Commission_Split

Last week, in LinkedIn’s Sales Operations Group forum, the question of commission splits arose. How should a company track and credit these splits? Many Sales Ops leaders brought insights to the conversation. One thing was clear reading through the responses. Designing and defining how to pay out on deals is a major headache.

 

To simplify the problem, Sales Ops should be answering 2 questions:

 

  1. How many people are paid on a deal?
  2. Can we articulate each person’s contribution to the deal?

 

If not, it may be time to refresh your Rules of Engagement. The Rules of Engagement Primer will help you determine your customer engagement strategy. Who would your buyers prefer to interact with throughout their buying process? Should you include a team bonus in lieu of commission splits on big deals? The Primer will give you a framework for this design process.

 

In order to set Rules of Engagement, start with this 5 step process:

 

  1. Identify your Market Segment:

     

    • In what markets should we focus? Where is there growth and alignment? Where does our org create value for the market?
    • Within those markets, who are our ideal customers? What accounts should we pursue? How many of them are there?
    • Who are the buyers in those accounts? How do they prefer to buy?

       

    1. Determine what account segments will look like:

       

      • How and where do we draw lines on segmentation by account size?
      • What industries will we focus on?

         

    2. By segment, identify the following:

       

      • How much new business potential is in each segment?
      • How much cross-sell / upsell potential is in each segment?
      • How many accounts are in each segment?

 

    1. Align segments with appropriate sales team by matching:

       

      • How buyers prefer to buy (high touch vs. low touch, generalist vs. expert)
      • How much capacity to sell each rep has
      • The organization’s focus on growing top line or bottom line

 

    1. Re-write Rules of Engagement:

       

      • What roles will be necessary in order to sell into these accounts?
      • Where in the buying process will each resource be needed?

 

Once you’ve settled on Rules of Engagement, you can easily articulate who does what. ‘In this segment, 2 roles are necessary.’ ‘The SE will engage at this point in the process.’ ‘They will do X% of the work.’ You can predetermine how resources will be compensated based on their contribution.  Consider what resources are necessary at each point in the sales process.

 

Rules_of_Engagement_Primer1

Compensation can be a major pain without Rules of Engagement. This document will ensure that all payouts are fair and backed up with reason. Getting this off your plate will avoid those headaches down the line.

 

 

ABOUT THE AUTHOR

John Kearney

Helps clients adopt emerging best practices to help them make their number.
Learn more about John Kearney >

John has been with SBI since 2011. He has worked with executives in Executive Education, Media, Telco, IT Services, and others. Under his leadership, organizations have successfully grown revenue and improved Sales and Marketing Effectiveness. With a focus on aligning strategies across functions, John has delivered strategic solutions that are actionable and executable. Prior to SBI, John earned his MBA from the University of Notre Dame.

 

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