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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 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.
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 should business goals tie to the sales compensation plans?
There should be tight alignment between the sales compensation plan measures and goal, and the business plan. The linkages go like this…
How can I maximize the impact of the communication of the new sales compensation plan?
One rule of thumb for plan communication is to double the amount of time you used for designing the plan to the plan implementation effort. Ideally the communication begins by letting the sales force know that the plan is being reviewed to align it with the company’s changing go-to-market strategy. Examples include: More emphasis on …
What is the difference between a commission and a bonus?
The difference is that the “commission” is communicated as a “piece of the action” (e.g., 2% of revenue, $5 per unit, 6% of margin dollars); whereas a “bonus” is a fixed incentive amount offered for achieving a specific objective, often with less offered for lower achievement levels and more for higher levels.
Should sales representatives receive incentive compensation payments while on a leave of absence?
For incentive compensation payments during a leave of absence, think about when the work is done vs. when the payment is made.
What are the key components of a sales compensation plan document?
The sales compensation plan document serves as a standard reference for sales reps, sales managers, and those who calculate the incentive payouts. Typically, the plan document includes an overview of the plan structure often with a statement of the company’s pay philosophy, a detailed description of the plan’s components with brief payout examples, the terms …
When is the use of a threshold a good idea vs. paying on every sale?
For sales people tasked with growing an established business, a threshold can be the key to focusing them on growth.