Sales Compensation Review - Why Should You Do It?


Motivation Properly done, a good plan motivates salespeople to higher levels of achievement.

Accountability and Measurement A major by-product of an effective plan is management's increased ability to hold individuals accountable for their performance and to have additional measurements with which to gauge success.

Hiring and Retention Just as a productive sales group is critical to the success of the company, so too is retaining and attracting quality, high caliber sales personnel. If your compensation plan isn't competitive, you risk serious problems. You can't fully address this possibility unless you take the time to assess your current program.

Communication Use your plan to communicate your priorities – and the measurements, criteria and standards you will use.

Competition It continues to get tougher. New methods of reaching your prospects and customers, such as e-commerce and telemarketing, can serve to make the conventional methods of sales compensation obsolete. New forces in the market place can demand new reward strategies for your people.

Productivity Paying for performance is at the heart of any productivity discussion. Close examination and review of current plans can uncover areas, such as territory or account coverage, sales force size and training, which might merit attention.

Morale Inferred in a well thought out compensation plan are the concepts that benefit salespeople directly, i.e., the idea of high rewards for high producers, fairness, and respecting the value and needs of a sales group. Taking the time to make sure you have the right plan for the right people sends a very positive message to the entire company.

Costs Sales compensation can be a large portion of the entire sales administration budget. Making sure that every dollar paid in sales compensation has a measurable return to the company is important. Evaluated, this invariably leads to management decisions and actions that result in either (1) lower costs or (2) a higher return on dollars spent.