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The four watch words for developing a good incentive program
There are 4 watch-words for developing a good incentive program: Relevant, Controllable, Measurable, and Objective.
Flexible objectives in a sales compensation plan
It is occasionally necessary to base sales incentives on behavior- or activity-based objectives. This is recommended only for sales people with very long sales cycles for whom effort and success in the current year will not yield financial results in that same year…
What is the ideal quota attainment distribution?
This is a topic on which sales leaders and finance people have strong opinions. While I’ll discuss some of the nuances around the topic below, my bottom line is that most people should achieve or exceed quota.
Payment timing for multi-year deals
Our sales people sell long-term deals, most of which span several years. When should they be paid for these – upon signing, as invoiced, when revenue is recognized, at completion, or a combination of these?
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.
There is a lot of press now about curbing incentives. Do incentives actually work?
A well designed incentive usually requires (1) a performance standard (some say quota, others say productivity expectation or goal); and (2) a good tracking and reporting system (have to keep up with it if we’re going to pay on it).
Should base pay for sales people be the same for everyone in the role, or should there be a range?
Not managing base is a relatively common practice.. It’s not a best practice in my opinion, but it’s not unusual. There’s a philosophy that says, “Make your own raise – sell more.”
Should there be secondary objectives in a sales comp plan?
Do companies achieve secondary goals like introducing new products or improving the product mix or the average unit price through comp plans? Is it advisable to pursue more than the number one goal of rewarding sales?
Other ideas for sales measures other than hitting sales quota?
I’m looking for ideas in revamping our sales comp to include metrics and pay for items other than just meeting a traditional sales quota. Perhaps a bonus for a close rate of XYZ, for example. Any ideas are welcome!
Tips on putting together an incentive plan for inside sales
Any tips for putting together an incentive plan for “inside sales” employees? We are trying to get our employees into a “value-added selling” frame of mind (instead of price-point) and want to provide an incentive.