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September 1, 2017
Is Now the Right Time to Pull the Compensation Trigger?
By: Mike Drapeau
Today’s article is focused on sales compensation planning. How do you decide when to change the plan to pay your people responsible for driving growth? Assess your compensation approach by reviewing the Sales Compensation phase of the new How to Make Your Number in 2018 . Turn to page 395 of the Sales Strategy section.
One of the biggest misconceptions about compensation is that it drives behavior. It does, but only partially. When overused it doesn’t deliver results.
When evaluating whether it’s the right time for a change to the compensation plan, here are questions to ask:
Here is an example of compensation not driving behavior. New product revenue incentives are often a part of sales rep compensation plans. One of my clients did a 4x multiplier to drive sales of a relatively new product. The compensation plan was ineffective because the product was launched prematurely and had quality problems. In this case, a compensation driver would not have remedied the situation.
On the other side, let’s review an example where a salesperson is comfortable with a product. The product is so strong that there’s pull from customers. Salespeople will sell it without any special compensation allotment. The difficulty here comes when you want them to shift to focus on other products that require more time, effort, and skill. Compensation is often inadequate on its own to drive the change.
The take away is to get the root of the problem. Only then can you properly designed an incentive program to attract top talent and motivate the desired behaviors.
There is an old saying in the sales profession, “Give yourself a raise, sell more.” As a sales leader, it’s inconceivable to think of anything with more of an impact than changing comp plans.
The reality is that there are a variety of improvement programs being implemented and one of them is compensation planning. When positive results roll in, it can be confusing to determine just exactly what it was that made the difference. Was compensation a key part of the results achieved, a neutral non-impact, or even a drag to performance?
Sales operates in an environment where there are many changes happening simultaneously. You can’t isolate the variables. Here are deep strategic questions to ask yourself to make sure you have the right sequence of changes and timing for a compensation change.
Overall, you must look at all pieces of the puzzle. Before investing time on compensation plan changes, validate that now is the ideal time for the change.
Have expectations gone up and left you wondering if you can make your number? Here is an 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:
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