The Million Dollar Sales Question

Why is it so hard to get sales compensation right? In sales, this is the million-dollar question.

For a leader in sales, finance, or HR, structuring a strong sales comp plan can be an exasperatingly difficult source of pain and frustration, possibly the single biggest challenge you face in keeping your sales force on track and motivated. Underestimating the vital need for planning, or failing to commit to a dedicated process during sales comp design, can lead to trial-and-error, shot-in-the-dark approaches that have major ramifications on your ability to field a strong sales team – thus threatening the health of your company.   

sales compensation

In a recent webinar, Getting Sales Compensation Right – Why is it so hard? sponsored by Optymyze, guest presenter Dana Therrien, Research Director of Sales Operations Strategies at SiriusDecisions, offered valuable insight into why we’ve been asking the million-dollar question for what seems like a million years. And how we can answer it.

Since responsibilities are often shared among multiple groups, crafting cohesive plans that serve wider needs often proves difficult. With so many departments and stakeholders involved, each with competing interests, it’s possible that the plan won’t, when all is said and done, align with company objectives. This can lead many organizations to either overpay for performance, and lose money, or underpay, and lose people.

Among the abundance of helpful tips delivered in this webinar, the following are vital to keep top-of-mind:

  • Consider all plan designers’ perspectives, challenges, interests and needs in addition to your own.
  • Get all participants on the same page regarding lexicon, principles and theories for sales comp, so everyone’s speaking the same language.
  • Develop a persona-based approach to clearly define participants’ roles in the process.

One of the most impactful examples used was imagining each member of the compensation team holding one piece of a jigsaw puzzle. What would be required for that group to assemble the puzzle?  Each person’s willingness and ability to clearly describe his or her own puzzle piece.  Each person’s commitment to listen closely to other members to understand their pieces, and how and where they fit.  And each person’s commitment to collaborative planning so that the big picture could be clearly envisioned and worked toward. This poignant lesson highlighted the importance of truly effective communication – including well-developed listening skills – to plan design. It also inspired participants to consider the time required for successfully completing such a project. Needless to say, early planning plays a tremendous role in achieving success.

Yet a recent SiriusDecisions survey revealed that just 2% of companies plan incentive comp programs accurately enough to eliminate the need for manual modifications. Conversely, 95% of companies find themselves reassessing or modifying crucial processes, such as quotas or territory assignments.

Companies relying on inefficient sales comp planning methods can be easily overwhelmed. Leading-edge tools that cut down on the administrative tasks and create routes for effective, efficient collaborative thinking and planning are now available. These do away with unnecessary, often repetitive or circular tasks and can pay significant dividends in saved time, money and effort.

Which brings us back to the million-dollar question. Leaders ask it, of course, in the hopes of solving it. The good news is that designing a sales compensation plan that benefits all parties involved is possible. The great news is that it’s in your power to create one that establishes your company as a destination employer.

Get started with this informative webinar.

Learn How to Model Incentive Plans for Sales Excellence

Download our guide to see the impact of sales compensation plan modeling, details on varying approaches to modeling, and use it to make adjustments to your plan before roll out.

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Michael Giordano

Director, Advocacy and Communications

Michael has over 15 years of experience building teams and transforming processes to produce highly-effective sales, marketing and technical functions. He excels in leveraging industry-best process and technology practices while implementing strategies to deliver continued growth and success. Follow him on Twitter @Optymike and @Optymyze.

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