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But, it's a mistake to think that the compensation plan is the entire solution. It's only a part.
The reason that a company will call us to help with the compensation plan is often a deeper issue. Their sales are flat, or even declining. They are casting about to find a solution to their lack of sales effectiveness, and have arrived at compensation as the culprit.
It may very well be contributing to the general malaise. But it's rarely the only issue. Let's consider some other factors commonly contributing to dismal sales numbers.
Sales is a sophisticated profession where the skill set of the highest performers is significantly greater than that of the mediocre. And the unfortunate, ugly truth is that most B2B salespeople don't know how to do their jobs well. They have never been instructed in the best practices of the best salespeople. They have struggled to learn on their own, on the job, through trial and error. Some of them have arrived at routines that have been successful for them, but most have not.
You can change the compensation plan all you want, but if you don't instruct the salespeople in how to do the thing that you are paying them to do, your results will be considerably less than spectacular.
Here's an example. Let's say that you want to gain new customers. So, you change your compensation plan to pay a premium for new customers. That's good, and some salespeople will, as a result, put more effort to acquiring new customers.
But, that doesn't mean that any of them know how to do this well. While some will be attracted to the income, the lack of comfort associated with how to do it will be a far greater force, holding them back.
If you pay them a premium to create new customers, and then train them specifically in how to do that, you'll find that your change in sales force compensation will make a dramatic improvement in their behavior.
The same can be said for any specific behavior that you want to encourage through a revised sales force compensation plan. It won't do you much good to emphasis key account penetration, key product line sales, etc., unless you take the time to show them how to do what you want them to do.
2. Management Practices.
The practices and routines followed by sales management can have a great impact on the performance of the salesperson. For example, if you change your compensation plan to emphasize acquiring new accounts, and your sales manager never measures the number of new accounts acquired, never measures the various steps in that process, never asks the salesperson about it nor holds him accountable in any way, your change in sales force compensation will be ineffective.
Sales managers need to measure the progress on every performance indicator encouraged by the compensation plan. They need to have regular meetings with each salesperson in which the topic of conversation is dictated by the sales manager, and focuses on specific progress on each performance indicator, and specific plans to achieve greater numbers.
In much of my other writing, I discuss the concept of "sales structure". Briefly, the structure is the set of written and unspoken policies, procedures, and expectations that surround the job of the salesperson. I like to characterize it as everything left in the sales department after you remove all the people. It is larger and more specific than "culture" because it is often codified and institutionalized. Some examples of elements of the structure include:
Sales compensation planThis is just a small sampling of the list that makes up the "rules"
Dave Kahle ( www.davekahle.com ) is a consultant and trainer who helps his clients increase their sales and improve their sales productivity. He speaks from real world experience, having been the number one salesperson in the country for two companies in two distinct industries. Dave has trained thousands of salespeople to be more successful in the Information Age economy. He's the author of over 500 articles, a weekly ezine, and five books. His latest is 10 Secrets of Time Management for Salespeople.
He has a gift for creating powerful training events that get audiences thinking differently about sales. Dave Kahle's "Thinking About Sales" Ezine features content-filled motivating articles, practical tips for immediate improvements, and helpful tips to help increase sales. Join on-line at www.davekahle.com/mailinglist.html
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