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Sales Force Compensation – A Well-Designed Program


It is a truism to say that a well-designed sales force compensation program should reinforce an organization’s strategic objectives. However, many organizations have never developed a well formulated strategic sales plan. Developing a strategic sales plan is step 1 to developing an effective sales force compensation program.

The strategic sales plan should act as a “road map” for sales achievement. The plan should take into account the external conditions affecting the company’s ability to achieve sales results, as well as the type of sales techniques and approaches that are necessary to accomplish these results. Some of these conditions include:

* Market demand

* Market maturity by market segment

* Competitive conditions

* Economic conditions in the market

* Strategic objectives by market

* Types of sales effort/behaviors desired

* Current/desired sales structure

* Current/desired future skills needs, and

* Other factors which may impact on a company’s sales effort

Without a well formulated sales strategy, a company’s sales efforts will be disjointed at best and highly ineffective at worst. Yogi Berra got it right when he said, “If you don’t know where your going, you’re liable to end up someplace else.”

Sales people, in general, will play by the rules given in order to make commissions and/or bonuses — in other words, “win.” The sales compensation strategy as it is driven through the compensation program is meant to keep the players running in the right direction and prevent them from scoring touchdowns on the wrong end of the field.