When sales people have competing objectives… imagine the following scenario:
A company has two different products for banks: core processing systems and lending products. For the two products, there is a large difference in the incentive opportunities. For example, the incentive opportunity on $1.5M processing system sale is $75,000 (5% commission). The incentive on a lending product sale may be only $5000.
How do you motivate the right focus and results, limit “elephant hunting,” and keep both product lines productive?
Several possible approaches:
- If there are skilled “elephant hunters” on staff, a role could be carved out for them that tolerates, even rewards that behavior. You would probably then also need a designated lending-only role. So… split the roles and play to strengths.
- If you want to have one person cover both, and if it is indeed essential that they do both, then you need an “And-type Comp Plan” — a plan where they have to do both to really make the sweet money. And that means linked components.
Linkages can be as severe as…
No over-goal payout until $xx in lending products are sold, or
Reduced commission rates on both until both reach some threshold.
Linkages can also be as gentle as
Hold back 10% of core commission until a threshold level of lending product is sold (something like 75% of goal), or
Add 10% additional to core commission once lending products are at or above goal, or
Both of the above.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.