The Future of Sales Compensation

The Future of Sales Compensation
June 29th, 2021 0 Comments

In order to keep up with today’s increasingly competitive sales environment, we can see that businesses are fine-tuning their sales compensation strategies. It is widely known that customers now are well aware and are not easily influenced by clever marketing tactics. So, companies have begun to shift their focus to empowering their sales teams.

Having a good sales team is the single most important aspect of any business. A sales team is what will accelerate profit and support an upward momentum of growth and success. Although, building a talented team of sales representatives is not without its challenges.


Why Sales Compensation Is Important

Highly qualified and top-performing individuals will undoubtedly have several options for employment. And can therefore be a little more discerning about the companies they choose to work for. Meaning, if a company is not offering exactly what they are looking for, they will most likely pass on that opportunity. This is why carefully and deliberately building a solid compensation strategy is incredibly important.

In order to create long-term success, you have to strike a balance between what is right for your company. And what will motivate your team to work hard. Too much of one thing or another will also make scaling incredibly difficult.

Mapping out sales compensation plans can be difficult. But it may be helpful to keep in mind a few key trends that forecast some changes to come.


Comp Plans Motivate Reps for Success!

It is safe to say that having a strong sales team can be the key to any business’s success. But what ensures a top-performing team? Modeling a strategic compensation plan can steer your team towards success and create sustained motivation to garner only the best results.

However, it may be hard to truly visualize how sales compensation plans affect your company if you solely rely on snippets of data (i.e., a mass of spreadsheets that do not paint a bigger picture). Without all the relevant information needed to look at everything from a bird’s eye view, it won’t be easy to thoroughly examine the relationships between compensation plans, sales team performance, and sales results.

It is often said that salespeople will behave the way that they are compensated to behave.  When planning for the year ahead, it may be beneficial to examine the previous year’s performance and examine how that compensation plan may have resulted in certain behaviors within your sales team. You may even find that strategy produced outcomes that were not favorable for the company’s overall success. 



ROI Is Key

The goal of every organization is to maximize the return they get from their compensation plans.

However, it can be hard to examine the ROI on compensation plans if leaders depend on a pile of spreadsheets to give a complete picture. Again, the key here is to look at the relationships between different plan elements and revenue.

There are several metrics businesses can use to examine ROI adequately. But gathering any meaningful information will be difficult using traditional data collection methods.


Simplicity, Simplicity, Simplicity!

Tailor compensation plans to the needs of the business. And change these whenever necessary as the business continues to expand. However, compensation should always remain as simplistic as possible not to drive away potential sales representatives.

The problem arises when there is no clear understanding of what representatives are being compensated for due to its complex or convoluted nature. As a result, representatives might ignore the plan entirely, or they might spend unnecessary time trying to work out details. Not only does this create confusion, but it also takes away from the overall sales strategy. This can all be avoided by erring on the side of simplicity while still ensuring that representatives understand all of the terms and remain motivated.

Simplistic compensation plans also help to mitigate any risk of miscommunication. When your roll a new plan out, make sure that representatives have a thorough understanding of their focus needs. And how they can deliver the best possible results for their company.

However, leaders should also be preparing their teams for these future changes. Sales professionals don’t like to be surprised with a change to their compensation, especially if that change is perceived in a negative manner.  Again, prioritizing good communication (advance notice, crisp and clear discussion, and honest communication) can help ensure that the new plan will be effective.


Learning To Stay on Your Toes

In order to compete in today’s professional landscape, companies must continue to ensure that organizational processes (like sales compensation plans) are effective and efficient. In addition, in an environment of great complexity and uncertainty, companies need to adapt to the many pressures that exist. Their compensation plan should reflect this.

Change is one of the few constants to exist, so sticking with an old compensation plan is no longer sufficient. Instead, they require continuous monitoring to remain relevant to the current needs and goals of the company. If this is not maintained, companies may find out somewhere along the line that their teams are not performing at where they should be.

Sales compensation is a high-stakes investment for any company. It requires a large allocation of resources, but with the potential of a great reward.

A well-thought-out sales compensation plan has the potential to empower your sales team. Ensuring they stay motivated to perform their absolute best. This will almost certainly help to foster even greater success with the company, as the sales team is any company’s greatest asset.


We Will Lead You to Lasting Success 

Developing an effective compensation plan requires expertise and time to choose the best route for your organization and sales team.

By utilizing the knowledge we’ve gained from working with companies of all sizes, we can help you maximize your sales team’s strengths so that they may support future success.

Have you thought about how you can propel your sales team to greatness? Schedule your free consultation here to find out how we help sales teams break sales records.

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Article Name
The Future of Sales Compensation
Mapping out sales compensation plans can be difficult. Read on to learn why you need a good sales compensation plan.
General, Organizational Development
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