Sales compensation and incentive programmes
The use of incentives for effective sales force management is a two edged sword. On one side the right incentive plan can inspire and energize a sales force to work hard and achieve challenging goals. Incentives provide sales people with the motivation to face the challenges of finding new business and closing sales. They also set expectations of what is important to the company. They can assist in retaining top sellers and are a powerful recognition of a sales person’s efforts. Incentives are an important means through which many companies reinforce a sales orientated culture.
On the other side, incentives create many sales force management challenges. Incentives can inspire mercenary, greedy sales forces behaviours that create short term sales but conflict with long term company success. Incentives can acutely reduce motivation and lead to turnover amount salespeople who feel they are not getting as much incentive reward as they deserve or feel others that are delivering less results and making more money. The incentives can remove the flexibility in a sales force that is required to meet market changes. Sales strategy changes (such as changes in customer responsibilities, product emphasis, or selling activity focus) that are in the companies best interest may meet resistance from sales people, if they feel the changes will reduce their personal income.
They can hinder teamwork among departments and comprise customer relationships as company employees feel that the sales force incentives are excessive.
The designing of Sales compensation and incentive requires far more planning, structure, measurement and delivery than the traditional bonus payment or percentage of sales often applied by sales management. The incentive is commonly cash based only delivering a high cost to the company.
Through our two decades of working with sales force’s in numerous industries, we have seen where incentives schemes can miss the motivational requirements of many team members. They fail to address the corporate goals and often fail to address the real business drivers.
All organisations are at different levels of maturity with changing demands on meeting the market. A well structured plan balances corporate goals, individual goals and team goals delivering the results required at lower costs than the traditional approaches.
The communication strategy of the plan and the ability for sales people to evaluate how their extra effort will be compensated is a critical part of the programmes on-going performance. Where sales people can review rewards, work through ‘what if’ scenarios and plan how to gain their rewards, the results for the company and team are significantly higher.
Sales Focus International can assist you in the development of a professional sales compensation and incentive plan through our seven step process. We can evaluate and design a plan to deliver the effectiveness you need. Following this proven, seven step methodology, we meet with senior management and proceed to: