Last updated: How to create a sales compensation plan and retain top reps

How to create a sales compensation plan and retain top reps


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You spent a lot of time developing your sales compensation plan and rolled it out to the sales team, so now you can move onto other things, right? Not so fast.

As your sales reps dig into their first-quarter goals, you need to consider how you’ll evaluate the effectiveness of your payout structure.

Don’t wait until mid-year to find out that sales reps aren’t close to making their numbers, or that expenses exceed bookings.

Learn how to create a sales compensation plan by asking the right questions

If your compensation plan isn’t supporting the strategic goals of the organization, you need to know sooner than later so you can make some changes.

Here are three key questions to help assess sales compensation plan effectiveness:

  1. Is spending translating to increased revenue?

  2. Is the plan motivating the right sales behaviors?

  3. Are you losing top sales reps?

Is spending translating to increased revenue?

A boost in sales revenue compared to dollars spent is a clear indicator of an effective sales compensation plan. This is your CEO’s top priority, and they are looking to you to provide this data.

But providing proof of the plan’s ROI can be difficult, especially if you rely on traditional manual methods and spreadsheets.

Modern sales tools can provide insight into sales compensation plan performance, especially if they leverage augmented intelligence and machine learning. These tools correlate payouts with actual bookings and uncover compensation plan components that are costing the business, but not generating revenue. They also can provide recommendations for ways to improve performance and drive more revenue.

Is the plan motivating the right sales behaviors?

Your sales compensation plan is intended to drive sales behaviors that support the strategic goals of the business: Perhaps a corporate goal is to sell more services, or a product line from an acquired business.

Automated sales tools can help you ascertain whether sales reps are helping you reach these goals, or recommend plans of action, such as a bonus program or SPIF to encourage the right behaviors.

AI-based tools also can provide prescriptive recommendations for individual sales reps based on compensation plan components that are are key to delivering the company’s objectives. For example, it could recommend that a rep who sells more of a particular product or adds a particular service could make enough money to make it highly attractive to push these offerings.

Are you losing top sales reps?

An effectives sales compensation plan should enable you to attract and retain top talent. If your top salespeople are heading for the door, but underperforming reps are sticking around, then you need to make some adjustments.

Sales tools that make commissions data transparent go a long way towards improving sales rep retention. If your salespeople can clearly see how they’re performing against their goals, and how their payouts are calculated, they won’t be suspicious or be apt to waste time on their own accounting.

“What-if” calculators allow sales reps to estimate their incomes based on your compensation rates, which can be a powerful motivator to drive the right behaviors and increase retention.

Making it easy for salepeople to investigate payments and resolve disputes helps keep them happy, and from looking elsewhere for employment. An automated system can streamline dispute resolution by enabling sales reps to raise a query about their commission via payment details or a sales dashboard. This allows sellers to focus on selling rather than shadow-accounting or long email chains about disputed payments.

Automation = real-time impact

It’s important to analyze your sales compensation plan performance on a regular basis to ensure it’s supporting the company’s strategic goals and driving a healthy return.

Automation enables sales operations to move beyond the traditional set it and forget it mentality by making it possible to conduct real-time analysis, and model plan changes to see their impact.

More options. More conditions. More stakeholders. More circling-back.
Modern selling is anything but simple.
Intelligent sales enablement starts HERE.

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