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Should sales leader comp go up with quota size?
We have two sales VPs with remarkably different team revenue quotas. One at $12MM/yr, the other at $20MM. To date we have targeted the same variable comp for each…
If we have a reduction in force, do we pay terminated employees their variable pay?
It’s important to think carefully about the message you’re sending to your other sales people, other employees, investors, and prospective future sales people. A couple of case examples…
How do we ensure our sales comp plans help us retain top performers and help us weed out the under-performers?
Let the plans do what they do best and pull your solid folks along to higher levels of contribution, and use your performance management process to send a clear message to the underperformers.
Are ongoing incentives and contests “outside the plan” a good idea?
Contests that create value are generally focused on behavior change, motivating because they’re fun and different…
What are the best measures of quota quality?
Quotas are good if they motivate your sales team to achieve at top levels. Measures of quota quality include accuracy, the shape of the performance distribution, and the credibility of the quotas and quota setting process among the sales people.
How often should the sales compensation plan change?
Most businesses change their sales compensation plan a bit on an annual basis, tuning rates, adjusting goals, possibly adding linkages or adjusting crediting rules. There is value in keeping the basic framework stable as long as it is serving the business well.
How do we make sure that sales cost is a variable expense?
The variable pay plan should take care of minor fluctuations in sales volumes. For larger shifts, the staffing level and/or coverage model will have to be addressed.
How should we link the company’s strategic goals and the sales compensation plan?
There’s a direct chain that goes from the business strategy all the way to the measures and objectives in the sales comp plans. If you can’t demonstrate these linkages, your sales compensation plans may not be doing all they can to support your business’s success.
How do we design a tiered compensation plan? And why would we want one?
A tiered plan generally involves several different payout rates at different levels of achievement. Generally the rates increase as sales productivity increases so that the reward for higher levels of sales is a greater payout rate for additional sales.
For commission-only sales people, should we offer a draw?
For highly seasonal businesses, or sales jobs which expect to close a small number of large deals in a year, a draw may be necessary to smooth out earnings in a 100% commission plan – but the administration of a draw can be challenging.