The Complete Guide to Sales Force Incentive Compensation

Getting Sales Incentive Compensation Right...If You Can

Establishing the right sales incentive compensation plan is challenging, but it’s worth the trouble. Getting this right can help you retain and recruit top-selling talent and increase sales, which is the whole point. Alas, getting it wrong can have the opposite effect; you can lose people and sales, and injure your company. The objective is clear: create an effective compensation program. To achieve this goal, you need to take many different factors into account.

Begin with a budget and ask how much you can allocate to pay salespeople. Consider your experience and theirs to determine what ratio of their compensation should be salary as opposed to incentives or bonuses. Do you want to vary salespeople’s pay depending on performance? Do bonuses or short-term incentives emphasize achievement or do they divert salespeople from their main mission? Do cross-selling incentives work? As you establish a plan, avoid complexity. Build on past successes as you keep an eye on your future sales needs. Use your staffers’ enthusiasm for the plan as a metric that can indicate if it will work to satisfy the four reasons that companies...