A new sales comp plan should seek to (a) attract and retain top sales talent, (b) motivate productive sales activity, and (c) remain within budget. One requirement of comp plans that is too often overlooked, however, is establishing and maintaining alignment with corporate objectives.
Compensation plans represent one of your most powerful levers to drive specific behaviors from the sales team, and to communicate what you feel is truly ‘important’. If care is not taken to align sales behavior to the objectives of the broader organization, an opportunity is lost. Furthermore, as corporate strategy and even corporate culture evolve, your sales compensation plan should evolve as well.
A simple example of an evolutionary plan would go as follows:
In this simple example, note that as corporate objectives evolve and as corporate culture shifts, these changes have specific implications on the optimal design of the sales comp plan. As the culture shifts toward one that values meritocracy over broad employee satisfaction, the sales comp plan features a pay mix that is heavier on incentives with accelerating rates once quota has been achieved. When there is a greater corporate emphasis on growth driven by new logo customers, the comp plan reflects this shift.
The revision of comp plans, as corporate objectives are revised, is just one of many best practices that should be deployed as part of an annual comp plan design review. You will find other best practices in the tool linked here.
Too often, corporate strategy, sales strategy, marketing strategy, and product strategy are developed in silos. Deployment of the Revenue Growth Methodology ensures that there is alignment across these functional strategies. Sales compensation plan design is one example of a key component of sales strategy that should be aligned with corporate strategy.
Don’t miss an opportunity to signal to your sales force what is truly important and to drive sales behaviors that are consistent with your corporate objectives.