In industries particularly hard hit by the struggling economy, even the best sales representatives may appear to be under performing based on the most important sales objective, the sales revenue target. How do you know if sales personnel are doing their jobs when their corporate customers’ budget freezes don’t allow for deals to close? Good sales reps will continue with the proven processes that under normal circumstances allow for them to exceed revenue targets — practices like scheduled check-ins with existing accounts, accurate and timely CRM record keeping, deal / budget qualification, etc. Attention to these items, should allow your sales reps to be first out of the gate when budgets free up and money starts flowing again.
Your incentive compensation plans should recognize this and reward reps that are doing the right things. You can think about MBOs as a coach encouraging the attention to the fundamentals of a sport like playing good defense or blocking out for rebounds in basketball while measuring sales revenue is looking at the final score; if the fundamentals are executed the final score is more likely to be in your favor.
As with revenue based objectives, the most effective MBOs will be based on SMART measurable goals rather than management rankings which can be highly subjective. So continuing with the basketball analogy, we would be better off counting a player’s steals or rebounds rather than subjectively assessing the quality of the player’s defense.
How do you implement an MBO incentive compensation component? Any EIM system should be able to handle the necessary calculations assuming the performance data is available. This however is where MBOs can be a little tricky. Performance data like the number of customer visits or CRM updates are probably not in the same data feed as your sales revenue data and may not be present in the system at all. If this is the case, a new data feed can be added or a manual data entry process can be implemented. To facilitate manual MBO data entry and the workflow approval process that normally accompanies it, several of the EIM software vendors have introduced MBO products or modules to their suites (e.g. Callidus TrueMBO, Varicent).