What would your reaction be if your number one sales rep made more cash off their commissions this year than you do?
Is it a sign of a lousy comp plan? Or is it a fantastic idea to motivate sales reps?
For Erik Charles, a leading expert in bridging sales, marketing, and engineering to advance revenue and incentive management, the answer defines a company’s vision and growth potential.
“If you’re not willing to realize that an incentive plan drives behavior, and if it drives a lot of behavior. You might sell a ton of product, but it just doesn’t work,” he said. “So that’s where I always start.”
Building an effective sales compensation plan is both an art and a science. For Erik, it’s about balancing your company’s goals with the realities of your sales cycle and team dynamics.
In this episode of Go-to-Market with Dr. Amy Cook, Erik points out that by starting with a clear understanding of your business objectives—whether that’s growing revenue, capturing market share, or improving customer retention—you can create a plan that motivates your sales team without overcomplicating the process.
Simplicity, clarity, and collaboration are the cornerstones for alignment between sales, marketing, and leadership. From hiring the right talent to avoiding the common traps of frequent quota shifts, Erik explains why a thoughtful approach to comp plans sets the stage for long-term success and a thriving sales team, particularly with dynamic territory planning.
“The idea of building a plan in Q4 that triggers in Q1 and not touching it for another 12 months is insane,” Erik said. “Your business challenges do not pay attention to what month it is. They will just simply pop up and you need to adjust.”
Here are more highlights from that interview:
Amy: I find it interesting that you believe the first sale should be to your reps when a company constructs sales compensation plans.
Erik: The approach should be, ‘I’ve got an amazing opportunity for you to make some coin.’ That’s your first sales pitch. The second one is, ‘And this is the territory I’m assigning to you.’ The territory could be geographic. It could be a vertical market. It could be a variety of things. It could be the first part of the market, SMB, mid-market, or enterprise. So after you’ve convinced them the plan is good, you have to convince them that their territory is amazing.
Amy: The first sale on your comp plan is to the sales rep, the second thing you need to do is sell them the territory. What’s the third thing?
Erik: It needs to be easy to understand. For example, one of the tests I’d like to do with some clients is to walk into the bullpen, and I’ll have the CEO with me, and I’ll look at a rep and say, What’s a top deal in your pipeline? How much is it? What do you think you do? We’re pitching a $250,000 project with an automatic three-year renewal and $50,000 in implementation fees. How much will you make if you close that this month? If they can’t easily answer that question, you’re wasting incentive dollars.
Amy: What happens if people are not very happy with their territory?
Erik: You didn’t have enough data to sell it to them. You should walk in with enough data to cover the following things . . .
To listen to the full interview, click here:
