Driving motivation, improving performance, and cultivating a positive team culture all depend on designing a compensation plan that sales representatives will appreciate. However, making the ideal plan calls for a well-rounded strategy that takes into account the goals of the business as well as the needs of the representatives.
To ensure you’re creating a compensation plan your sales reps will love, don’t get caught making these four common mistakes.
Don’t Dos
DON’T Overcomplicate the Plan
When 9 percent of sales reps quit because of confusing and poorly managed compensation plans, it should send a message to managers that just because you have the tech chops to build a complex compensation plan doesn’t mean you should. Sales reps may find it difficult to understand how to maximize their earnings, leading to confusion and decreased motivation.
DON’T Ignore the Length of the Sales Cycle
Despite the groans and grimacing, longer sales cycles make a regular appearance in B2B sales. If your compensation plan doesn’t account for this, sales reps might rush deals to close prematurely or neglect long-term relationship-building, which is crucial in B2B sales.
DON’T Overlook Non-sales Influences
As they say, it takes a village to raise a child and to close a B2B sale. When managers ignore the strategic support of the entire RevOps team, it can crush collaboration between departments and missed opportunities to optimize the sales process.
It’s all hands on deck for consistently effective Go-to-Market strategy, which is why customers love Fullcast’s platform that brings the key components of your Go-to-Market strategy and operations into a single platform. By integrating territories, quota, capacity, and coverage assignments, we provide the visibility and predictability needed to achieve your revenue goals.
DON’T Ignore Competitive Pay in the Industry
The pace of market changes for an industry is constantly changing, including pay scales. This makes it challenging to stay ahead of the sales compensation game. Sixty-four percent of top-performing salespeople admit that they will accept a job offer with similar duties because of better pay.
Don’t add high turnover to a market climate already filled with changing business needs. Do the research, and set your pay at a fair and competitive rate.
Do Dos
Successful compensation plans share several key characteristics that make them effective in motivating sales teams, aligning with company goals, and driving desired outcomes. Here are the common traits:
DO Align Plan with Business Objectives
Your company’s focus directly influences where your sales reps should concentrate their efforts. Despite statistics showing that a little over half (53 percent) of companies have a formal compensation strategy and business philosophy, teams that clearly define expectations and align them with compensation plans ensure that everyone on the GTM team is working toward the same goals.
DO Incentivize KPI-Based Behavior
A well-designed compensation plan encourages sales reps to stick with what works, regardless of whether they are closing large deals, building long-term client relationships, or upselling current clients. This improves performance and fosters a winning culture where everyone works toward the same objectives.
DO Monitor and Adjust Regularly
Is your plan regularly reviewed and adjusted based on performance data, feedback, and changing business needs? If you’re relying on spreadsheets to ensure that compensation is accurate and payments are timely, who really knows for certain that your data is accurate?
Fullcast’s territory management platform makes it easy to export data, edit or switch plans, and manage quota goals simply and efficiently.
By automating management tasks associated with compensation plans, users can feel confident that their data is current as the plan continues to be effective and aligned with the company’s goals.
Learn more about plan management by clicking here.
DO Create Agile and Transparent Compensation Parameters
Looking for an easy way to build trust among sales teams? Stay ahead of market trends and conditions, then share how this impacts performance compensation. For instance, the recent Salesforce State of Sales Report found that 90 percent of sales teams have moved beyond single revenue sources. Does your plan address newer sales opportunities? Does it compensate for partner sales? As your sales teams explore new ways to connect with customers, your compensation plan should reflect these successes.
Creating a compensation plan that sales reps will love requires a thoughtful approach that balances company goals with the needs of your team. By setting clear, achievable objectives, offering a mix of incentives, and regularly reviewing and tailoring the plan, you can motivate your sales force to perform at their best.
