Many sales roles, such as sales representatives, sales operations personnel, sales managers contribute towards making a sales organization productive. Should you include all roles in a sales incentive compensation plan? Although there is no one-size-fits-all solution, you can consider several factors when determining who is eligible for sales incentive compensation.
When determining sales incentive eligibility, consider these three particular factors: the amount and nature of customer contact, your organization’s sales process and the individual’s impact therein, and your company’s sales process and culture.
Some common criteria for determining eligibility:
- Is there a fixed sales quota attached to the role?
- Does the role involve customer interaction to some extent?
- Are the criteria for measuring performance linked to sales results?
- Are you able to attract and retain your top performing sales talent?
- Do the responsibilities include expanding and maintaining the customer base in any way?
- What are the sales incentive practices that your competitor uses? Are there any industry norms?
- What are your organization’s culture and your philosophy concerning roles eligible for sales compensation plans?
There are at least three functional groups that may be eligible for a sales compensation plan.
- Direct sales roles. The most fundamental qualification for participating in sales compensation is direct involvement with customers, to bring in revenue. Many sales roles meet this criterion: inside and outside sales reps, account managers, business development managers, sales management, etc. These roles are always eligible for the sales compensation plan.
- Sales support. As the art of selling and sales organizations evolve, sales support roles become critical. These are specialists in marketing, product, pre-sales, post-sales, pricing, proposal writing, planning, etc. Depending on industry practices and company culture, these specialists are usually included in plans. They may not face the customer directly, but their back-end support keeps the sales machine oiled and running properly. Just like salespeople, their compensation should be tied to sales results.
- Functional support. Incentive compensation for non-customer facing sales personnel such as sales operations may be appropriate. Departments like marketing, operations, customer service, and legal may also qualify for incentives, depending on their involvement in the sales process. For example, you might include operations and legal roles if your sales cycle is long, with complicated proposals and contracts. Think about a fifteen-year contract for electrical power, outsourcing programs, logistics services, etc.
Sales Ops functions like sales data management, sales analytics reporting, lead management, etc. are very crucial to the sales function. They help keep the pipeline alive and manage relationships with current customers, among other things. Including them in incentive programs helps them feel part of the bigger team rather than isolated, stand-alone functions.
Going Beyond Traditional Roles that Qualify for Sales Compensation
Technical experts like medical professionals in Pharma or engineers get compensation for their expertise. These technical experts help the sales team solve technical queries from their customers, contribute towards generating RFPs, and sift through technical data to validate products and services. They also have insight into ways to approach customers, the best use of products, etc.
Some industries, such as manufacturing or pharma, may require customer service after the sale. In such cases, a member of the sales team fulfills this service.
Then there are the coaches and the trainers – are they eligible for incentives? They take care of product training, market training, onboarding, and at times, team motivation. Usually, sales managers double as sales coaches, but when there are dedicated coaches, it’s not always clear where their job description ends and where they become eligible for incentives. One way to measure their performance is to monitor if their use of the system has increased, and onboardings have become smoother and quicker, making the rep productive faster.
Essentially, if anyone contributes towards increasing the productivity, effectiveness, and efficiency of the sales team, he or she can be eligible for some incentives. Including multiple roles in a sales incentive plan makes the variable component in payouts higher than the fixed one, which is financially advantageous. Such inclusion brings in a deeper sense of ownership and also helps team members focus better on their assigned functions and tasks. As their incentives are linked to the team’s results, people are motivated to look for ways to contribute more towards the team as a whole.