Effective incentive compensation is designed to reward desired selling behaviors. Your top sales reps have been living with the comp plan since kickoff. By now, they have figured out how to leverage this year’s plan. The top performers have calculated their income for the rest of the year.

 

This is a crucial time for Sales leaders and their HR business partners. Top sales reps have banked the remaining commissions earned last year. There is nothing keeping them if the new comp plan isn’t working in their favor. Unwanted turnover could be around the corner. Is your comp plan putting your top performers at risk?

 

Sales leaders and their HR business partners can download the Compensation Checkpoint for a quick diagnosis. With this post you can evaluate the levers of your compensation plan. Do they advance and support the desired behaviors?

 

Why Focus on the Buyer?

Incentive compensation is intended to reward specific behaviors of the sales force. Ideally, these should be activities that the customer values. But sometimes there is a disconnection. If asked,would your customer pay for the activities being rewarded?

 

Here are just four examples of the negative impact of poorly designed incentive compensation:

 

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Connect Compensation to the Customer

The solution starts by answering one question:

 

Which sales rep activities do your customers value?

 

Answering this question requires an understanding of the buying process. It also requires awareness of what really happens in the field. These insights usually can’t be found in existing data. They require dedicated investigative work. The payoff can be enormous, ultimately resulting in higher margins and more revenue.

 

What Does the Customer Value?

SBI is regularly engaged by clients to help answer this question. The initial reaction is to reach for a recent market survey. However, these studies focus on customer attitudes. They reveal brand preferences, market segments and trends. They only hint at the customer’s buying process.

 

The most accurate way to identify what customers’ value is through buyer persona interviews. This work should already be done by Marketing. But it is often overlooked. The lack of this insight negatively impacts the effectiveness of campaigns. And it also hurts compensation planning.  

 

Map Compensation to the Buying Process

First, understand what the buyer cares about. Next, incent the sales rep to support the buying activity. It requires creativity to map incentives to buyer’s needs. The tendency is to reward internally-focused behaviors. Look for a connection to the customer in every compensated activity. Human Resources business partners can play an objective role here. Keep the buying process in mind with every compensation lever. In the long run, this will deliver revenue and margin growth, as well as loyal top sales performers.

 

Here’s How to Get Started

Schedule a meeting with your sales leaders to assess your current compensation plan. Will the incentives cause your sales people to engage in “high value” activities?

 

Your business is unique. A tailored approach will align the reward system with your customers’ needs and drive better results. Get started at the middle of the year. Waiting until the end of the year is a common mistake. Yes, you need to see full year results to set the new targets. But much can be done to prepare. Develop a compensation task plan to get early activities done well in advance. Then yo’re ready to execute the final decisions quickly.  

 

Next StepsIncentive_Compensation_Checkpoint_tool

It’s time for HR business partners to ensure that compensation is delivering results. Download the Compensation Checkpoint and answer the 11 questions. In just a few minutes you’ll have a clear understanding they dynamics of your plan. If you need to take immediate action, it will be apparent. Your top sales performers will be focused on behaviors that will Make the Number.