Is Your Compensation Plan Driving Sales to the Wrong Finish Line?

October 28, 2016

“Moving the needle” in terms of overall sales force performance is no mean feat. Sales Enablement – yes, big S, big E – is becoming an increasingly important function of many sales organizations, charged with increasing productivity, typically through the effective application of investments in people, technology, process and content. So let the games begin!

No company has the luxury of an unlimited budget or unlimited time, so decision-makers must prioritize where to invest. Many Sales Enablement investments pay off in the course of 12 months or more; however, heads of sales departments have quarterly objectives, so they must somehow saddle and ride the horse at the same time.

So where does a sales VP place their bets? He or she will need to make some critical decisions. For example, is investing more heavily in training a better option than the introduction of a content management or CPQ tool? Or is a new sales methodology a better option than investing in a sales manager coaching program? From an ROI standpoint, it is generally acknowledged that a discrete investment has limited payback if it is not supported by other related investments. For instance, many would concur that a high percentage of sales training is forgotten or ignored in as little as 30 days after the workshop. However, if training is reinforced with effective opportunity-level coaching, there is a higher likelihood of achieving sustained change and performance improvement. This is why smaller investments supporting the large investments are critical for success.

Companies must make these types of Sales Enablement investments to remain competitive and meet revenue expectations. One crucial dimension to consider is that most of these investments are focused on the “What” and the “How.” These can include:

  • What we are selling
  • What tools we are using to do our jobs
  • What we say to a client
  • How we advance an opportunity
  • How we manage the deal
  • How we capture data and information

 

However, this train of thinking neglects the “Why.” This is where effective compensation plans come into play, as they can make a big impact on driving behaviors through the “Why.” Few sales enabling investments engage a rep at the emotional level, and reps may have to use a tool or process because it is mandated, whether or not they really want to. However, a new compensation plan that helps reps achieve their objectives faster or more easily will get reps on board, answering the basic question of, “What’s in it for me?” Most effectively, aligning compensation plans with the goals of the business gives reps the reason “Why” to sell a particular product or service to a particular type of customer. If you lose that alignment, your plans will be competing with and devaluing your other Sales Enablement investments: a lose-lose situation.

To delve further into the business case for an effective incentive compensation management approach, join us for our WorldatWork webinar on the Art and Science of Sale Performance Management on November 15 at 12 pm EST. Joseph DiMisa, SVP of Marketing and Sales Effectiveness Practice Leader at Sibson Consulting will join me to discuss the strategic and operational factors behind developing an agile incentive compensation plan as well as the business case for one. Register for this free webinar today!

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