June 2, 2022Vangelis Sakelliou

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 decide whether each role is eligible for sales incentives.

This seems obvious. If a salesperson sells a product, they deserve an incentive, right? That’s true – no salesperson will sell for you if they don’t have an incentive to do so!

But many companies overlook roles that aren’t directly involved in selling, but are still sales roles nonetheless.

For example, I once worked with a technology company that sold a complicated product. Because of the level of complexity, they employed pre-sales consultants who regularly met with the sales manager to strategize for the business. Although they didn’t have sales targets, their role was key in generating opportunities. We agreed to make the consultants eligible for sales incentives, and within a year they’d increased sales by twenty three percent.

Defining The Job Role Might Be The Answer To Any Commission Plan Problem

October 1, 2020November 10, 2023Vangelis Sakelliou

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) and keeps them engaged with their roles.

When sales management realises there is something wrong with their system, they blame the most visible factors for example the commission rate they offer. Often the reason lies somewhere else.

One of the first one needs to check is not an obvious one; is that of the sales role definition.

There are some common errors that I’ve seen show up again and again when helping companies design their sales schemes. Being aware of these will help you avoid the same pitfalls:

Not knowing who has a sales role

It’s easy to assume that only sales people who are out there direct selling to clients have a sales role. However, there are lots of other roles that contribute to successful sales, such as technical support.

Factsheet; Errors To Avoid When Designing A Sales Compensation Plan

September 10, 2020September 10, 2020Vangelis Sakelliou

The design process of a sales incentives and reward program includes a mixture of terms, conditions and rules that apply. I would argue that the process is very specific and its steps shall be followed and thought through carefully. If the process is followed, the chances are that these common mistakes will be avoided.

Look below for some of the most common ones that are commonly seen in the market. Those are key ones to avoid when implementing a system.

Quota Distribution And How It Affects Sales Compensation Programs

September 4, 2020September 4, 2020Vangelis Sakelliou

An essential part of each sales compensation plan is the territory allocation analysed in this white paper https://comp4sales.com/product/white-paper-territory-allocation-and-the-link-to-sales-incentives-programs/, and the quota distribution.

We have published a new paper https://comp4sales.com/product/white-paper-quota-distribution-and-how-it-affects-sales-compensation-programs/, deep diving into the idea of setting targets to the sales force.

Just having the greatest terms and condition in a program does not complete it without considering the revenues a territory can bring and its potential. An additional factor to consider is the capabilities of the sales person responsible for the region.

Below the introduction of our new white paper:

“Every time the end of the financial year rolls around, budget discussions become commonplace. The sales for the current year are almost done, and sales people are in a hurry to close opportunities in their pipeline. Everyone expects to have bigger targets for the next year.

Targets (interchangeably called quotas) are the standard by which sales people are appraised. How much of the target a sales person achieves is part of any appraisal, and knowing targets gives sales people a clear idea of how much money they can reasonably expect to make.”