The following are a few tips and questions to consider when analyzing your sales compensation plan.
A SUCCESSFUL SALES COMPENSATION PLAN IS DEFINED BY HOW WELL THE SALES STAFF…
- Understands what the plan is intended to accomplish and how it is administered.
- Perceives the plan to be straightforward, and fair.
- Feels an ownership of the plan.
- Is challenged by the goals of the plan.
- Is able to articulate how the plan is aligned with the company’s vision, and business objectives.
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| How comprehensive is the sales staff’s sense of the economics driving the business?
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| Is anything wrong with the current sales results? If so, is compensation the right repair tool?
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| What history and interactions that have nothing to do with compensation plans and practices continue to hinder optimum performance?
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| What is the company specifically paying the sales force to generate?
- New business from new sources
- New business from existing sources
- Continuing business from existing sources
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| Should any compensation distinction be made as to:
- How the business is obtained; cold calling, referrals, principal or colleague generated.
- Where the business comes from; repeat/new clients, new territories, new market segments.
- Whether accounts are actively managed or not.
- Distinguishing goal and payout differences based on seniority/experience.
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| How does the company’s environment, management, territory distribution, and training impact performance and in turn compensation?
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| What is a tolerable level of compensation risk for a solid sales performer? For the company?
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| What compensation mix (base, commission, bonus, etc.) will attract the selling skills the company requires?
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| What compensation mix will stimulate improved performance?
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| Are there relevant windfall issues, or other business conditions that impact the perceived fairness of pay?
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