The call comes in with surprising frequency – “Our sales plan is broken – it’s just not motivating our people.” Often it’s because there is a huge focus on the top performers unlocking the scheme. But what if the big secret of sales bonus is motivating Malcolm in the Middle? First, run a check on your existing scheme. It should:
- Clearly demarcate what success looks like for your sales team. What does good and great performance actually mean for you?
- Motivate the right behaviour and production among your employees which in turn drives success for the whole business. Sales high performers know that selling is about more than producing the numbers – it’s leaving a good taste in the mouth of your customers.
- Represent good value for the business, and incentivises the sales team – don’t give away the shop by poor planning and analysis.
The real problem with designing sales bonus is that it is complex. Pulling together a multifaceted range of elements and translating them into an incentive plan that inspires team members is difficult.
Calibration is key. A good plan incentivises at the point of incremental increase. That’s defined as the point where having a sales team makes a difference. For many companies we use the base point of what would an intelligent internal sales team make just answering the phone for orders, knowing the product range and providing a central point of contact? Basically, with no external sales team at all, what would come in anyway?
Let’s start from the very beginning – it’s a very good place to start…
1. Analytics is key. Knowing your incremental point makes a difference – so does knowing how much £1,000 of sales costs you. Knowing how much a good sales professional earns in your market in comparison with a great performer helps. Understanding what you want to and can afford to pay for different levels of performance above the incremental level is crucial.
2. Once you’ve got that base platform of analytics, then take a step back and assess your strategy. Most sales managers focus on making the best better – the performance of the top 20% of the team.
But if you look at the spread of your team – 20% sales whisperers, 60% solid performers, 20% are struggling – a 5% increase in performance would have a much more significant impact in the middle group than just focussing on the top performers.
3. Approach the problem from both sides: (i) how much revenue will be generated, and (ii) how much you want your team members to earn. The on-target earnings for your median performers should be based in the pay market intelligence you covered in Step 1.
Reference back to your affordability figures – can you afford to pay market rates for your revenue generation? Does that require a rethink? It’s surprising how often when Reward and Sales managers add up the figures – it just doesn’t work. Better to know that now than after you’ve launched the new scheme.
4. Think carefully about how you can make that middle 60% more motivated. Depending on the size of your sales team – would a league for the middle group with promotion and relegation to upper and lower leagues be an incentive? Is there a special recognition scheme you can add to this group to encourage them to push a little harder?
60% of employees all adding 5% to their revenue figures makes a big difference to your overall success. It’s worth investing time and thought in this one.
5. Finally – landing the aeroplane is the tricky bit. The closing eight minutes of any flight is the most dangerous part, and it’s the same in launching a new sales plan, communicating how it works is key.
Don’t mix up ‘simple’ with ‘understandable’. Often sales schemes are complex – the mix of revenue, profit margin, product and timescales all impact business success – and ensuring team members understand the mix and how it impacts their remuneration is critical. If they don’t understand it, it won’t motivate them to do their best.
So there’s five points to redesigning your plan, and improving the performance of Malcolm in the Middle. If you’d like to discuss sales bonus in more detail, please email Deborah.rees-frost@innecto.com or call 020 3457 0894.
