article | November 7, 2012
How to Compensate the Overlay Sales Specialist
Motivating the sales force requires careful adjustment of payout formulas, rates, accelerators, product eligibility tables and more. Today’s post will expose a dimension that is often overlooked – overlay selling roles. The compensation calculator offered here will help you make smarter decisions about the economics behind motivating a critical component of your sales force.
The Overlay Strategy Payoff
Overlay specialists can play an important role in supplementing the skills of the field sales force. With proper structure and compensation, they can provide tremendous leverage. They can be a costly drain on the organization if you fail to deploy them correctly.
Like a sales rep, they have a quota. They are aligned to a region, team or group of sales reps. The most common varieties include:
Ideally, the overlay specialist should eliminate their own role by training their sales people how to sell the new product or penetrate the new market without assistance.
Motivating Specialist Behavior
Compensation for the overlay specialist can be problematical. They are not paid to simply sell. They are also paid to enable and teach others to sell. If the overlay specialists fail to transfer their knowledge, you have not only lost the opportunity for incremental revenue, but you have delayed the self-sufficiency of your reps for another year.
Paying specialists for the revenue produced by everyone they overlay will cause them to devote their time to top performers. This defeats a key purpose of their role. Instead of enabling the field to be proficient with the new product or market, the people who need the most support are ignored. Improper incentive dynamics result in favoritism and defer full implementation of the new product or vertical market strategy.
Solution: Incent overlay specialists to focus on both components:
These can be two separate payout components, or the participation value can be used as a multiplying factor to raise or lower the payout on performance. The table below shows examples of the payout multipliers that are earned depending upon the percentage of the supported team that participates in selling the target solution.
An overlay specialist who rides the success of a single sales rep will only earn a fraction of the potential payout. The Multiplier at the Threshhold 1 participation level (0% – 9%) would earn only 60% of total revenue sold. The overlay specialist must focus on maximizing both revenue and participation. (Note that the maximum expected Participation is only 90% to avoid penalizing the overlay specialist for a “C” player in their mix.) A specialist who enables 90% or more of the overlay team will earn a bonus of 10%.
A best practice for overlay specialists is to sign a “contract” at the start of the year with each sales rep. This makes the expectations clear. In return for training and support on sales calls, the sales rep must help the specialist achieve the participation bonus.
Key Take-Away Ideas
The solution lies in a holistic approach to compensation. The incentive plan must be directly connected to the sale force structure, which includes overlay roles. Sales structure is its own discipline which is linked to account segmentation, go to market strategy, sizing and role definition (to name a few). This forms a foundation that supports compensation planning.
As you can see, this is much more than the simple role-by-role comp review that HR is asked to conduct each year. It is not enough to compare expected payouts to a benchmark without understanding how the pieces fit together.
Follow these 4 steps to create an effective overlay structure:
Although the steps are simple, this can become a daunting task to balance with the rest of the planning required to kick off a new year. A sales effectiveness consulting partner can help. A general purpose HR consulting firm with expertise in staffing model can build a compensation plan, but they will lack the connections deeper to the mechanics of a sales organization.