Sales & Marketing Management - July/August 2008 - (Page 23)

TRAVEL/MEETINGS INCENTIVES TECHNOLOGY TRAINING Compensate to motivate Are you and your team really on the same page? N SOURCE: RESOURCES GLOBAL PROFESSIONALS REPORT www.salesandmarketingmanagement.com istock photo o question, channeling the energy of a sales team can be a challenging endeavor. But here’s an incontestable fact: How you compensate your reps determines where they invest their time and the results you get. The incongruence of sales compensation is one of the biggest disconnects in companies. Executives sit in a boardroom with strategic plans of grandeur, but the plan collapses when they don’t address the compensation for the sales troops. This is a very simple equation. Your salespeople invest their time in activities that drive their compensation, plain and simple. Thinking they will actively and consistently perform activities that are not in their best financial interests is naive at best. Further complicating matters, there are instances where salespeople are compensated for delivering certain results while their managers are compensated on a different set of results. Thus, the sales managers are driving their team consistently with their compensation message, but inconsistently with their sales team members. It creates the visual of the manager pushing a boulder up a hill, trying to get their team to focus on activities that contradict their income. When structuring sales compensation plans, a company should strongly consider the goals for the company. Working backwards, the goals for the company drive the structure of the sales compensation plan. Thus, they should be directly aligned. If the company’s goal is to gain adoption of a new product in the marketplace, the plan should reward salespeople for accomplishing this feat. If the goal is to increase revenue with their current clientele, the plan should reward for that. The second consideration when structuring compensation plans is that sales managers and salespeople should have alignment with their respective results. If one is compensated for adding new clients and the other for selling a new product to existing clients, and it does matter which is compensated for which, the incongruence causes a paralysis of performance. Making this more daunting is the fact that in complex sales environments (those with protracted buying cycles), the standard salary and commission model does not create enough of a framework to ensure that the sales team performs the right activities daily. How do you structure the plan so that the team is motivated to do the right things? Employers also face the challenge of hiring salespeople who are concerned about the length of time of the buying cycle in contrast to their earnings. The standard solution is to bridge the gap with a draw. There are two types of these: The first, known as a recoverable variety draw, is essentially a loan against the salesperson’s future commissions. Then there’s the non-recoverable draw, which is money (free and clear) to the salesperson for some period of time. [THE PULSE] 20 PERCENTAGE OF HUMAN RESOURCE EXECUTIVES WHO RANK CORPORATE PRODUCTIVITY AS A TOP HR PRIORITY. JULY/AUGUST 2008 SALES &MARKETING MANAGEMENT 23 http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - July/August 2008

Sales & Marketing Management - July/August 2008 Contents Editor's Letter Brian Tracy University Smart Sales Sales Strategy Smart Marketing Marketing Strategy Smart Management Management Strategy The Mother Lode of All Market Data Returns Embracing the Future Training Technology Incentives/Motivation Don't Become a Target Abroad Book Excerpt On the Road The Way I See It

Sales & Marketing Management - July/August 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.