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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…
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 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.
Should the sales force receive credit for online sales?
Whether or not a sales incentive plan should provide credit for online sales should be primarily linked to the nature of the sales role in question. Specifically, we should consider two criteria: Does the sales person meaningfully influence online sales results through the fulfillment of the primary accountabilities and responsibilities of their role? Can the …
How do we compensate for high margin and low margin sales in the same compensation plan?
It may be possible to combine the two types of sales using margin value as the measure, or it may be necessary to create two separate incentive components…
How do we compensate appropriately when the sales person is responsible for both New and Recurring business?
Three approaches that work are: (1) split the plan into New and Existing components, (2) single component goal-based plan with a goal that requires good retention/penetration and New, (3) pay on net new.
We want to pay on both revenue and margin – how do we do that?
Often in manufacturing companies, sales people influence both the volume of sales and their relative profitability, rewarding simultaneously for both puts the incentives in line with what’s best for the company.