For more than eight years, Xactly Corporation has aggregated sales performance and transaction data from hundreds of sales organizations. Their research shows that on average, 40% of sales teams make less than 80% of quota. Is your sales team in the same boat? Here are some actionable tips to make sure your company’s commission plans deliver the results you want.
Start with the following three steps to create a framework for success.
Above all, you want to make sure profits are aligned for your company and your salespeople. Don’t stress if your sales reps are taking home big checks. This is what your sales compensation strategy is created to do: Create incentive plans that generously reward high-performing sales people. However, if your cost-per-sale is too high, you probably didn’t have right analytics and modeling before you implemented your incentive plan.
You’ll also need to take steps to change what’s not working. Pull up your incentive dashboards to instantly see which sales reps most need your help. Make sure your team’s quota attainment approximates its incentive plan attainment. If, for example, your team averages 60 percent quota attainment and 150 percent target incentive payout, you need to rethink your commission plan. Second, ask the right questions. Did you start a SPIF that only paid two people? Are all your sales people struggling to sell one particular product? Use your analytics reports here.
If you see elements that need correction, take immediate action. If you don’t fix what you can now, you may not be at the table when your team writes incentive plans for next year.
Speaking of future plans, securing everyone’s support for incentive compensation is no walk in the park, especially when it involves tweaking the original. To effectively communicate the redesign and get your company on board, start by testing your initial results. This will help you see how much you’re spending, how much your team is selling, and how those numbers compare to your overall goals.
You should also ask salespeople and sales operations for feedback. Are reps complaining or disputing payouts? Do they understand the new plan? Does sales ops have the data it needs?
Good, clean data is key to a well-functioning comp plan. You’re dead in the water if your company’s post-sales information is scattered across a variety of systems (including ERP, HR and payroll) so make sure all of your pre-sales and post-sales data is centralized in one place.