The best way to prepare for this discussion is to know your value to the company. If you know what value you provide, you’ll know what you deserve in return.
In this article I cover the basics of calculating your sales value. To assist you further, download the Sales Rep Value Calculator.
Step 1 is to know your actual worth in sales to your company. Oftentimes sales reps have an inflated view of themselves and their sales efforts. You must take an unbiased look at your performance. Are you making your quota? What percentage does your quota make up of the company’s number? This should help you get a feel for your true value.
Here are the best ways you can use this info to discuss compensation:
Four Reasons Why You Need to Know Your Worth in Sales
1. Assure your Compensation Plan is Aligned: Unless you know your sales value, you won’t be able to determine if discussions are warranted. Aligning your compensation history to company performance history is a critical step. This exercise can be done without too much effort. The key components are having 3-year performance numbers for both you and the company. Aligning pertains mostly to growth and performance. Yours should be in sync with the company’s. If not, discussions are likely warranted.
2. The Case for More Compensation: There are a few scenarios where you’ll have a strong case for more compensation. For instance, if your sales are up and earnings aren’t, then you have a case. Reps often believe that new compensation plans always favor the company. This may or may not be true. It could just be that the compensation plans are outdated. Oftentimes plans are based on metrics, goals, and assumptions that are no longer relevant. In that case, it is up to the sales department to drive the revisions.
The Sales Rep Value Calculator will help uncover earnings and quota trends. These trends can often help make your case stronger. (See below for an explanation of this calculator)
3. Determine if it’s Time to Make a Switch: Industry and company trends may work for or against you. Your sales and company sales should be trending in a parallel direction. If there is an inverse relationship here, then a move may need to be considered. Are you progressing faster than the company or the company progressing faster than you? Either way, keeping your options open is a good idea.
Companies watch trends. They often live and die by them. Sales reps should also be cognizant of trends. Use them as the basis of analysis, discussion, and decision making.
4. Improve Your Skills: A realistic view of your sales will help you justify your position in uncertain times. At times, you may find your worth isn’t what you’d hoped. This isn’t ideal, but it still helps. If you know your worth, you’ll be aware of your potential weaknesses and liabilities. Make these your areas of focus moving forward. Find ways to improve them and increase your value to the company. Improved skills and increased value give you the leverage you need for compensation change.
How to Calculate What You Are Worth
The Sales Rep Value Calculator will allow you to calculate your sales value worth.
Track your earnings and quota over a 3-year period. 3 years of data provides more than just a brief snapshot of your performance. Instead, you can illustrate trends and show consistency or improvement.
The illustration below was taken from the Sales Rep Value Calculator. In the example the rep’s earnings are trending down while their percent of quota is up. This potentially indicates the compensation plan is misaligned and may need to be reevaluated.
Once you know your value as a sales rep, you can make educated decisions about:
- Efforts to realign sales compensation structure
- Securing better compensation for yourself
- Improving your own skills
- Pursuing opportunities at outside organizations (if necessary)
If you determine a move is warranted, read Dan Bernoske’s blog How Top Sales Reps Interview the Interviewer.