Sales compensation plans are a crucial tool for motivating and retaining top sales talent, but getting the most out of your new plan can be a complex and time-consuming process. Let’s discuss some key strategies for successfully rolling out and analyzing sales compensation plans, so that you can ensure that your plan is effective in driving revenue growth and retaining top talent.
- Communicate the Plan Clearly and Transparently
Once your sales compensation plan has been designed, it is important to communicate it clearly and transparently to your sales team. This will ensure that they understand the plan and how they will be rewarded for their efforts. By providing clear and detailed explanations of the plan, you can help to ensure that your sales team is motivated and engaged. Remember, plan communication shouldn’t stop after rollout, nor should it be one-directional. Some best practices include:
- Communicate in multiple formats. Include a formal presentation, create documents, and post an FAQ online.
- Survey the sales force after rolling out the plan, then clarify points of confusion.
- Re-communicate plan specifics after the first payout, when reps are most likely to have questions.
- Use feedback from your sales force to inform your future plan designs (this is a practice many companies fail to consider).
- Track Key Metrics
To analyze the effectiveness of your sales compensation plan, it is important to track key metrics such as sales bookings by product type, customer retention, and employee turnover. By regularly reviewing these metrics, you can identify any areas where the plan may need to be tweaked or adjusted to better align with your organizational goals.
- Create Better Sales Compensation Dashboards & Reports
Dashboards are the key to effectively communicating your sales compensation plan, but they’re widely underutilized. Many sales compensation dashboards are clunky readouts of a few lagging metrics: last month’s commission payout, commission earned to date, estimated pipeline value, and maybe a couple more.
To demonstrate to the sales team that the new plan is effective, companies need to have dashboards that align to the plan and the go-to-market strategy. Best-in-class companies generate different reports for different stakeholders—salespeople, managers, leadership, administrators—each with its own metrics and cadence that relate directly to the role. Make sure your dashboards display information that’s helpful to the target role and provides up-to-date incentive payout tracking. Also, ensure dashboards can evolve with your sales team’s needs. Having drill-down capabilities so reps can see what drives their incentives helps them understand the comp plan better and reduces commission disputes.
- Invest in Ongoing Training
Educating reps on the comp plan should be part of your ongoing sales training program. Consider instilling a culture of transparency by getting top-performing reps to explain to others what they’re doing to maximize their earnings. Also, facilitate informal peer-to-peer knowledge sharing as much as possible by buddying newer reps with well-performing reps. Representatives can only copy winning behavior if they know what it looks like.
- Create a Feedback Channel
Create a feedback channel between reps and the sales compensation function. An email inbox is not enough. Ideally, use the messaging tools built into your existing Incentive Compensation Management software to give reps an easy way to request information about their sales compensation.
- Continuously Monitor and Improve
It's important to remember that Sales Compensation plan are not one-time event but an ongoing process. You should continuously monitor and improve the plan as per the market and organization's needs and shifting market dynamics. For example, if you see that your team is not performing well against certain plan expectations, you can use that insight to dig into why the team is missing and what changes are needed to meet the sales plan.
A poor sales compensation communication and roll out strategy can hinder an otherwise well-designed incentive program. If you have any questions on this topic, schedule a meeting here with our experts.