With the right compensation package, a sales team is focused to hit target. So, why is it often overlooked as a key driver for behaviour and results?
There are countless articles on the importance of bringing positivity and energy to a sales role. Responsibility is placed firmly at the feet of the individual to turn up with a ‘can do’ attitude. And rightly so. A positive mindset takes you a very long way. But when a commercial team is underperforming, this focus on mind set and individual accountability, prevents us seeing and fixing the bigger issue. And more often than not the bigger picture is how the compensation package is organised.
Why is there a disconnect on what’s important?
The reason why people work in businesses are different. Of course, there are shared interests to have a pay cheque at the end of the day, but some are more about the long term, others just want to get to 5pm.
Ambitious leaders focus on growth and long-term strategy. A sales rep complaining about their territory, or the discounting rules seems petty and annoying when there are bigger issues to tackle. Every little complaint cannot be indulged otherwise the sales rep becomes the one setting the agenda.
Instead of becoming numbed by frequent minor complaints it’s important to remember that OTE is one of the main reasons a sales rep joins a firm, company goals feature much lower in a salesperson’s motivation. If there are barriers outside of their control to achieving commission, then the job they signed up for becomes a con.
Three rules of a motivational commission plan:
Simple. A sales rep needs to be able to keep a mental count of what they’re earning. As a little test ask a team member, mid-month, what they’ve earned so far, and what they’re forecasting to achieve. If they can’t answer the question, they’re not on a good plan.
Objective. The rules to achieve commission need to be clear cut, ideally numerical, and in a shared location for all to see. Commission pay out that depends on a subjective end of month review, run by Senior Management, is not motivational. The salesperson is not in control of their earnings and will worry that the Manager plays ‘favourites’ about who earns what. As a side note it is also very difficult to scale a business with a discussion-based approach to earnings.
Trackable. A salesperson needs to be able to record their outcomes quickly. Immediately after an activity occurred, whether they’re on the road or not. If a sales rep is waiting to the end of the week or even month to log their activity as part of a huge admin task, then it’s a chore. Results are not accurate on CRM and you end up making manual adjustments to a spreadsheet.
What is the best way to change a commission plan?
The natural reaction of any salesperson to, ‘we are reviewing your commission plan’ is one of fear. Fear of the unknown. Fear of earning less money. The instant assumption being that the new plan is engineered to make it harder for them to earn. Fear then turns to resistance and demotivation. And this is exactly what prevents leaders from even thinking about changing compensation plans, it seems dangerous to rock the boat.
But commission plans should only be changed to make the sales reps, and the company, more money. Everybody is happy when there are clear, simple goals with trackable ROI. Communication around the change is almost as important as the change itself. For example, don’t put all your sales reps in a room and announce the change. It’s better to speak to them individually first and welcome their input before anything is altered. Once you have everybody’s input, genuinely consider it, and recognise their ideas when the final, new plan, is rolled out.
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