One of the most challenging and important responsibilities of sales leaders is to design a compensation plan that gets the desired results in a way that makes sense for the individual sales reps, the sales team and the company as a whole. Certainly, a major goal for most sales leaders is to ensure that the sales compensation plan would help to maximize sales revenue. But how do you create a compensation plan that drives revenue without sabotaging other important (and often conflicting) goals such as target client revenue, win-rate, customer satisfaction, portfolio mix, high quality and profitability.
It is not hard to imagine that salespeople who are measured and rewarded on revenue growth alone, may be eager to pad their pockets with cash by selling to anyone who will buy rather than wisely discriminating about the customers the company hopes to profitably help and hold onto for the long term. For example, a recent client changed their go-to-market strategy to sell comprehensive solutions to large accounts and to move away from selling transactional products to anyone who would buy them. Their compensation plan did not change. Sales reps were bonused on meeting or exceeding revenue targets. So while the change in strategy made sense strategically, the compensation plan did not help to incent sales reps to follow the new plan. Accordingly, they kept selling what they were used to selling and predictably missed their targets.
It is also not hard to imagine salespeople who are measured and rewarded on revenue having a conflict with delivery teams who are measured and rewarded based upon profit. For example, a recent client found that their delivery teams where cutting corners at clients to meet tight budget parameters. This created dissatisfied clients and higher account churn – which eventually negatively impacted revenue.
Smart sales leaders think through (with their teams) any unforeseen consequences of whatever incentives you offer as carrots to your sales force to minimize problems and to motivate the desired behaviors.
The good news is that you don’t need to be an expert at solution selling training to identify a simple example of an incentive program gone wrong. We have all had a favorite store where we knew we could get attention and help in finding just the right item. I certainly did. Then, suddenly there was a drastic change in the way I was treated. Instead of a clerk with time to spend helping me, they hurriedly answered my question and went to help someone else before I could find what I needed. My retail “helper” was impatient and looking over my shoulder to grab the next customer before I was truly served. What had happened? I learned that sales clerks were no longer being paid according to how well they served the customer but by how many customers they talked to in a given day. The unforeseen circumstance? They lost me as a loyal customer. I’m sure that is not what their new pay plan intended to accomplish.
Before you implement a new rewards and recognition program designed to incent your sales team, be sure you:
• Are clear on the purpose, desired behaviors and consequences.
Know what your customers value about the way you do business. Are they interested, for instance, in service before, during and after the sale? Know, too, what would make a real difference in your revenue. Should you focus, for instance, on a different type of customer or, perhaps, on fewer but larger deals?
Identify your sweet spot and make sure you don’t jeopardize the opportunities to capitalize on that sweet spot by incentivizing the wrong behaviors in your sales team. Choose what behaviors will promote your sales strategy and be sure those are the behaviors you reward.
• Understand what would truly motivate your team.
Sure, there are tangible rewards for performance above and beyond like cash bonuses, company-paid vacations and company cars. But research has shown that often the intangible rewards are just as effective. Consider giving a day off or allowing more flexible hours. Regardless of what carrots you offer, make the award public whenever it makes sense. Thank each honoree in front of others so they have the recognition they deserve. Make sure that the rewards on offer are equal to what you are asking people to achieve.
• Set agreed-upon guidelines.
The best sales compensation plans are those designed collaboratively by both sales managers and team members. This way the strategy, goals, roles and rules are well-known to everyone and accepted as fair and worthwhile upfront so you reduce misunderstandings or conflict as you implement the plan.
Are your rewards motivating the “right” sales and service behaviors?
Over the years, both at 3Com and now at Redback, I’ve found LSA Global to be a valuable resource. The recent compliance program that they delivered for Redback’s executive and management team was the right solution, of the highest of quality, and customized to our business and culture. I would highly recommend LSA to any company looking for top quality solutions.
Vice President of Human Resources
We have been able to utilize LSA’s extensive network of top-notch resources to leverage our investment in employee development. The result has been the cost effective and highly efficient delivery of quality educational and management training programs.
