Comprehensive Compensation

By Malcolm Fleschner

To paraphrase an old expression, sales incentives don’t exist in a vacuum. Except maybe, if your current reward program involves handing out vacuum cleaners to your top-selling reps. The point is that sales incentive programs do not always succeed or fail based solely on their own merits. Larger issues of compensation and motivation also play a major role.

So how can savvy sales managers work to insure that all these ducks are in their proper rows before launching the next incentive? The experts at the Sales Marketing Network (www.info-now.com) offer the following five suggestions:

1. Keep Compensation Fresh
Many sales organizations mistakenly base their compensation plans on gross sales, when a preferable approach is to compensate reps specifically for driving profitability. Salespeople wield considerable influence over price, product mix, discounts and transportation allowances. Taking this into account, many companies develop pay structures using criteria that reinforce quality customer relationships. Factors commonly considered include customer satisfaction, number of contacts within an account and customer retention.

2. Together Everyone Earns More
The complexity of today’s sales cycles, combined with the fact that fewer salespeople are true "solo flyers" has led many sales organizations to adopt more team-oriented compensations plans. If you find that your salespeople are increasingly turning to folks in marketing, logistics, merchandising and distribution to close sales, it may be time to create a compensation plan that reflects the reality on the ground.

3. Hit the Motivational Bull’s-Eye
To be effective today, sales managers must understand that individual salespeople are all unique, with a range of interests, drives and passions. Can you describe the specific differences among your reps? If not, you may need to take a more intimate approach to management. Also, remember that money is not typically a salesperson’s number one motivating force. It’s more likely they look to you for two specific things: independence and recognition.

4. "Empower" To the People
Effective managers strike a balance between giving salespeople free rein and stepping in to offer assistance. The key is to set specific parameters so that your team members understand where they have leeway to make critical decisions regarding their accounts, and when they need to bring you in. Salespeople who frequently take too much or too little initiative simply may not understand what the established ground rules are.

5. Take Aim with Incentives
While such traditional incentive approaches as group trips, merchandise awards and President’s Clubs remain popular, business realities are compelling sales organizations to consider more targeted incentive approaches. In today’s business environment, achievement awards need to be based on what the reps genuinely want, and program goals must be realistic.

Consider the possibility of expanding incentive programs to recognize the contributions of all the people and channels involved in making sales happen. In addition, consider rewarding all channels of the company, and begin including more quality-oriented measures like time spent with customers.