Stump the Consultant: Biggest Mistakes Made with Sales Compensation

Written by Mike Marks on Wednesday, 20 November 2019. Posted in Business Strategy, Sales Management, Sales Compensation

Stump the Consultant Biggest Mistakes Made with Sales CompensationIt’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:

About the Author

Mike Marks

Mike Marks

Mike Marks co-founded IRCG in April 1987. He began his consulting practice after working in distribution management for more than 20 years. Over the years, his narrow focus in B2B channel-driven markets has created an extensive number of deep executive relationships within virtually every business vertical in construction, industrial, OEM, agricultural, and healthcare.

Mike has led project teams that improve market access by aligning resources to growth opportunities serving manufacturers, dealers, and distributors. Clients have ranged from small privately owned firms to many of the industry’s market share leaders. Ownership structures have included owner-operators, private equity, ESOPs, and publically traded firms. Mike is proud of the teams work and the confidence clients have shown with additional project work.

He has written extensively, and is frequently quoted on many industry issues. He has substantial board experience on both public and private distribution firms. His contributions to the field include serving multiple terms as a Research Fellow with the National Association of Wholesaler-Distributors, permanent faculty at Purdue University’s University of Industrial Distribution, eight years as Graduate Adjunct Faculty in the Industrial Distribution Program at Texas A & M University, and rendering several precedent-setting expert opinions in contract disputes between manufacturers and distributors.

Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, an $800 million vertically integrated electronics distributor in Stamford, CT. Mike’s path to management in his early career was through increasing responsibilities in sales and sales management. He also completed a tour of duty as a manufacturer’s representative.

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