3 Parts to a Sales Compensation Program

Sales Compensation is not easy.  Throughout my career, I have seen plans which break the sales budget to plans which do are insulting to the rep as they pay too little for a lot of work.  I refer to sales compensation programs as a form of art which requires a bit of science.

3 Parts of Sales Compensation Program

Science is pretty easy as it is understanding how your team should be selling your product and how it translates to the pipeline and corporate goals.  This understanding translates to key performance indicators (KPIs) which one can use to monitor rep performance and team performance.

The art plays in as you develop the actual plan and which KPIs enter that plan.  Average Deal Size, Number of Meetings, or Conference Attendees may not necessarily be the best indicators of sales.  With a mix straight sales revenue compensation (say 2%) and additional kickers and bonuses, the art of using plan structure for influencing rep behavior can take trial and error to get right.

Finally, the best compensation programs leverage transparency, reporting, and recognition. This is plan implementation where making sure the rep understands their KPI progress and how it translates to their paycheck.  Regular reporting and team leaderboard distribution are essential, motivating and drive revenue. A proactive analytics program can ease the calculation and payout of compensation at the end of the quarter.

As a specialist in the field, I encourage you to follow Spiral Analytics, my consulting firm dedicated to sales team optimization and small business promotion.  Follow us on Facebook