Setting up a sales compensation plan

One of the biggest management challenges for a growing business is compensating salespeople effectively. You know you need an incentive compensation plan that encourages your sales force to land new accounts and continue to upsell existing customers, but where do you begin figuring out the best way to compensate them?

Creating a high performance culture

It often boils down to finding the right balance between base pay and commission. But other questions also may come into play:

  • Will a commissions-only model work for you?
  • How do you set parameters for performance?
  • How do you measure that performance?

If these issues seem daunting at first, don’t worry. You’re not alone. Sales incentive programmes can have an enormous impact on the bottom line and on future growth of the business. Executing a well-designed sales compensation plan can help companies create a sales culture of high performance where individual goals are aligned with those of the larger organisation. Furthermore, building a reputation for recognising and rewarding good performance accurately also helps companies attract and retain top sales talent.

It’s probably one of the fundamental keys to success for a business, provided it has a sales force – which would apply to the vast majority of businesses. Going to market is really a fundamental part of planning your business. The compensation plan is how you operationalise the sales force, get your salespeople aligned with your business goals, and get them motivated and driven to implement your go-to-market strategy.

The elements of the plan

A sales compensation plan is a way to put your marketing strategy into operation. Given the impact that sales compensation plans can have on growth, almost every company with a sales force should take a more strategic approach to designing its incentives plan. Fully understanding both the key drivers of successful sales incentive programmes and the ways to optimise them can be complex, and plan specifics can vary widely. Nevertheless, there are a few key factors that you should consider when designing and administering an effective sales incentive programme.


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