Sales Compensation Blog

When you hire a group of hungry sales reps, do you ever envision them getting "satisfied" and not selling as much in years 2,3 and 4? Probably not however this scenario gets played out time and time again due to compensation plans that drive that exact behavior you fear. Your hunters have become farmers!

What is the cause of this phenomena? Comp plans drive behavior and the plans are essentially telling the reps to stop selling. A plan that is designed to garner new clients and retain customers will become ineffective if a company grows quickly. The compensation for account management may exceed the compensation for new business once a baseline of accounts has been established.

Adaptation to a quickly changing selling environment is necessary for young companies whose growth quickly outpaces stale or early stage sales compensation plans. Too many companies try to stick to old plans to reduce change only to see sales revenues decrease and sales effectiveness slowly deteriorate.

The answer lies in role definition. As a young company, it makes fiscal sense to have one sales rep take care of both new business and existing customers. If the customers need constant contact to remain a loyal customer, then you will have to compensate the rep for this work. However at some point you will need to separate these two tasks into separate job roles. Account managers and sales reps can be compensated in a way that creates a unified selling environment while at the same time bringing back into alignment that old adage, "gain for top performers and pain for the non-performers".

For more insight into creating sales comp plans please go to our website, MakanaSolutions.com