Sale Compensation Planning

Time Is Running Out For Sales Compensation Planning

In Sales Leadership by Jason Cortel

We are a little over one month into the fourth quarter. For many sales leaders that means that sales compensation plans are almost due. Your due date for the plans should by December depending on your internal approval processes and of course they should be rolled out at the start of the New Year. For those of you have finished the plans well done! For those who haven’t started yet, today is a good day to begin and you will need to move quickly. Below are the top five things to consider as you begin your plan.

Confirm the 2014 Sales Strategy. Is your company rolling out any new products? Are you trying to break into any new sectors? Have you developed your account growth strategies and what are your retention strategies? What do your demand generation and your inbound marketing initiatives look like? Ideally you want an emphasis on all three sales activities and a solid plan from marketing but understanding what the organization is trying to achieve is critical for your 2014 sales plans success.

Confirm and Modify Roles and Responsibilities. You can’t have effective sales compensation plans without effective job descriptions. Review the current job descriptions of your sales team, confirm that is the job they are doing, and make any necessary changes. You also want to think about your sales strategies and if your core team can sell those strategies or if you will need additional support. When looking for growth in new accounts, is anyone on your sales team experienced in those accounts or do you have any hunters? Identify how each of your current sales staff will support each of your sales strategies then determine if potential hires will be needed to fill the gaps. Don’t just jump to the details of the sales compensation plan you have to fully understand what each of the sales roles will be held accountable to.

Year in Review – How Well Did Last Year’s Compensation Plan Work? All plans require qualitative input and quantitative analyses. In order to do that you need to get input from finance, HR and your sales operations person. If you still haven’t resolved any reporting or data issues you may need to talk to IT as well. Talk to your sales staff to better understand how well the current plan focuses and motivates them.

Take a deep dive into the performance of the current plan. Look at the return that the plan offered and if the 2013 strategies were achieved. Is the pay-and-performance balanced or is tweaking needed? How well balanced is the upside-risk and downside-opportunity? Answering these questions combined with the qualitative input paint a picture of your sales compensation plan and should provide areas for potential improvement.

Engage a Team to Generate New Plan Ideas. Hold a couple of in-depth meetings with well-informed stakeholders that would include sales, finance, HR and operations. This team can help define the needs and consider potential solutions. For each need identified, the team should recommend solutions that consider best practices and weigh the benefits and downfalls. When considering best practices look not only within your organization but also within your competitors and industry. The output of these sessions would be the plan recommendations for you to consider.

Do the recommendations fit within your corporate culture and address the organization’s needs? Are the plans aligned for the sales roles you have in place? Does the plan’s pay level match the talent needs and does it offer the optimum level of sales aggressiveness? Does the plan address the sales strategy and is it measurable? Will the plan achieve the right level of acceleration? Are there any details that still need to be filled in? How will this plan be communicated and can the sales goals be established from the plan? Will the new sales plan drive the salespeople’s behavior in a way that is easy for them to understand and will it help them achieve optimal performance?

Test the Plan Using Cost Modeling. Don’t jump the gun and finalize your plan until you have tested it using scenario-based cost modeling. The last thing you want to do is to have to modify the plan because your strategies aren’t being realized. There are three scenarios you want to test the plan against: a bad year, an average year and a good year. How does the plan cost compared to last year’s plan? Are there any reps that win or lose and is that gap acceptable? Do the economics of the compensation cost of sales under the different scenarios make sense or do they need fine tuning before they are released?

Define the Rollout. This last step is the one that is most skipped and given the least attention but is really important. You have to carve out time to do this and execute it well. Create a presentation that addresses: What is the new plan, why are we making changes and how will it be measured? Make sure to share who was on the design team and hopefully you made sure they were well-respected within the group. This is also a great time to share how the team matters and their potential payout from the new plan.

Use your sales skills to sell them on the plan don’t just talk at them. Go the extra mile and bring clear plan documents and even a plan calculator to further aid their understanding. Hold off on the roll-out until the start of the year so they can continue to help you meet your year-end numbers. Make sure you are available if anyone has additional questions.

Start Today. This process for defining the sales compensation plan can be done if you focus. It must be the priority and involve the right people in the planning and design stage. If you have budget remaining for the year you could always involve a third-party to help drive the process and provide expertise. The sales compensation plan is the best enabler of your organizations performance, give it the attention it deserves. Time is getting short but you still have time to drive your sales organizations success for the coming year.

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Jason Cortel

Jason Cortel

Call Center Manager
An accomplished sales and marketing operations executive in demand generation, client services and technical support industries. Jason has proven leadership, strategic planning, and problem solving skills. He is recognized for having the ability to develop client-focused organizational cultures resulting in significantly higher customer satisfaction and retention.
Jason CortelTime Is Running Out For Sales Compensation Planning