Incentive compensation plans that get you to your revenue goal.

You made a compensation plan change to stimulate sales activity within the sales team. You’re anxious to see if it has made an impact. 


It’s been a few months since it went into effect.


Did it succeed or fail?


Stop guessing. Assess your alignment with emerging best practices for sales compensation by answering questions in the new How to Make Your Number in 2018 Workbook. Flip to the Compensation Planning phase of the Workbook starting on page 395.


This may surprise you, but just because revenue hasn’t risen doesn’t mean it failed. Read on to discover what other indicators you should be paying attention to. 


Make sure you are using the right factors to evaluate your comp plan.


How to Determine the REAL Impact of the Comp Plan


It may be too early to identify the full impact of your comp plan. Certain goals require more time to see an impact. Longer sales cycles might not show revenue results for 2 or 3 quarters.


But there are still success indicators you can be on the lookout for.


  • Close rate: A higher close rate may indicate that reps have been successfully incentivized. If more reps are closing sales, they are boosting their negotiation and closing skills.


  • Discount rate: A lower discount rate may also indicate that reps are incentivized. They are putting their sales skills to work and putting profitability first.


  • SPIFF performance: SPIFFS are designed for short-term gains. You should be able to accurately measure their performance within the new comp plan.


  • Service sale rate: Though they often have a lower margin, services are stickier than products. They lead to better overall profitability and renewal rates. A rise in the service content of sales is an indicator of comp plan success.


  • Renewal rate: Compare the number of long-term contracts that renewed this year versus last. An increase is a positive sign.


  • Later-stage and early-stage pipeline changes: This is especially relevant to slow sales cycles. Look for more deals at the later stages of the sales pipeline. A higher close rate is a success indicator. So is additional early-stage new logo sales revenue.


How Rep Behavior Impacts Comp Plan Success


Just as your comp plan influences sales rep behavior, their behavior affects your plan.


Are sales reps asking for more pre-deal exceptions? If they are increasingly asking for exceptions – commission percentage for example – pay attention. There may be misalignment between your comp plan and sales rep expectations.


Are sales reps making more post-close commission complaints? If reps aren’t happy with their commission, listen up. It may indicate that the comp plan isn’t easy for them to calculate. Or it may indicate that the comp plan just isn’t working.


Are field reps spending more time with the ICM (Incentive Commission Management) system? Reps need to calculate how much money they will make on each deal. If the new comp plan has complicated this process, reps may be miscalculating. If unaddressed, this can quickly lead to the failure of a new comp plan.


You may notice increased turnover after a comp plan change as well. This doesn’t necessarily mean the plan has failed, though. There are two types of turnover you should pay special attention to:


  1. Type 1 – These reps will leave while they’re waiting on commission checks. No matter what. You can’t blame the comp plan for them leaving.
  2. Type 2 – These reps are on the fence about the new comp plan. They start to look for new jobs as soon as the plan is implemented. Pay attention to this type of turnover. An increase might mean the comp plan isn’t meeting reps’ needs.


Use our Sales Compensation Best Practices Guide for a deeper review of your turnover situation.  The Guide will help you evaluate your comp plan versus best practices and pinpoint weaknesses.  Go ahead and download the Sales Compensation Best Practice Guide.


Warning Signs


Be on the lookout for more conflict with indirect channels. Your comp plan may be causing friction if one channel is better compensated than another.


Also, be on the lookout for a rise in customer complaints. For example, reps are too aggressive or they are making promises they can’t keep. This might indicate that the comp plan is incentivizing the wrong behavior. That doesn’t mean that the comp plan is a failure, though. It might mean that some of the reps are a bad culture fit.


At the End of the Day


Don’t panic if you don’t see revenue increase right away. That doesn’t necessarily mean your comp plan has failed. The success indicators in this article may yet point the way to revenue increase.


Have expectations gone up and left you wondering if you can make your number? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate yourself against SBI’s sales and marketing strategy to find out if:

  • Your revenue goal is realistic
  • You will earn your bonus
  • You will keep your job


Would you like help evaluating and adjusting your sales compensation plan to make the revenue number?

Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate your Sales Strategy against SBI’s emerging best practices to find out if:


  • Your revenue goal is realistic
  • You will earn your bonus
  • You will keep your job


2018 workbook


Mike Drapeau

Makes data and analysis come alive so clients can understand the “what” and “why” and design solutions that fit the environment.
Mike has led every function at SBI – Delivery, Sales, Talent, and Technology. Now he is a leader for Account Management, Private Equity Partnership, and long-term business development at SBI.


He has personally led over 100 projects for SBI over his decade+ time since its founding in 2006.


This starts by earning trust – of clients, of PE firms, of prospects. Mike obtains this by leveraging deep domain expertise, with more than 25 years in sales, competitive intelligence, sales management, marketing enablement, product management, pre-sales and sales operations. Mike relishes the idea of living in the field. So he does.


As a founding partner, Mike built out SBI’s library of emerging best practices for sales and marketing, which leads to evidence-based solutions, custom-fit to each client. Mike built himself many of the solutions now part of the Revenue Growth Methodology. And whatever he touches gets adopted. This is part of his commitment to making it happen in the field.
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