Creating the “Right” Environment

In an effort to “align” salespeople to the goals and strategies of the company, many companies are developing sales compensation plans that are specific to the sales role and customer/territory situation that the individual is working in. This customized approach works particularly well within a framework that applies a common and consistent mix, target total compensation and measurement criteria relative to each role.

In the framework approach, “individual” compensation can be targeted to generate incentive payouts that are appropriate for the results generated (both from a revenue and/or margin perspective), a behavioral or activity requirement as well as tied into the amount of account management versus direct selling inherent in the role.

In order to attract and retain the best salespeople, organizations must have a clear understanding of the following:

1. What kind of salespeople do we want to attract? This goes back to the sales strategies mentioned above. If you want the top aggressive business developer that is going to scour the market to get their hands on every piece of new business, don’t create an environment that encourages and rewards non-sales activities. Compensation should be driven by commissions, with significant and multiple accelerators for overachievement. Also, “top hat” incentives may be used for delivery of strategic or identified high potential accounts. Conversely, if most of the business is coming from existing customers, a very different incentive program is needed. A focus on growth, management of the “block” and margin on existing business will provide better results. If you structure compensation so that it sends mixed messages or reinforces the wrong behaviors, not only will you not get the sales results that you are looking for, but you may drive away the very people who can help you to achieve your goals.
2. What makes people unique is the fact that they don’t perceive or react to the same stimulus in the same way. Therefore, how can we expect that one sales compensation plan is going to motivate all salespeople? Sales managers are often frustrated because the compensation plan won’t let them pay the better people more money, so they find ways around the plan to deliver more cash to the high performer. Top performers should have their own plan that is focused on overachievement and rewards them handsomely for delivering the results that you need.
3. Depending on how your sales force is organized, you may want to consider utilizing your best salespeople to attack strategic or high potential customers/markets. Often sales managers try to keep the best people who are delivering the consistent results on their accounts, while challenging a less skilled salesperson to go after the tough to land accounts that could lead to exponential growth. Instead, consider transitioning existing customer accounts to other salespeople with support from the top performer and then focus them on strategic opportunities with big payouts if they deliver.
4. The high performing salesperson is not only able to bring in the business, but typically they can also milk the most out of the existing customer base. Rewards for top performers in existing accounts should focus not just on delivering what they did last year, but on incremental growth or use multipliers for new product/SKU introduction, increased profitability of the “block” of business or incremental margin.

Sales compensation however is only one piece of the puzzle in attracting and retaining top performers. Most high performing salespeople are only prepared to move from one company to another if their prospects for success are increased, or there is an opportunity for a better sales/work environment. Factors that influence whether a top performer stays or leaves to go to another company include:

1. Input: The highest rated factor in research that identified things valued by the “superstar” sales person was information. Most wanted management to share plans, goals, strategies and direction to allow them to position themselves for success with their customers. Some progressive companies have begun to use their top performers as an advisory group to “bounce” ideas off, review new strategy or for input on new product introduction. In this way, they keep the “key” salespeople as contributors and also benefit from their experience and expertise with customers. Who knows better what the customer wants, than your best salespeople who are talking to them on a regular basis?
2. Communication:  Along with input, the need for communication from field sales management or the head office is paramount to keeping top salespeople in the fold. Most high performers who leave to go to a competitor cite a lack of communication or direction as an important factor in their decision. It is too late when the person has mentally severed the employment relationship to begin trying to communicate with them.
3. Measurement & Tracking:  A critical factor in retaining key sales people is ensuring that they feel that they have been treated fairly. One area that contributes heartily to supporting fair treatment is the degree of confidence that the top performer has in the information that you provide to him/her. If there are questions about the accuracy of the sales performance information that the company provides the individual, then they begin to question everything. In addition, if the superstar spends an increasing amount of their time reviewing the numbers to ensure that they have received everything that they are due, then they are not spending that time in front of the customer doing what they do best…selling!
4. Training:  Unlike the new recruit, your top salespeople shouldn’t need to sit through the standard sales skills training (even if you want to send them just to justify the cost!!). However, sending the top salesperson to industry events to increase their strategic knowledge, or getting them early training on the latest technologies to secure their buy-in and capability to adopt new ways of selling can pay huge dividends.

Recognition: One of the benefits of being on top is the recognition that the individual receives from management, their peers and the customer. There is an old saying, “Nothing sells like success”. The salesperson that achieves the top position in the company expects that they will be recognized. They want some public display by the company that demonstrates that they appreciate the efforts and results produced. 

Whether it is in an industry magazine, newspaper, company/customer newsletter or any other communication medium, take the opportunity to make a big deal out of the successes of the top salespeople. Not only will they feel better about the company, they might be able to parlay their success into increased leverage with their customers and the other salespeople will see what is in store if they achieve the same level of success.