Sales Compensation Blog

First, the organization needs to agree on the corporate strategy that will be delivered though sales.  Is the goal to increase revenue, further penetrate the market, increase profitability, improve retention, sell long term contracts?

Some of these goals are mutually exclusive and, unfortunately, you can't have it all.  You need to ensure that the strategy doesn't compete with itself. Also, look at the number of goals.  If you try to focus on too many of them, they get diluted and the company will not achieve any of its objectives.

Next, see if the corporate strategy differs from last year's.  If the strategy will remain unchanged, did the sales plan deliver the desired results in the previous year?  If it didn't, search for the disconnect and adjust your sales plan.  Analyzing your team's performance distribution may point to the source of your problem.  ( See our post on "Building A Performance Distribution Curve On Your Sales Team". )

Once the corporate and sales strategies are defined, determine how the various job roles support the strategy.  Defining job roles goes beyond a focus on revenue numbers.  A change in strategy may lead to adding job roles to focus on developing channel partner relationships or separating new sales from renewal sales.

Lastly, look at measures within the roles. Measures are things a rep carries a quota or goal for. It is imperative that these measures align to the sales strategy.  With its visual approach, Makana's alignment view helps the plan designer ensure that the measurements support the corporate strategy and that the plans are aligned along job roles.

Q1 is over. Did you get the results you wanted?

Now that the first quarter results are in and your team is eligible for their quarterly bonuses, it is important to evaluate if your compensation plans are delivering the results you wanted. If your answer is "no", it's time to make a mid-course adjustment.

First though, you need to be measuring results and sharing the details with your reps and management. If you can't measure and share, clearly that's another issue. Click here for help solving that problem.

If you aren't achieving the results you want, revisit your incentive plans. While there can certainly be other reasons such as the economy, poor goal setting, lack of training etc., it may be that your sales comp plans are directing unintended behavior.

Evaluate Plan Documents & Communicate with Reps
Begin your analysis by looking at your plan documents and talking with reps. Many companies with complex, convoluted plans find that it is common for reps to only "get" the plan after receiving -- or not receiving -- their quarterly bonuses. If you suspect this to be the case, check out our other blog entries that can help you improve your communication:

• Do you know if your sales team is motivated? Ask them.
• Communicating your Sales Comp Plan

Strategy Alignment
If you feel your team understood the plans correctly, the next thing you want to do is check for alignment to your overall business strategy and goals. Examine the key elements of the plans for each job role side by side.

The most important areas to check for strategic alignment here are:

• What is being measured? Orders, profits etc.
• Are these measures the best ones to support your business strategy?
• Does your employee have enough control to influence the customer in this area?
• Are the goals achievable based on the assigned territories?
• Do you have common goals for teams? Or are they working at cross purposes?

How many payout components do you have? Are your priorities clear?
The Motivator alignment view (shown above) provides a compact way to consider the impact of your plans.

We have found that executives who discuss the alignment of their plans while looking at them in this view end up honing their strategies as well.

To learn more about how to evaluate sales performance and some sales performance best practice tips please register for our webinar here: Sales Performance.