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Plan design principles
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.
When two or more people work a sale, how should credit be shared?
Especially for large or complex sales, it often takes more than one person from the sales team to close the deal. If the two people are…
When is a relative ranking plan a good idea?
Relative ranking plans work best for sales forces in which collaboration is not a key requirement for success…
If a Territory Manager is a “Hunting Farmer,” How Should Their Comp Work?
While many established sales organizations use the hunter-farmer model as their sales force organization model, there are inevitably geographic territories or customer segments that do not justify both “hunters” and “farmers’…
How do we reward salespeople for strategic sales activities?
If the comp plan focuses exclusively on immediate results, making progress for the long run may not seem very important to the salespeople. To focus sales activity on strategic effort…
Hiring your first sales person
For early stage businesses, your first sales hire is hard to do well. You don’t have a sales leader to help you confirm you have the right skills and temperament for the job. You’re not sure what to expect in terms of productivity…
Why is it important to set Target Total Compensation for a role?
Target Total Compensation (TTC) is the amount of pay that a role (not a person) is expected to earn at 100% of expected performance. This number is absolutely essential to developing sound compensation plans. Without it you will not know who is doing better than expected and who is doing worse. Compared to what?
Why should I pay incentives to my employees when the company has not hit its overall goal?
This is a common question, especially for smaller companies, whose resources are limited. It’s certainly understandable for a manager to want to develop an incentive plan that only pays out of the company profits (if there are any).
Keys to Success: Six Areas to Address in Your Next Sales Compensation Plan
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.