Telemarketing Software Featured Article

Successful Sales Teams Need Effective and Transparent Sales Compensation Solutions

December 30, 2015
By Tracey E. Schelmetic - Telemarketing Software Contributor

While the effective motivation of salespeople is a complex subject involving many facets: good sales management, initial and ongoing training, sales support materials and collaboration programs and solutions, it often comes down to monetary incentives for salespeople. Good salespeople will go where the opportunities to earn money are, and they are more likely to stay with an organization that is fair, transparent, and best when it comes to compensating them.

According to Barry Wilderman of Wilderman Associates writing for TechTarget, companies need to carefully develop an effective incentive compensation plan that allows salespeople to be rewarded for excelling.

“Incentive compensation is critical to sales,” he wrote. “For salespeople, IC ties sales success to additional compensation. For sales management, incentive compensation can influence the achievement of strategic corporate goals. Without a well-structured incentive compensation plan, the expectations for salespeople may be poorly defined and sales results may be inconsistent with corporate goals.”

Salespeople may focus on the areas that will produce the best results for them in the short-term, but if these goals aren’t aligned with the organization’s long-term goals, salespeople will actually be working against their employers. Software that can keep track of incentive compensation is key here, but it needs to be highly usable, flexibility and robust in reporting and effective integrated with other sales support solutions. The first step should be to analyze the overall objectives of the historical plan and how well those objectives were met, and identify the most urgent needs going forward.

“Review the historical incentive compensation plan from a sales point of view,” wrote Wilderman. “In the historical plan, decisions were made to assign territories, quotas and incentive compensation by salesperson. Again, make notes as to what worked and what didn't. The IC plan should spell out the variety of IC calculation approaches required.”

Once historical information is analyzed and needs and goals are identified, companies should then create a new plan based on strategic objectives. It’s important that they consider benefits to the organization, but also benefits to individual sales reps, or the two groups will be working against one another if the goals aren’t aligned.

“Clearly, you will want to hit some profitability goals,” wrote Wilderman. “But the analysis must go deeper. Do you want to emphasize certain product lines? In certain regions? Is it the company's goal to bundle more service with product? Create a sales plan based on territories, quota and IC. The sales plan must meet the objectives described above.”

When it comes time to align the technology to the plan, consider which other solutions or departments need to be folded into the compensation solution. Human resources, workforce management or payroll may need to be integrated. Performance management and sales performance management solutions will also be critical to the compensation solution, particularly since the compensation calculations may need to draw data directly from those solutions. Before choosing a solution, look for recommendations from other users, read some case studies and ensure that the vendor you pick has experience in integration with other critical solutions. Also ensure that the solution you pick is designed to be easy to use and transparent for sales personnel to keep track of. Any compensation solution that appears to be designed to obfuscate and frustrate individual salespeople rather than make it easier for them to do their jobs will have low utilization rates and will accomplish the opposite of what it was intended to do. 

Edited by Kyle Piscioniere