A well-designed sales compensation program should be easy to understand and
it should reinforce your organizations strategic objectives and drive the specific
sales results you require. THRD can design that program taking into consideration
such elements as profitability, what is affordable, customer service, new and
existing accounts, competitive conditions, sales cycle, type of product(s)/service(s)
and sales representative experience.
Some of the key elements to an effective sales compensation plan:
Plan goals coordinated with organizational strategic objectives.
Who participates?
Definition of sales’ reps role – finding, cultivating and keeping
customers.
Establish the pay range- what is appropriate, what can you afford and
what is competitive.
Pay for what performance?
Plan design – understandable, equitable, flexible, realistic, achievable,
and measurable.
When should the sales rep get paid? How often?
Test the design using previous actual performance or projected performance.
Explain and train your administrators and managers.
Communicate the plan.
The Human Resource Department. (THRD) project manager will work with you
to clearly establish your answers to the above elements, particularly strategy
and objectives, sales’ rep role and pay range.
Then the project manager will take into consideration important considerations
such as:
Market demand
Market maturity by market segment
Competitive conditions
Economic conditions
Current sales structure
The end result you want in your sales compensation design is a plan that encourages
those who can be extraordinary to be extraordinary and it sets an example for
lower or mid-level performers. The process of aligning sales compensation with
sales strategy never ends. The organization that works to ensure the ongoing
alignment of sales compensation strategy and practices with its strategic objectives
will be rewarded with increased profitable sales and success.
