The daily burden of sales operations is increasing every day. From data processes, metrics, analytics, and sales compensation, to territory and channel management, quotas and objectives – not a single day looks like the other when you work in sales operations. With so many administrative tasks, there is not much time to think about strategy and planning.
Over the years, we have received many questions from sales operations employees who have their hands full with sales compensation issues. Our experts will reply to their concerns in a series of blog posts.
Q: Our reps make sales, but they don’t seem to work to achieve our strategic objectives. Is there a way to design a compensation plan that will drive the sales force to focus on not just the quantity of sales but the quality too?
A: Everybody searches for quality sales. Your first goal is to clearly define what constitutes a “quality” sale for your company. This should be directly related to the strategic objectives of the organization — and not just revenue.
For example, an objective might be to drive both the size and profitability of the deal, or to increase client commitment.
Modeling sales compensation will help you identify your strategic objectives and verify all “what if” scenarios. The results of your modeling efforts will allow you to see if sales reps are working towards achieving those objectives. In the end, modeling will reduce risks and improve your overall effectiveness.
Though it might sound obvious, many sales organizations are forced to simplify or modify their sales compensation plans because they can’t implement and manage the plans they desire. This creates strategic misalignment and prevents companies from using metrics related to both the quantity and quality of sales.
After determining their strategic objectives, sales ops can start to focus on sales compensation metrics and goals.
In our experience, strategic misalignment has a large negative impact, leading to:
- poor sales force productivity and inefficient resource utilization;
- lower revenue and margins due to opportunity loss;
- poor motivation of salespeople;
- mixed and inconsistent messages to sales force;
- lower revenue and higher costs due to sales force turnover.
Read more tips about how to design a successful compensation plan in our dedicated eguide: Seven Steps to Design a Sales Comp Plan that Works.