Five Steps to a Sales Compensation Plan That Works

  

Many sales managers revise their sales compensation plans each Fall for the following year.  In some cases good effort and intentions fail to produce the desired outcomes.

Here are five steps to a more effective sales compensation plan:

1)     Define desired outcomes and related behaviors:

Purposeful sales compensation plans are created with one goal in mind: affect specific behavior.  What behavior?  The behaviors that you most want to inspire.   For instance, if your sales force has the ability to sell two solutions, and solution "A" has a much higher profit margin then solution "B", then one desired outcome could be to increase sales of solution "A".   With this clarity of purpose, the commission schedule can be adjusted so as to increase emphasis and focus on solution "A" and, to the extent necessary, diminish time spent pursuing solution "B" transactions.

2)     Use precursors and consequences effectively: 

Precursors are anything that comes before the required behavior with the strict intention of motivating or inspiring the behavior.  Consequences are the result or what happens after the behavior.  Consequences are often incorrectly applied in that they tend to disproportionately focus on the negative.  However, consequences can also be visibly and measurably positive. Compensation is a consequence. There are three relevant aspects of consequences: 

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I have been a sales professional for over 8 years.  For a good part of my career I was an Outside Sales Representative.  My first outside sales gig gave me a territory in the Rocky Mountains outside of Denver.  The autonomy was great and so was being able to meet and engage with clients every day.  Trust me, I saw some amazing places and things but it wasn't all nice.  Having navigated in and around the mountains through rain, sleet, and snow, I wore my road warrior badge proudly.  My car was my (not so neat) office and the road my foe.  I'm sure many of you can relate.

Until coming to Treeline, Inc., I never really considered being an Inside Sales Representative.  Preconceived notions drove my hesitance.  My idea of an inside sales role meant taking a step down in my career.  My days would consist of hard starts and hard stops, a call center feel and the color beige, meaning boring.  Not that there is anything wrong with call centers or the color beige, it's just not my type of environment.  Many of you will think the opposite and feel inside sales is better and that's ok.  We all decide where we want to be for our own reasons but I hope we also take the time to be open and not limit ourselves from opportunities that could add value to the advancement of our careers.