Incentive Planning - Relative Terms

Incentive Planning – Relative Terms

Transparency in measuring a salesperson’s success is an absolute necessity and that is the reason most of the companies are very frank in sharing commissions and profit-sharing figures with their employees. As a part of good company measures, salespersons are always clearly told that they are being waged with a specific commission on the revenue earned on sales.

Unfortunately, as per the existing number-centric model, performances in many companies are still measured only in terms of revenues and profits, which are the only things that companies can measure efficiently. That is an outcome of them not having taken the time to form a strategic plan for compensation. Inspite of having some core aspects in place, their plan may still not have been communicated effectively.

Some companies that try hard to incorporate significant activities into the plan, sometimes don’t focus on one of the most crucial elements, i.e., productivity. There are two crucial weight carrying factors in the compensation plan, which include − expertise of the salesperson and the goals and objectives of the sales process.

A good possible answer to the first point would be the factor that differentiates the good sales organization from the bad sales organizations. As salespeople work for the things they get compensated for, it is their choice whether they want to encourage certain behaviours, ensuring it goes in accordance with the plan. If it does not go according to the plan, they will be left looking at their angry senior, with him asking them back, “Why was X done, and not Y?”

Characteristics of Incentive Deserving Salespersons

Along with revenues and profits, sales activities such as searching for calls and sales proposals could be included within the compensation plan. On the other hand, the measurement of several other crucial areas must also be considered, which may include sales skills and knowledge about the products. They can be clubbed with numerous categories that are mentioned with respect to their strategic priorities, such as −

  • Revenue or Profits − Is the salesperson on the verge to meet the set targets related to the existing and/or newly introduced products?
  • Sales Activities − Does the salesperson exhibit the correct activities that help achieve the required results?
  • Sales Skills − Does the sales person provide adequate solutions to the customer?
  • Inter-Departmental Communications − Is the salesperson working hand in hand with different entities inside the organization?
  • Knowledge about the Products − Does the salesperson know the current product line and newer products that are being launched?
  • Competitive Analysis − Does the salesperson have a good understanding of the offerings of the competitors?
  • Financial Understanding − Does the salesperson have a deep understanding about the numerical aspect of the business?