First – and really foremost – the sales compensation plan has to align with the strategy for the business as a whole. Typically, it’s the CEO who sets the strategy and it’s this original version that should be top of mind when thinking about how to pay the sales reps.
The sales strategy defines the sales organization’s action plan to achieve its goal. The sales strategy will drive decisions concerning product and service focus, concentration on certain markets, value propositions, and the resulting approach to market. Central to the strategy, you have to define the core and strategic products and services the business provides. In many companies these are developed based on the needs of certain customer segments.
These priorities gave us a clear direction for the business, which we could then translate to customer coverage and sales compensation. The company wanted a more sales driven culture.
To make the connection between these business priorities and compensation, the company’s leadership should focus on their priorities for the design of the compensation program. They should know what they needed to accomplish. Once they get down deep into the compensation work and the team starts getting uncomfortable, making comments like, “Do we really want to do that?” and “I’m not comfortable with this measure,” and “Finance is not going to support that upside,” it becomes easy to say, “Look, here’s what you want to accomplish as a business. We’re going to have a hard time going back to the CEO saying we missed a couple important points.” Nobody wanted to return to the CEO with anything that didn’t support his goals for the business. And, the C-level to front line connection is made.
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