Ask a Question
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.
Our CFO feels we should give out quotas that add to 20% more than our annual plan. Is that a good idea?
Distributing more quota then the annual operating plan is called over allocation. A little bit is okay and a lot is not.
Sales Compensation Quarterly, November 8, 2009 – Communicating changing sales compensation plans is never easy. The salesforce will always start with the assumption that the new plan is going to take something away from them, and will be skeptical of anything the company tries to push as a “positive change.”
Workspan, August 27, 2010 — It’s fall again, the economy appears to have shifted toward the positive in many sectors, and companies are thinking about redesigning their sales compensation plans for 2011. In order to ensure the redesign process and resulting plans will provide a good return, businesses should address six key areas.
Sales Compensation Focus, July 2010 – The economy appears to have taken a positive turn and many companies are starting to think about growth: hiring more sales reps, launching a new product, or breaking into a new market segment. One of the first questions that is raised when a company returns to growth mode, especially if there has been significant retrenching, is, “What should we do with our sales compensation plans?”
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.
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).
October 2009 – New research indicates that, “Eliminating sales quotas boosts company profits says Professor Harikesh Nair. In one case, the new sales compensation plan without quotas resulted in a 9% improvement in overall revenues…”
Regarding whether or not incentives actually help at all, the best piece I’ve read on the subject is Rewards and Intrinsic Motivation by Cameron and Pierce. The key points relevant to sales compensation design from the book are…
Are there any design principles you recommend I use to differentiate between existing products to new customers and new business/new products?
Generally a sales comp plan may pay differently for new products or new accounts in order to recognize a few typical characteristics of these sales: