Developing a Sales Compensation Plan in Tough Times
When times are tough, companies often start tinkering with their sales compensation plan. Here are four key questions they need to answer to develop a plan that will motivate the sales force without creating more problems than it solves.
1. How easy is it to hire and retain the type of salespeople we need? Is sales force turnover too high or too low? Can people make the kind of living we want our people to make? On the other hand, are they making so much money they never leave and our sales force is loosing that lean and hungry look?
2. How are or sales figures? Do we need to provide more monetary incentive to optimize sales in this environment?
3. Is the compensation system generating the behaviors we most wish to encourage? Are we selling the most profitable products to the most profitable customers? Are we getting the appropriate level of customer satisfaction?
4. Will the compensation system we have (or the one we’re considering) also be appropriate once sales rebound? This is a vital question that’s almost never asked. If things turn around and sales people are suddenly making huge amounts of money, the company could be left with two poor alternatives. Either let them make far more than is necessary to generate optimal answers to questions 1 through 3, or else change the compensation plan and be seen as “taking money out of our pockets, ” possibly crushing morale.