3 Solution Selling Compensation Strategies That Work

Solution Selling Compensation Strategies
One of the most challenging and important responsibilities of sales leaders looking to shift from selling products to selling solutions is to design solution selling compensation strategies that are aligned with the go-to-market plans for success.  An effective sales compensation plan gets the desired results in a way that makes sense for the individual sales reps, the sales team, and the company as a whole.

Aligning Sales Compensation with Sales Strategies
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 solution selling compensation strategies that drive revenue without sabotaging other important (and often conflicting) goals such as target client revenue, win-rate, margins, customer satisfaction, portfolio mix, high quality and profitability?

Rewards Based Upon Revenue – An Example
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 – regardless of margin, satisfaction, or long-term potential.  For example, a recent client changed their go-to-market strategy to sell comprehensive solutions to large target accounts and to move away from selling transactional products.

Unfortunately, their compensation plan did not change. Sales reps were bonused on meeting or exceeding revenue targets. So while the change in strategy made sense for their marketplace, the compensation plan did not create the right incentive to follow the new plan. Accordingly, they kept selling what they were used to selling and predictably missed their profitability and portfolio mix targets.

Conflicts Between Sales and Service Compensation Strategies
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 solution selling training client found that their delivery teams where cutting corners at clients to meet tight budget parameters. This created dissatisfied clients and higher key account churn – which eventually negatively impacted revenue.

Smart sales leaders think through (with their teams) any unforeseen consequences of each and every incentive on to ensure that their solution selling compensation strategies minimize problems and maximize desired behaviors.

3 Solution Selling Compensation Strategies That Work
Before you implement a new rewards and recognition program designed to incent your sales team, be sure that you:

1. Are Crystal Clear on the Purpose, Desired Behaviors and Consequences
   Know exactly what your target 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 sales behaviors. Carefully choose the behaviors that will promote your sales strategy and be sure that you proportionately reward those behaviors.
2. Understand What Truly Motivates 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.
3. 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.

The Bottom Line
Are your rewards motivating the “right” sales and service behaviors?  Almost nothing can derail a solid sales strategy or a differentiated offering faster than a misaligned sales compensation strategy.  Are you aligned enough to win?

To learn more about creating high performing sales teams, download How to Optimize Your Sales Force in the Face of Increased Performance Pressure