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Sales compensation and commissions are somehow embedded in the DNA of good sales people. They can optimize the pay-out math on their sales pipeline faster than calculating new debt or mortgage payments.
It is a simple fact of sales management. So, when you consider your sales incentive plan make sure it will optimize for your intended revenue targets.
1. If you want short-term wins: Put your top commissions on simple, broad appeal products. Apply incentives to volume and contact rates, not relationship or pipeline building.
2. If you want long-term sustainability: Put your commissions on managing portfolio-type accounts. These are people that are affluent and typically have multiple transactions or strong referral networks. Apply incentives to pillar relationships with professionals (i.e., accountants, lawyers, and doctors)
3. On all accounts: Commission on sales revenue, bonus on hitting and exceeding targets, profit-share on out of this world results.
As the old sale adage goes, “What gets paid gets done.” Think closely about what you are telling your sales team to work on when you publish your next commission plan. Word to the wise, do the math on the team’s pipeline first. That is the quickest way to forecast the results.
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Troy,
I might also add that using the proper tools to model these costs is important. Building a plan with an easy to use graphical interface increases the clarity when communicating new plans, it also prevents over-payments, and allows you to better track the effectiveness of the plans. You can view samples of these plans here: http://www.makanasolutions.com/incentive-compensation-software/
-Teanna
http://www.makanasolutions.com/blog