Vice President, Human Resources
The LSA Global team was very receptive and flexible to our needs every step of the way. Their staff and facilitator demonstrated attention to detail, responsiveness, and professional courtesy. The participants were thrilled with the outcome and rated the communication skills workshop and the facilitator as ‘Excellent’. I’d highly recommend working with the LSA Global team to meet your professional development needs.
LSA provided top notch solutions right when and how we needed them. They exceeded my expectations from a speed, quality, and cost standpoint. I recommend them to anyone looking for a true business partner in the Learning and Development arena. The breadth and depth of their expertise has helped us hit tight deadlines across multiple projects.
Fortune 500 Financial Services Company
Director of Infrastructure & Technology
LSA has been a tremendous asset to my portfolio, both at my current company and my past company. As an HR leader, I am always looking for ways to find external resources that can provide a solution to our management training needs. LSA does that for me. Their solutions are presented in a much more leadership-oriented manner so as to be crisp, business relevant, and easy to apply right back on the job. I will continue to augment our programs using LSA solutions.
VP of Human Resources
I have worked with other training companies and found it to be more of a seller/buyer relationship than one of matching the right expertise to our business issues. That’s what LSA does – ask the hard questions, listen, and understand our business needs. We receive the benefit of their expertise from assistance with personal development plans to enhancing team performance, to looking at enterprise-wide challenges. It’s all about helping our business succeed as we grow. Right now, LSA is providing great ideas, a fresh approach, and valuable guidance as we develop our management team and accelerate our client relationship management results.
Director, Team Development
We partnered with LSA to pilot a customized behavioral interviewing program to help ensure that we continue to hire the best and brightest as we continue to rapidly scale. LSA’s ability to understand our business and our unique culture combined with their desire to ensure that the best practices framework truly fits our performance environment and is highly adopted by our people is a real blessing. Most other firms want to just ‘give you training.’ Not LSA, they are focused on helping me hit our hiring forecasts and attract A players.
Director of Global Recruiting
LSA helped to meet the needs of my teams within a very narrow timeframe. My team walked away with highly useful management tools and practices. LSA saved us time in delivering the right solution for our specific needs.
Director, Software Engineering, EPG
The refreshing thing about LSA is that they focus on understanding our business situation and helping me succeed instead of selling a product. With over 150 experts, they are an invaluable resource that helps me deliver higher quality results faster. I recommend them to anyone looking to improve the performance of their workforce.
VP of Human Resources
LSA has added tremendous value and intellectual rigor to help take us to the next level. They have been a training outsourcing goldmine for us. Their flexibility, expertise, and speed has been extraordinary. I am a big fan and recommend them to anyone looking to drive true business value.
Global Financial Services Company
Director, Organizational Effectiveness
Here’s a token of my appreciation for ALL your efforts. I’m offering my most sincere appreciation, and it extends to all the folks who made our customized management development programs possible.
Workforce Planning Bureau
We contacted LSA to help us with customized management development. LSA worked with me to identify a solution that would meet our exact needs. We decided to start at the top and ran the program for our executive team. It was such a great success that we hope to roll it out companywide. We look forward to a long-term partnership with LSA Global and their team of experts.
Barry L. Byrd, SPHR
Human Resources Manager
The Next Generation Management Development courses have helped me communicate more effectively with my peers and teammates. By utilizing effective communication techniques such as clarifying and confirming, and asking open ended questions, I have been able to clarify and understand information in situations where I would have otherwise asked limited questions and made false assumptions.
Firmware Engineering Manager
The Managing Virtual Teams program was extremely valuable. Your consultant/ facilitator’s fundamental knowledge of Synopsys as a company provided an incredible base to build upon while tackling the complications of managing and working with globally distributed teams. My team walked away walked away with highly useful practices and tools. It was an excellent use of our time.
Vice President, Information Technology
Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.
Want to know how you stack up against leading organizations? Receive a complimentary benchmarking analysis courtesy of an LSA Expert.
Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.
First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.
Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.
Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.