Six Steps to Communicate Sales Compensation Plans

Most of us have had to field that call when one of our sales reps is unpleasantly surprised and disappointed with their payout at the end of the period. The conversation usually reveals that they didn’t understand what they needed to do to succeed, limiting the motivational value of the sales compensation plan.

If your sales compensation plan isn’t designed to clearly support the sales strategy, you are less likely to achieve your objectives. Effective communication of your sales compensation plans can have a tremendous impact on your sales efficiency.

CSO Insights showed that up to 60 percent of reps’ time is spent on activities unrelated to selling. Some of these activities can include trying to understand the plan, disputing past payments, or even “shadow accounting”. As sales operations leaders, our goal is to eliminate constraints to selling, doing what we do well to allow our reps to spend their time doing what they do well – selling! This is one way you can turn sales operations into a competitive advantage.

Global Business Communications

Communicating sales compensation plans may be tough without the proper processes and tools.

One of the most important ways you can keep your sales force engaged is through effective communication of the sales compensation plan.

Six steps to help you enable #salesForce engagement:

Step 1: Ensure that your plans clearly reinforce your sales strategy

Key points to get across:

  • Comp plan needs to be aligned with strategy
  • Motivate the behaviors you want
  • Communicate the ‘WHYs’ of the plan – to reinforce the strategy

EXPERT TIP: Start early with plan design – typically 12 to 16 weeks in advance of the new plan period.

Step 2: Be open to sales force feedback

As you assess the current plan’s performance, leverage surveys and focus groups to check satisfaction, identify easy wins, and test the level of understanding across the sales force. Performing a focus group or survey at the outset of a plan design effort can help shape the process. Focus groups can also offer a fresh view of how the plan is perceived, helping you to gather feedback and improve the effectiveness of plan communication.

Surveys and focus groups help you build sales force trust.

EXPERT TIP: When running a focus group, include a diverse group of people (different historic earnings levels, different market conditions, different tenure, etc.) in order to ensure healthy debate.

Step 3: Communicate and clarify changes

Regulations and laws in some states have us all aware of the importance of timely communication of sales compensation plan changes. At the same time, plan communication is an opportunity where we know we will have everyone’s attention. Use this opportunity to reinforce sales strategy, so the sales force understands why you are making the change and what day to day behaviors and sales results will be rewarded under the new plan. Keep a positive tone in the change communication, and use a forum where you can communicate directly to the salespeople, rather than risking incomplete or inconsistent delivery of the message.

EXPERT TIP: When communicating changes, give sales reps the ability to calculate various scenarios under the new plan. This allows them to focus on the future and set an ambitious goal for themselves, reinforcing the motivational value of the plan.

Step 4: Provide actionable information on the go

man hand with smartphone and virtual world map

Sales reps should get sales compensation information on the go.

Monthly reporting may have been good enough in the past, but today’s salespeople want to digest information on their performance in real-time. Easy-to-use tools such as mobile dashboards can help salespeople optimize their own performance, giving them live access to account management, sales performance, and sales compensation information at any time, even when they are on the go. This helps sales organizations improve sales productivity by eliminating delays, reducing frustration, and increasing utilization of CRM and other sales enablement tools.

EXPERT TIP: Don’t forget to link together various information sources (CRM, IC, Sales Reporting) to make sure each one is used at full capacity.

Step 5: Check for data accuracy issues

To eliminate shadow accounting, and the resulting tidal wave of inquires, disputes, and misunderstandings, make sure you always provide clear and accurate information. Remember that the most effective sales organizations spend more time selling, so any investment you make in clear communication will pay off with improved sales performance. Use clear language and a self-explanatory structure that tells a story. Your communication plan should include items such as easy-to-understand figures, graphs, and tables of data that back up the calculations. Even before the plan goes live, make sure your examples in the plan rollout show realistic data and correct calculations.

EXPERT TIP: All of the data you put in front of people should be aligned or clear on what key rules are applied. Many questions originate from a mismatch of numbers between sales compensation sources and other sources.

Step 6: Create a communication plan

When creating your communication plan, make sure it will tell the sales force a consistent story. Before rolling it out, ask yourself some questions. Will the communication keep them engaged? Is it easy to understand? Does the sales strategy come through?

Make sure you consider the hierarchy of communication. The department managers should be informed of the new compensation plan first, in case they need to answer any questions from employees after the compensation plan is announced company-wide.

Use examples and “what-if” calculators to help salespeople understand what they need to do to earn more. Schedule one-on-one plan review meetings with sales leaders, create plan documents, FAQs, tutorials, and Q&A sessions so that everyone has a chance to engage. Don’t forget to adjust communication and messages for different channels and different audiences.

EXPERT TIP: Perform plan reinforcements through the plan period to help people gain understanding and re-engage people in their success.

Sales compensation plans play a key role in motivating salespeople. Because of this motivation, it’s important to design plans that are aligned with your sales strategy to make sure you are pointing the sales force in the right direction. Even the best plan can fail to achieve expected results if it is not effectively communicated. This communication plan needs to include both rollout and ongoing communication that will help the sales force understand strategy, desired behaviors, rewards, and any changes. Sales organizations that review and fine tune their communication on a regular basis will maximize the motivational value of their sales compensation plan.

Need help improving your sales compensation plans? Optymyze can provide the right blend of technology and people to help you improve your sales operations.

7 Steps to Designing an Incentive Compensation Plan that Drives Results

Most companies are dissatisfied with their compensation programs. Read this guide to learn how to design a comp plan that gets results.

Get it here

Erich Sachse

Vice President, Professional Services

Erich has 14 years of experience leading engagements to assess and transform sales and channel performance for over 80 clients.

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