I’ve noticed throughout my career that many people confuse “activity” with “productivity.” This takes me back to my summer college days when I worked in environmental remediation. The countless times I heard, “Here comes the foreman, grab a broom and look like you’re busy!” That might’ve saved you from getting yelled at back in the day on a construction site, but in today’s modern business, especially in a “paying for performance” category, the activity is just activity and not productive unless it directly ties to organizational objectives, i.e. results.
Organizational objectives serve to unify and motivate a company with shared goals. But creating that alignment is difficult when individuals and departments have an independent set of motivations. This is often most on display in the sales department, where compensation may be tied to activities that don’t fit with your organization’s overarching objectives. By prioritizing and incentivizing sales activities appropriately, you help to ensure the sales department does its part to work toward those goals.
When sales activities and incentives aren’t properly aligned with organizational goals, it can slow progress toward the intended objectives—and sometimes even work directly against them.
In this article, we’ll go over five steps you can take to align sales activities with organizational objectives:
- Know what organizational objectives to pursue.
- Identify which sales activities support those objectives.
- Structure your sales comp plan to incentivize those activities.
- Roll out your new sales comp plan.
- Track performance and refine your plan.
1. Know what organizational objectives to pursue
Before you can start aligning sales activities with organizational objectives, you need to know what those objectives are.
They will typically come from the executive level and should create a unifying direction for the company to head. Organizational goals should consider the Strengths, Weaknesses, Opportunities, and Threats (SWOT) posed by the current state of the organization and the market environment, and they should align with the organization’s overall mission and values.
Examples of organizational objectives can range from broad goals, like driving revenue and increasing market share, to much more narrowly defined goals, like strengthening customer service or improving brand reputation. Any objective should come with Specific, Measurable, Achievable, Realistic, and Timely (SMART) criteria for completion. In other words, the goal shouldn’t just be to increase market share, but to increase market share by 60% over the next five years.
You’ll also need to determine the degree of influence sales can exert over each of those objectives, and understand when your team will play a main role, when you’ll play a supporting role, and when the factors for reaching that goal are largely (or entirely) outside your team’s area of influence. Work with sales leaders and executive leadership to ensure everyone is on the same page with how each objective will influence sales’ strategic and tactical direction.
2. Identify which sales activities support those objectives
Aligning sales with organizational objectives is a matter of prioritizing the activities that will support sales’ part in reaching those objectives—without minimizing other activities to the point of creating problems.
But before you can prioritize objective-supporting activities, you need to know which ones those are. And that’s going to differ based on the organizational goals you’re working toward. For example, if the goal is to improve customer retention by 10%, then sales activities might include things like regular check-ins with customers or securing sign-ups for a loyalty program.
Some of the activities may be obvious, but what about the less-obvious correlations between sales activities and organizational objectives? There may be subtle, unnoticed aspects of sales activities that add up to bigger changes in your progress toward (or away from) goals. To find those, you need to engage in sales data analysis.
Sales generate a tremendous amount of data that you can mine for insights. But you have to track your data first, and you need to have a tool capable of analyzing the data to find correlations that would otherwise go unnoticed. An Incentive Compensation Management (ICM) platform like Performio can do both.
Performio’s Analytics Studio puts all of your sales data at your fingertips, with intuitive dashboards, graphs, and auto-generated reports that make it easy to find the insights you need. You’ll be able to see, for example, which kinds of deals are most profitable, taking into consideration factors like time and effort required, fees, commissions, and other costs that can obscure the true value of a given deal.
For any sales activity, you can analyze how much it contributes toward organizational objectives. You can drill down to the specific KPIs needed to support those activities. And then you’ll be empowered to structure your sales comp plan accordingly.
3. Structure your sales comp plan to incentivize those activities
Once you know which sales activities will play a critical part in achieving organizational objectives, you can prioritize those activities in your compensation plan with increased or additional incentives.
