What are the six most common sales incentive issues faced by professionals? We’ll reveal them all in an upcoming webinar on Feb. 27.
In this post, we hit on one issue that annually nears the top of the list: the need to simplify your incentive plans. Many constituents have a say in what goes into the sales incentive plan. Marketing wants its products highlighted and promoted. HR wants to ensure the plan is fair and motivational. Sales wants to ensure it hits its number. Finance wants to keep the cost of sales in line with expectations. Sales operations wants to make sure it can administer the plan.
The end result can be a complicated plan, with multiple metrics, multiple levers, qualifiers and kickers, accelerators, etc. While closing that big sale may be very difficult, figuring out what you get paid should not be.
So what does it mean to simplify? In short, less is more. Reduce the number of metrics. Reduce the number of "inflection points" in the commission rates and payout curves. Reduce the number of kickers in the plan. Communicate salesperson performance often, and in a clear, simple way. Give salespeople a tool to know how much they can make on each and every sale.
When you design plans for next year, don't start with what you had last year. If you have a very complex plan, you may end up satisfied with a fairly complex plan—an improvement over what you had before, but no more understandable to the field.
Begin with a blank sheet. Identify guiding principles. Develop plan options from simplest to most complex. With every successive option, challenge the group as to whether the business results you get by adding complexity will be more than offset by the reduced understanding by the field. By going about it this way, you are far more likely to end up with a simple, manageable, understandable incentive plan that, in turn, is more likely to motivate your salespeople.