It seems that compensation plan structure is a hot topic with many Braveheart clients. The following are a few things to keep in mind when structuring compensation plans for your sales team.
1. Not all salespeople are money-motivated.
In fact, from the work that we do with clients and the thousands of assessments we see of salespeople, it appears that the majority of salespeople are NOT motivated solely by money. This means that ─ for most salespeople ─ increasing the commission opportunity will not necessarily incent them to behave dramatically differently. You could lower the base so substantially that they can’t survive unless they do more, but for many this tactic just increases turnover.
2. Remember to reward the behavior you want.
For instance, if you sell systems which have an installation component and a smaller recurring revenue component, but your company value is driven by the recurring revenue component, then the salespeople need to be rewarded for increasing company value ─ which means on the recurring revenue component, not just on the big installation sale.
3. Whether you incent on topline sales or on profit is company specific.
If your salespeople have control over the profitability of their sales, then by all means incent on profit rather than just topline sales. This will reinforce the right behavior. A plan design idea that we share freely with business owners is a concept whereby the salesperson gets to pick their compensation plan for the year.