All sales managers want their teams to perform well and outsell the competition. The problem is that they don’t always know the best ways to go about that or how to keep salespeople motivated over the long haul. Fortunately, sales is a field that offers a lot of creativity when it comes to compensating and motivating people to do their best. This start with bringing together the right people to form a team to formulate the right sales compensation model.

Key Players to Include on a Sales Compensation Team

The way that a company pays its sales associates affects more than the sales department. It impacts several other departments and outside experts as well. With this in mind, a sales manager should consider inviting the people described below to be part of a team to decide on compensation packages and motivation strategies for sales professionals.

  • Finance Manager: This department has the responsibility of assessing cost and plan modeling as well as ensuring that the results of each plan strategically align with company goals.
  • Human Resources Manager: The human resources department is the one to actually issue payments from a specific compensation plan to employees. A representative from this area will have excellent insights into whether a plan is fair to all and the regulatory statutes that must govern it.
  • Sales Director: Members of leadership from the sales department obviously have the greatest oversight and interest in the performance of a sales compensation program. A person from this team brings an understanding of market expectations, how compensation plans affect recruitment, and how to attract the best talent.
  • Outside Consulting Expert: Getting the opinion of a sales expert outside of the company can be invaluable to its success.

In addition, the planning committee should consider notifying management in the marketing and legal departments as well as compensation analysts.

Factors to Consider When Developing Sales Compensation Plans

Most companies offer sales representatives a combination of base and bonus pay. The base pay provides them with the security of knowing they will still receive payment even if they have a slow month. However, it’s the opportunity to earn unlimited bonuses that truly motivates sales professionals. Putting a cap on how much of a bonus a salesperson can earn is likely to kill his or her motivation.

Those responsible for creating base salary plus bonus need to consider the sales representative’s experience level and proven track record for the company. The longer a person stays and the better he or she performs, the greater the opportunity should be to earn sales bonuses.

Types of Behavior to Reward in Sales Representatives

Before implementing a new sales compensation plan, management should make it clear what representatives need to do to earn bonuses. Although this will look different from one company to the next, managers typically like to see these behaviors from their sales teams.

  • Book new recurring revenue
  • Achieve a high renewal rate
  • Obtain a high satisfaction rating with customers
  • Sign a certain number of customers to long-term contracts
  • Close as many deals as possible where the customer pays cash upfront
  • Work with existing customers to drive expansion revenue

By communicating expectations clearly and letting sales representatives know that they feel confident in their abilities, sales managers can achieve greater levels of success with nearly any compensation plan.

(Image Credit: Used with permission via / Daniil Peshkov)