You’ve worked hard to create a compensation plan that maps out important goals so the sales team feels motivated, energized, and appreciated as they work toward them.
There’s just one problem: They hate your plan.
In a landmark sales survey, all revenue leaders (that’s right, 100 percent) agreed that sales compensation plans need improvement. Further, 91 percent of companies reported that less than 80 percent of their sales reps were hitting quota. With that being the case, now is the ideal time to address challenges that often plague compensation plans.
A well-designed sales compensation plan is more than just a tool for rewarding sales teams: It’s a strategic asset that can propel an organization toward its goals.
Creating a compensation plan your team will love starts with one simple but powerful ingredient: clarity! Let’s start by setting clear objectives and goals that ensure that the compensation plan is tailored to achieve specific outcomes, such as increasing sales, penetrating new markets, or promoting essential products.
Start with the End Results
Selling is getting harder. According to Salesforce, 69 percent of sales reps feel pressure to hit their targets, citing tight budgets, changing technology, uncertain regulations, and supply chain challenges as contributing factors.
Creating a sales compensation plan with clear objectives and goals is like giving your sales team a roadmap to success. When everyone knows where they’re headed and what’s expected of them, it’s easier to focus efforts on the critical business priorities, whether they’re boosting revenue, expanding into new markets, or keeping customers coming back.
“Before you start designing a compensation plan, it is essential for you to consider the actual results you want to achieve,” says Vincent Burruano, author and sales consultant. “Is it increased revenue? Better profitability? More new clients? Improved client retention? Creating a plan that is aligned with your larger organizational goals and objectives will ensure that your sales team is engaged in the right activities in pursuit of the desired outcomes.”
This involves analyzing gathered data, understanding how this information impacts and supports business goals, and aligning the compensation plan to support these objectives.
For instance, if a company aims to increase sales, the compensation plan might focus on rewarding revenue generation and exceeding sales targets. Also, if the goal is to penetrate new markets, the plan might incentivize sales reps to acquire new customers or promote specific products tailored to those markets.
Use Data as Your Foundation
Data quality is the backbone of effective sales compensation plans because it ensures that compensation is fair, motivating, and aligned with company goals and individual performance. Without accurate data, compensation plans can become a source of frustration rather than a tool for driving success.
Since a trustworthy compensation plan is only as honest as the data supporting it, territory planning and market segmentation are pivotal parts of this process to ensure that quotas are achievable and compensation plans align with the company’s Go-to-Market objectives.
Fullcast is a sales planning and execution platform offering various metrics and analytics to help sales leaders design effective sales compensation plans that help managers create compensation plans that coincide with company objectives.
Create Hierarchies
Hierarchies serve as the primary means of organizing elements within your Go-to-Market design, expediting account groupings and teams for managing assignments and targets, and monitoring security access.
Fullcast offers five methodologies to categorize customer segments into hierarchies:
- Unique: Generates child nodes for distinctly unique values in a selected field
- Bucket: Allows the creation of specific buckets to categorize child territories based on predefined criteria
- SmartPlan: Automates territory creation, which is especially useful for dense postal code areas
- Map: Segments customers based on geographical location using a lasso tool
- Industry: Segments customers based on an industry vertical
While the installed methodologies are adequate for most market segmentation, users can also add custom modes to track unique goals.
By leveraging these metrics, GTM leaders can create data-driven objectives and goals for their sales compensation plans to reinforce alignment with strategic business goals and drive improved sales performance.
“The average sales organization loses 25% of its team every year,” says Jeffrey Steen, editor at Salesforce. “That’s a lot of talent walking out the door. But here’s the kicker — with the right compensation strategy, you can flip the script.”
A thoughtfully crafted compensation plan is the first step to launching Go-to-Market strategies that drive revenue growth and encourage market expansion. Powered by a culture of accountability and performance excellence, a clear set of objectives helps each team member understand their role in achieving the company’s goals.
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