Structuring Sales Incentive Programs that Motivate and Foster Growth
Today’s current generation of sales professionals have a much different job than their predecessors did. Thanks to the Internet and other digital resources, customers already have a significant amount of information before speaking to a salesperson about a potential purchase for the first time.
Products have also become more complex, leading to a longer buy cycle and greater challenges for sales professionals. In addition to these challenges, other current trends in the sales industry include:
- Demand can be unpredictable
- Multi-touchpoint usage
- Working with multiple decision-makers in the same company
Recognizing these current challenges, many sales organizations desire to revamp their incentive programs or even start new ones from scratch to ensure the business continues to attract the highest caliber of employee.
Incentive Plan Possibilities for the New Sales Industry
Every company must consider its own sales staff, budget, and several other unique factors when establishing sales incentive plans. Below are three options to consider either as is or with some adjustments to better meet business needs.
Pre-Selling Incentives: With customers spending up to a year investigating each of their alternatives due to the novelty and complexity of modern products, salespeople can become discouraged during the long buy cycle. To counter this, some companies have turned to pre-sale incentives that provides compensation in stages. This type of compensation plan rewards sales representatives with commission based on how well they’re progressing through the sales funnel.
Role-Specific Incentives: Due to the changing nature and increased complexity of products sold, some companies have recognized the need to base incentives on the role each person plays in closing the sale. With digital products, for example, a business might need one salesperson to have in-depth knowledge about its complexities while another salesperson acts as technical support both before and after the purchase.
Split Incentives: It’s common today for multiple salespeople to work on a single deal. To avoid interpersonal conflict within the team, it’s critical for management to establish roles and expectations right away. Splitting revenue generated from a sale equally between everyone who worked towards closing it is one option for handling this situation.
When a Sales Incentive Plan Failed
As businesses create new sales incentive plans, it’s important to look for past examples of ideas that didn’t work so well. One such example is a company that sold B2B products within the last decade.
After introducing a new plan that compensated salespeople for volume of products sold, it surprised management at this company to see the plan fail. Because salespeople received compensation based on volume, the price of the item didn’t matter to them very much. This caused some representatives to sell the product at a steep discount while still receiving credit for sales volume. Fortunately, the company recognized the strategic error quickly and changed the plan to one based on margins instead of volume.
The Importance of Empathy
Creating the ideal sales incentive plan is always a challenge. For those tasked with doing so, keeping the following quote about the value of empathy is structuring sales compensation plans is useful:
“When getting a new sales initiative off the ground or building an organization from the ground up, especially in the context of our discussion on incentives and rewards. It’s important to have a sense of empathy and think about from your perspective, what motivates you to bring your all to the workforce. If you’re passionate about your position, it’s probably not just a paycheck that’s directly commensurate for the work you bring in.”