Sales leaders often take for granted that money motivates reps to sell more. When sales activities do not go as planned, the first adjustment is usually to the compensation plan.
But although compensation is one of the biggest tools to motivate a sales team, it is not always the right tool. A rep without the individual influence to close a sale will not be able to deliver increased sales regardless of the commission incentive. Before looking to make changes to your compensation plan, evaluate your reps’ commissionable impact to confirm they have the ability to deliver the result you’re looking for. This can be done by looking at three areas:
- Sales environment. This involves the mechanics of the sale that determine the influence a rep has on closing business. Does your product require the rep to play a significant role in the sale, or is the rep only contributing to the sale? For example, having a large volume of deals makes commission a more valuable tool because the rep will have a lot of opportunity to generate results to reach their commission goals.
- Sales rep influence. The more support provided in the sales process, the less influence the rep has. How much does the team surrounding the rep contribute to the sale? For example, if reps generate the majority of their own prospects, they have a much bigger influence than reps who are provided the majority of their leads from marketing and are only required to qualify and close.
- Ability to measure results. Sales reps who are not confident in their numbers will be less motivated by high-commission plans. Can the sales rep see the anticipated results of his or her efforts (e.g., impact on compensation) in a timely and accurate way? For example, reps should be expected to have accurate numbers. Not having this will cause them to waste time trying to make sure their numbers are correct instead of working to drive sales. If this is an issue, resources should be dedicated to fix this as quickly as possible.
If after reviewing these areas, you can see that sales reps have a high influence on moving deals through the pipeline then compensation changes will have an impact on sales performance. With this knowledge, you can be aggressive in plan design to create a plan that brings out the best performance from your reps. However, if you find the rep is important but has a lot of pieces that are out of their control, commission is not going to make a big difference in driving performance. Make sure plans are aligned to pay reps to manage the long-term growth of the company and then look for other areas to motivate the overall team to improve sales.
For a deeper look into this, you can take our assessment to validate the commissionable impact of your sales team. Contact your account team to learn more. And explore our 2021 B2B Summit North America event for more research-based insights and guidance for sales operations leaders.