6 Tips for Improving Sales Compensation Communications to Drive Desired Behaviors
One of the primary goals of any sales compensation plan is to motivate and reinforce desired behaviors across the sales force. If a salesperson understands their sales compensation plan and receives frequent, timely, accurate feedback, the plan motivates and reinforces desired behaviors.
Unfortunately, most organizations lack the capabilities to design, produce, and consistently deliver understandable and useful participant information to effectively drive and reinforce salesperson behaviors.
Lack of plan understanding leads to time spent with shadow accounting and airing grievances, and decreases sales force motivation and job satisfaction. It also leads to less than optimal customer targeting, not selling the right products or services, and disputing plan results—all of which impact sales results.
What can you do to avoid these pitfalls and achieve high-quality sales compensation communications? The following tips, derived from a long-term study of the sales compensation management practices of over 100 large companies, reflect the best cross industry practices for improving sales compensation communications to drive desired behaviors.
Twenty-six percent of organizations that use a dedicated sales compensation application report improved sales compensation communications.
Ventana Research – Managing Sales Compensation Requires Commitment 2015
Have the plan designed and communicated before the start of the plan period to obtain maximum engagement from the sales force.
Compensation plans are very often rolled out late, minimizing the plan impact and missing an opportunity to get buy-in from the sales force. Designing and communicating the plan before the start of the plan period and making sure that the relationship between plan metrics and company objectives is clear enables each individual salesperson to understand their role in helping to execute company strategy.
The first step towards timely plan communication is to start early with plan design—typically 12 to 16 weeks in advance of the new plan period. When communicating plans, don’t miss the opportunity to get engaged with your sales force. It will not only give you a head start on communicating their objectives and the company’s focus, it will also serve to underline the importance of your plan as a purveyor of company strategy.
Use this communication event as a marketing activity to reinforce the plan objectives and their relationship to earnings potential and to get buy-in from the sales force. Clearly communicate plan objectives before the start of the period and continue to reinforce them on an ongoing basis to ensure that your sales force’s efforts remain aligned with company strategy.
Conduct surveys and focus groups to benchmark the current level of plan understanding across the sales force.
Surveying salespeople’s understanding of the plan is one way to determine the effectiveness of your plan communications. Doing this before the start of the plan period gives you a chance to modify your communications and increase the chances of the plan’s success. In addition, regular monitoring of plan understanding raises issues that can quickly be corrected.
Another effective way to get sales force feedback is to conduct focus group sessions with various groups moderated by committee members to identify the level of plan understanding, gain feedback on concerns, and improve the effectiveness of plan communications. This exercise helps to build sales force trust and get their buy-in.
Communicate all plan changes and the potential impact on earnings before the changes take effect.
When mid-period plan changes are unavoidable—whether due to internal or external factors—the changes should be proactively communicated prior to the plan changes taking effect. This is important to gaining sale force buy-in and maintaining high levels of motivation.
The best practices for communicating plan changes include:
- clearly explaining what changes are going to be made
- providing the reasons or, more importantly, the goals behind the changes
- indicating whether the change is temporary or for a longer period of time
- indicating the timeline for the changes to be effective
- describing how the changes will impact individual earnings in the short term and the long term.
Access to timely accurate sales information is the key to keeping sales force motivated, and focused on improving their results.
If your sales force is mobile, make sure you enable them with actionable information where they work. Mobile dashboards empower your team with access to account management, sales compensation, and sales performance information at any time in any location. With the information in their pocket, your sales organization eliminates delays addressing critical issues, reduces frustration among sales people, and increases productivity.
Make sure the solution you chose is agile enough, and provides key capabilities including:
- analytics for sales people to measure individual performance and earnings against current or previous objectives, and against the group performance
- reports with up to date sales or sales compensation information
- automated alerts for time sensitive issues that need immediate action.
Make sure you provide clear and concise at-a-glance information that eliminates shadow accounting.
Compensation reports for salespeople should be simple and self-explanatory, providing easy-to-understand figures, graphs, and tables of data that back up the calculations, so that salespeople see at a glance exactly what they are being paid and why.
The report should tell the employee exactly what he is getting paid for—without the need for a calculator. Typically, the payout report should be a one-page summary statement that provides a quick view of your plan—with detailed information annexed as required.
With reports clearly explaining their earnings, inquires and disputes will go down along with time spent doing shadow accounting.
Use “what-if” calculators to help salespeople understand what they need to do to earn more.
A sales compensation plan drives desired behaviors only when each salesperson has a clear understanding of what they need to do to succeed. Along with your compensation statements, create and distribute supporting tools that create more opportunities to reinforce and understand the plan. “What-if” calculators help clarify the relationship between plan results, metrics, and earnings. They also enable salespeople to easily view how they can increase their earnings. For instance, a sales rep may be able to view what he would have earned if he had sold 20% more of product A and 10% less of product B. Dynamic, interactive “what if” calculators are a key to driving the right behaviors and are an easy way to effectively reinforce the plan and the strategy embodied in the plan.