You may own a business with a resourceful and dedicated sales team. However, you may also notice that at certain times, your field sales reps are used to hitting their targets and not doing much more after within that month, even if they hit them early. This is the reason why you, as a business owner, need to start looking at sales compensation plans. This will ensure that your salespeople know what is expected of them and it can also assist with motivating them to sell at their absolute best.
If you give people the right compensation plan, it could make a massive difference in your profits. The way that compensation plans are structured are different for every business, and should vary based on your field sales rep’s experience and role.
When you do create your ideal compensation plan, don’t be fooled, as it comes with challenges like:
Setting the correct quota
You always want to make sure you achieve the correct, delicate balance of setting a quota right. If they are too aggressive you may find a lack of motivation and high turnover. If they are too low, the best field sales incentives reps will not be motivated enough to work at their optimum. Try to look at data and set your quota alongside accurate sales figures.
The weighting of compensation plans
Your compensation plans need the right weighting of base versus bonus. Your base salaries are very important as it shows your field sales reps an element of security. A bonus is there to inspire reps to get more done on the job.
So, in order to overcome these compensation plan challenges, you need to look at various elements within your sales team and process and how best to streamline them, in order to keep your best field sales reps, give them a good reason to do their best work and ultimately, keep the sales numbers ticking as smoothly as possible. Here are a few ways on how to structure this:
Keep it simple
Try your best to keep your plans simple for the field sales rep teams, so that everyone can understand payment plans without being confused. You want to give them a base salary which is the regular amount that your field sales rep will see in their bank account, and this is unaffected by performance. You then want to offer bonuses, which are additional amounts for achieving specific goals. A kicker should be an added bonus which is tied to a competition.
Always keep the rules the same
When you have a compensation plan in place, try to plan it and look for loopholes before implementing it. That way, your field sales team can have the rationale explained to them without being confused. You also want to have a plan in place and stick to it, so that the team can get used to the incentive structures. Always try to plan in cycles and never change the plan within one cycle, so that everyone is the page and knows what is expected of them during this time.
Be very clear with your field sales team
You want to be able to lower the chances of accidental misunderstandings, so try your best to be as clear as possible when explaining the compensation plan to your team. Explain the definition of a compensation plan as well as show examples of how it would work. This will help the team understand it better, and faster.
Do research before you implement caps which can limit earnings
If you feel that one of your field sales reps cannot hit a target of a certain amount against your compensation plan, you need to analyse if it is possible before cutting it off the earnings amount. Limiting earnings is usually done in a compensation plan, but it needs to be analysed well enough before putting a figure to it. You can set stricter limits with sales quotas in the initial stages. This will help you gauge what your field sales reps can and can’t achieve, and then you can use these learnings to further adjust the next cycle of your compensation plan. The sales team need to understand and be aware of any limitations and they also need to know how it works. This should be fed to them from the start in order for them to accurately forecast what to achieve.
Remember that the more a field sales reps brings in, the more motivation it is for the rest of the team to “up their game”, so try your best not to limit your incentive plans too much.
With the above sales incentive plan methodologies and structures, your field sales team will be able to accurately use them and be motivated to want to achieve them on a month-on-month basis.