It’s not about the formula.
The biggest mistake management teams make, when it comes to sales compensation, is using the pay plan to manage salespeople. Managers, not plans, are responsible for managing sales teams. Incentives are structures in place to reward and encourage salespeople for leading their managers towards achieving objectives.
The second biggest mistake arrives from the assumption of discretionary energy. If the pay plan changes, sales teams just need to work harder to sell more, right? Nope! This brand of formulaic strategizing can stifle the results you’re looking for.
According to the study we completed for NAW, the top predictor of income is tenure, not performance. Avoid this by redefining a sales management process to ensure “A” performers get paid like the “A” team, and “C” performers get paid like the “C” team.
We still see antiquated sales techniques like bringing in donuts to a prospective client on Thursday afternoon, which, safe to say, isn’t always the most efficient approach to making a sale. To consistently reach sales objectives, successful companies should think innovatively in defining goals for their sales team, letting people manage people.
Watch now as Mike Marks examines the biggest mistakes made with sales compensation: