For a sales team to perform and achieve at an optimum level, it needs three things: a well-designed sales plan; data and insights for forecasting, planning, and aligning their efforts to the business’s goals; and the tools to enable performance (training, environment, culture and CRM systems). Too often we see bonus schemes that are over-engineered, hard to understand and ultimately demotivating, so how can you review your current plans?

The one critical aspect that underpins compensation and a strong sales culture is data. Data insight allows companies and SDs/CCOs to track effort, validate the effectiveness of their sales approach and ultimately maintain a healthy pipeline by constantly asking key questions: How can we motivate team members in the face of market disruption and changes in our business model? How can we adapt our plans and measures to keep up with changes in customer demand? By analysing data in this way, a sales director can track consumer behaviours against expectations and understand the profitability of sales and their impact on the business in the short and long term. If the data is strong, it can support a robust sales compensation plan. Conversely, a well-thought-out sales compensation plan will usually identify gaps in data.  

Above all, sales personnel want clarity around what is expected of them, how they can achieve and surpass goals and what they can expect in terms of variable pay, in respect of the sales process and goals.

When a company changes the way it sells products to the consumer, it is crucial that its bonus plan remains relevant and aligned with that new approach. Leveraging data and analytics in compensation management can provide valuable insight into sales performance, cycle and channels, customer segmentation and behaviour, and market trends. As a result, it can enable informed decision-making around territories and resource allocation to optimise efforts and maximise return on investment.

Here are some easy steps to help a sales director align business goals with a sales incentive and bonus plan.

1. Define your business goals - these should be relevant and influence business success. Typically, they could include revenue, market share, customer acquisition, product/service targets and ESG. 
    
2. Convert goals into Key Performance Indicators (KPIs) – these should align with the company’s objectives and could include revenue growth achieved through customer acquisition, sales volume, sales income, and margin. Or, if prioritising customer retention, KPIs may include customer satisfaction or engagement, renewal rates and longevity value.
    
3. Develop achievable SMART targets - targets need to be challenging to drive performance but if they are unrealistic this can create negativity, inhibit performance and demotivate sales staff. True sales individuals will always be driven and motivated by a challenge, so this comes down to striking the right balance, again using data to support and influence.
    
4. Consider your compensation format – drawing on base pay, variable incentives and recognition programmes will allow you to recognize and reward salespeople for exceptional performance and behaviour, while also encouraging them to go above and beyond. Getting this right can provide a compelling and attractive package that helps with talent acquisition and retention, while also being agile enough for adjustments in priorities.
    
5. Align long-term goals with short-term plans – When dealing with a sales team’s short-term finite targets the biggest challenge is often marrying them up with the company’s longer-term ‘infinite’ goals. These might be culture-led or focused on intangibles such as sustainability and innovation, and if the short-term sales effort undermines them, things can unravel. The short-term, perspective is crucial, but make sure it plays into the bigger picture.
    
6. Understand the behaviours driving your culture – take care to understand where staff behaviour comes into play, for example how you manage a sale that requires team collaboration in the sales cycle. To support long-term stability and client retention, the sales team’s efforts need to align with a strong understanding of the client’s requirements. For that to happen in a way that’s consistent with the company ethos, you will often need to define the cultural behaviour and language they need to use to project that.
    
7. Align the Sales Cycle - in modern commercial environments, customers invest more time assessing the marketplace so the buying process has become longer and more complex involving a variety of touchpoints, solutions and decisions. To maintain motivation over the sales term, consider phased compensation that encourages both a short-term and long-term focus. Try to keep accounts and products ticking over with both short and long-term pipelines.
    
8. Appreciate that the sales role has evolved – with sales now more sophisticated than ever, individuals are required to consider and understand regulations, risk, customer experience and reputation. Building relationships, finding solutions and considering the bigger picture are all fundamental skills often brought to the sales effort by different individuals involved in landing a sale. This requires collaboration and clarity around rules of engagement and how team members are recognised. The challenge is often to draw up a simple plan within a more complex sales environment that resonates with sales individuals.
    
9. Communicate - often neglected but crucial, the comms effort around the sales plan, its goals and KPIs should be transparent to breed confidence in the scheme and reassurance that it is fair and being applied consistently. Whether using documented rules and an outline of the plan, individual letters and/or progress updates, a sales director who constantly reiterates the plan will reap the benefits of a more engaged sales team.
    
10. Monitor performance and feedback – sales directors should regularly monitor progress and identify and address issues quickly. By doing this, they can correct poor or unintended practice before it becomes embedded. Salespeople will usually value regular feedback if delivered in the right way because they will want to improve and have an opportunity to provide feedback. The idea here is to stay on track.
     
11. Evaluate and adjust - where no organisation-wide changes have taken place, reviewing the plan allows for small adjustments if results are not as expected. If significant changes have been implemented by the business, ideally the plan will be agile enough to adapt. Going back through the steps above should help to sense-check the efficiency and relevance of the scheme in meeting the goals of the company.

Embracing a data-based approach to sales compensation helps companies respond and adapt to market disruption. By aligning sales plans with business goals and creating that line-of-sight and transparency, you can create a sense of fairness that will engage employees while maintaining relevance and a strong market position. At Innecto our expert consultants have worked with clients across most sectors to design and review sales commission schemes, annual bonus plans and Executive Long Term Incentive Plans to enable both short- and long-term success.

 

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