8 years ago
April 13, 2016

3 Questions About Sales Compensation

You need to ask yourself these questions as you design or update your sales compensation plan.

Rhys Metler

As a sales manager, you know how important it is to implement an effective and valuable sales compensation package. Sales compensation packages are the crux of the successful sales team. If your sales people do not feel adequately or fairly compensated, they will not stay on your team for long.

As you develop or update your sales compensation package, it is important to look at the factors that will make the plan work. Sales managers know that the design of the plan affects your sales results. You need to ask yourself these questions as you design or update your plan.

Does the sales compensation plan integrate smoothly into the business goals of the company?

For example, if company goals are to expand sales into new markets or territories, the compensation plan needs to reflect this and provide incentive to meet those goals. Any objective that the company has developed into the strategic plan will be measurable. As a sales manager, it is your job to develop sales objectives to help meet the company goals and objectives, as well as putting together compensation plans that will provide motivation and incentive for you sales team to meet those goals and objectives. The plan should include incentives that will motivate the sales force to work toward helping the company meet its goals.

Does the sales compensation plan provide fair and appropriate measurement tools?

As part of the development of sales compensation packages, you need to implement evaluation tools that will fairly and accurately measure performance. Once you have set the objective, such as increased cold calls, percentage increases in current areas, etc., you need to set specific means of measuring how the goal has been achieved and how you will track the progress of your team as they strive to meet those goals. In addition to this, the measurement must be uncomplicated and straightforward enough so that all member of the sales team easily understands it. As they strive to meet or exceed goals, the sales team should understand exactly what is necessary to meet all levels of reward and compensation.

Does the sales compensation plan offer incentives that will motivate outstanding performance?

The sales compensation plan that you implement should be able to reward all levels of performance, while at the same time, offer great incentives for outstanding performance. In addition, the incentive package should not only provide rewards to individual sales team members, but should benefit the sales team as a whole. In other words, the sales compensation plan should include individual sales performance and team sales performance. The total compensation package that any individual receives should be based on personal performance, team performance with incentives in place for performance that exceeds goals.

Even as the market place becomes more competitive, company stakeholders are continuing to expect increases in sales and profits. With this in mind, the importance of a well-planned, measurable, and motivating sales compensation plan is even more significant in helping your company and your sales team to meet their goals.

Rhys Metler

Rhys is a tenacious, top performing Senior Sales Recruiter with 15+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America. He is a Certified Recruitment Specialist (CRS) and has expert experience in prospecting new business, client retention/renewals and managing top performing sales and recruitment teams. Rhys enjoys spending quality time with his wife, son, and daughters, BBQing on a hot summer day and tropical vacations.