Practical Tips For Developing an Effective Sales Compensation Plan – Part 2
Your sales comp plan is essential to finding and keeping your best salespeople. Striking the right balance, however, is not easy – you need to find the sweet spot between keeping your expenses low and yet your pros’ compensation competitive. If salespeople don’t feel incentivized by the plan, they’ll seek other opportunities or simply become complacent and stop growing your revenue.
Here is the second pair of practical tips for developing an effective sales compensation plan and incentivizing your sales talent to succeed.
Tip #3: Get Strategic With Rewards
Rather than just linking commission and rewards to net profit or total revenue, get strategic and reward the behaviours that your company needs. For example, if one of your overall goals is to secure more recurring revenue, then incentivise your reps to go out and get it by adding financial (or other types of rewards) to those sellers who bring in repeat customers. So long as you keep your reps in the loop, you can be flexible in how you structure these type of rewards, changing the behaviours you incentivise as the needs of your company change.
Tip #4: Don’t Fall Into the Trap of One Size Fits All
So, you’ve figured out a great sales compensation structure; time to roll it out as is to all your reps, right? Wrong! To be truly effective, sales compensation needs to be flexible so don’t fall into the trap of one size fits all. For example, you need to take product line and territory into account when creating the plan; you might need higher commission rates on a new product or territory at first to drive sales.
Also, consider a plan that changes with experience. Rather than throwing your new, inexperienced pros in at the deep end, start them off with a higher base salary and lower commission while they learn the ropes. Then decrease the base salary and raise commissions once the onboarding period is over and see their motivation and your revenue rise.
Here at Sales Resource Group, we provide our clients with the best-in-class sales compensation services, powerful training and market analysis. Contact us today to see how our consultants can help you attract, motivate and retain your highest-performing salespeople.