OCG fashions total sales compensation programs that foster and reward employee contributions to sales growth, market share, and account penetration goals. These programs strike a balance between what it takes to motivate the sales force and the amount and manner of resources used to motivate them.
A few thoughts:
- You need sales. Sales are the critical driver of a company’s performance, whether in its start-up, mature, or renewal, stage. Cost-cutting is a poor substitute for new revenue generation.
- Sales must be smart. They must contribute meaningfully to and be in alignment with the firm’s long-range objectives. Sales which merely keep a profitless facility open are at best pointless. We work with our clients and devote time to understanding their finances and business plan to set relevant measures for their sales forces.
- The sales force must be smart. Once we determine the relevant sales and financial measures, we recommend that they be communicated to the sales force. As a result, our clients benefit from a sales force which not only knows what is expected of it, but also what helps their company succeed, and their influence upon it.
- Sales compensation is about more than salary versus commission. If salary is too high, the sales force may languish in its “comfort zone.” If commission is over-emphasized, the sales force may sell by the numbers merely for the current quarter or year, without regard for the future of the business. Our successful clients typically look beyond, to a blend of:
- Salary
- Annual incentive
- Long-term incentive
- Sales probably involve more than just the salesperson. The sales force may be merely the tip of the spear of a firm’s revenues. When we look closer at our clients, we frequently find a team at work behind the key sales executive, comprised of, in one case:
- Marketing staff
- Engineer
- Quality control person
As a result, we often recommend a team incentive (perhaps with differing individual award levels) for sales compensation. (In your case, of course, the team may vary from our example.)
- We’ve been there and done that! To see our methods and philosophy in greater detail, download our whitepaper, How to Design an Effective Sales Compensation Program, here.