This is a balancing act. The specific sales activities you’ve singled out won’t be the only ones that are important for the success of your organization. And incentivising them too much may cause more problems than it solves. This can be especially true if the sales activity doesn’t directly generate revenue.
For example, you may have identified sending more emails as a sales activity worth incentivising. What you don’t want to do is place a commission directly on every email sent. You’d suddenly have thousands of emails being sent to potentially poor-quality leads with little or no follow-up, and you’d be on the hook to pay your sales reps for each one of them.
Instead, for non-revenue-generating sales activities, consider using non-cash incentives in order to prioritize the activity without jeopardizing your bottom line. To continue our example, you might hold a monthly contest where the sales rep who sends the most leads each month wins a gift card. In this way, you’ll ensure that more emails are being sent, but you’ll do so without over-prioritizing them to the point of creating other problems.
On the other hand, if the sales activity you want to prioritize does directly generate revenue, then it may be a great candidate for simply adding or increasing the commission associated with it. This is a spectrum, with some sales activities squarely on either side, and others falling somewhere in-between.
4. Roll out your new sales comp plan
Having structured your compensation plan to align sales activities with organizational objectives, you now need to roll it out in a way that clearly communicates the new plan to the sales department. It’s important that everyone understands not only what they’re expected to do, but also why the changes were made and how those changes will help them and the company succeed.
Make sure to bring the sales leadership team on board. Each leader will have a deeper understanding of what drives each of the sales reps they manage, and they’ll be able to help you relate your plan to their needs and desires. They’ll also be able to help you field questions and objections that sales reps are likely to raise, allowing you to anticipate them and be ready with answers.
Develop a narrative that explains the new plan and the benefits it will create. Don’t just give them numbers, give them a story. Start with a broader look at the organization’s mission and values. Then tie those into current market conditions, and the opportunities ready to be seized. Talk about any problems your organization is currently facing that need to be addressed. And then go over the plan, explaining how it will position the organization—and every sales rep—for a successful future. They should understand what the organizational goals are, what they’re doing to achieve them, and how they’ll be rewarded for following the plan.
Then be sure to provide thorough documentation to provide reps with all the details. In addition to a comprehensive breakdown, include an executive summary that pulls out just the most important pieces of information for each sales employee. You should create a few different executive summaries for different roles, so that each person only sees what is relevant to them in their summary.
5. Track performance and continue refining your plan
Ideally, the new plan will perform as intended, incentivising the right sales activities and pushing the organization toward achieving its objectives. But you can’t leave it to chance. You relied on data to get to this point, and you need to continue relying on data to ensure that you’re staying on course.
Continue tracking sales performance in an ICM like Performio, and generate regular reports to see whether the new alignment is doing what it’s supposed to do. To the extent that it isn’t, make whatever small adjustments to your plan are needed to keep it on track. Look out for things like bottlenecks to address or conversion rates to improve.
Additionally, market conditions rarely stay static for long. A plan that worked perfectly three months ago may suddenly find itself in need of revision due to external factors beyond your control. As circumstances change, organizational objectives and your prioritized sales activities may need to change with it.
Achieve organizational objectives with Performio
With Performio, building or changing a comp plan is easy. No need to sort through rows of data in spreadsheets, modify individual copies, and hope there are no errors. Just make the necessary changes once, and the new plan will be automatically distributed to your sales team to accept and sign electronically.
Performio then automatically calculates sales compensation reports for sales reps, managers, and finance staff. It’ll take into account both the old plan and the new one, and it’ll do it all in one place. This ensures that even when business priorities shift, your incentive structure can keep in step.
Additionally, our software gives you a start-to-finish look at your sales data, producing valuable insights at every step of the way. You’ll see which leads have the best conversion rates, which sales reps are securing the most customers, which methods are the most effective, and how all of it comes together to support organizational objectives.
Ready to see what Performio can do for your business? Request a demo today.