Sales requires a certain type of individual – someone with a go-getter attitude that's fueled by adversity and challenge. While much of this attitude is something that must come directly from the salesperson, companies can encourage this proactive behavior by incenting their sellers.
The sales compensation program plays a critical role in driving revenue and encouraging salespeople to perform better. If managers are finding themselves constantly complaining about their number of salespeople, it's likely not a problem with the talent or skill level of the employees, it's the compensation program itself.
Salespeople tend to follow the money, and an ineffective compensation system has flaws in the ways it deals with incentives. On the one hand, companies may be providing too much compensation to salespeople, so they grow complacent and don't strive for better. Conversely, companies may not be allocating enough money to their compensation system, which leads to retention issues and a revolving door of talent in the sales department.
Identifying poor compensation management systems
The ideal incentive compensation system depends largely on the goals of the sales department and the company as a whole. However, there are a few set characteristics of a poor program, Forbes adds.
Common flaws in compensation plans include incentives that aren't linked to the desired behaviors of sales representatives, a lack of incremental upside incentives to push salespeople to reach further goals, compensation programs that aren't competitive given the market and complex systems that aren't easily comprehensible to the people making sales.
If you believe your sales compensation program falls victim to one – or all – of those traits, you may want to reevaluate your system before you decide to part ways with underperforming sales representatives. After all, these people could be all-star sellers if the underlying system that incentivizes them did a better job pushing them to their limits.
Diagnosing to drive motivation
If sales compensation plans aren't working, the reasons why they aren't performing up to expectations need to be diagnosed. As you assess your systems, ask yourself the following questions:
Are the consequences of sales clear to the representatives, and is there a direct relationship between the reward and the sale?
Does your plan motivate salespeople to achieve goals that help to drive company-wide growth?
Is the plan consistent with your overall go-to market strategy?
A proper analysis that answers these questions could help to create a compensation system that truly motivates salespeople and keeps them hungry in order to convert new leads.