I recently had a conversation with a CFO about the effectiveness of sales compensation plans. His take on it was that sales commission is just an expense item, period! I’ve met many CFOs who think that sales commission is just something they have to pay their sales reps for doing what they do. It is always too much money in their financial eyes, up to 14% of the revenue in most companies. Attitudes like that undermine the motivational aspect that a well-designed sales compens

Next to salaries, sales compensation is your largest variable expense. But because there are so many facets that go into sales compensation, these details are often overlooked – until the management team is hit with higher than expected payouts or lower than expected revenue. The cost of an ineffective sales compensation plan is enormous. These costs can be related to: · Lost revenue because of confusing or misaligned sales compensation plans · Overworked sales reps

Your sales compensation plan is how you communicate your corporate strategy to your sales team. It is critical that you align these sales compensation plans with corporate strategy and if your strategy changes, so should your commission plans. Corporate strategy really doesn’t change that often but when it does, you need to align your sales compensation plans with that new strategy. That's easier said than done, but following these five steps will get you thinking in the rig