The point of sales compensation is to reinforce behavior that supports and propels your company in the direction you want — and strategic compensation planning is how you accomplish these goals.
Now that you’ve defined your company goals and objectives of your organization, it’s time to attach concrete, definable behaviors to these and create a path of stepping-stones to get there.
Align actions with outcomes
To make sure your sales compensation plan drives the right behaviors, take your “goal hierarchy,” you previously defined and formulated specific actions that correlate with each goal. This way, you’re identifying specific concrete actions you want to perpetuate and indicate which ones to avoid.
If your goal is to increase market share, then you could align a reward for sales reps who find more new business leads than repeat purchases. Or, if you’re trying to increase the size of your customer base and take away from your competitors, you could incentivize sales reps for each new customer they gain.
If your goal is to increase sales volume and inventory turnover, you can tie compensation rewards directly to match the volume of their sales. If one of your goals is to increase the company’s cash flow, it might be a good idea to carefully distribute commissions so that this goal doesn’t interfere with the other incentives you’ve established.
Most sales professionals all around the world tell their managers: Don’t cap bonuses or incentives. If you do, your highest-performers, your best sales reps, and highest achievers will stop when they reach their quotas or caps. This decreases the earning potential of your salespeople and reminds them that they can only go so far, so they will invest less effort into their work.
How to Measure Sales Compensation Outcomes
Of course, these compensation actions are nothing without proper metrics and measurements.
To track how well an incentive is contributing toward your goals, sales comp managers rely on sales commission management software that integrates sales data and company metrics. With an inventive compensation management solution, you won’t have to calculate anything by hand, spend time on data entry or draw conclusions from the different analytics reports.
Basing your decision-making process on reporting from your sales commission platform is a smooth and steady way to understand the cost of compensation.
So if something you’ve compensated for isn’t bringing the results you want, you can tell in real-time and figure out how to adjust to improve the outcomes. With dashboards and analytics capabilities, it’s easier than ever to visualize and understand how day-to-day efforts comprise and create the long-term goals that drive company success.
A SaaS-based system, Performio has saved more than 500,000 administrative hours and calculated more than 3 billion dollars in commissions. Our sales performance management solution allows sales comp administrators to configure forecasts easily and generate leaderboards, so it’s easy to analyze short- and long-term growth strategies.
Leaderboards let sales reps see how they’re stacking up against their quotas, their current bonus, and commissions, and regional or national sales reps rankings within the company. Leaderboards make it more useful for motivating a high-performance sales team. It’s an easy way to boost performance, increase transparency, and drive your salesforce to keep working toward personal and company goals.