If your fiscal cycle is a calendar year, your sales compensation planning season for 2018 is officially over! YEAH! You’ve done the hard work. You analyzed 2017 sales, attainment distribution and commission expenses. You mapped the 2018 company’s goals into measurable, actionable items by your sales team. You’ve made sure the job roles support the company’s growth strategy. Each plan has been carefully designed to focus the sales team doing the work that needs to be done and rewarding them appropriately for their efforts. You analyzed the plans, modeled them six ways to Sunday, wrote them up in a detail plan document. Each sales team member has signed the commission plan document. You are officially done with this year’s planning.
Well, if that isn’t where you are, give me a call so I can help before you miss another year’s revenue goal, spend too much on your commission expense or have your top performers leave in this tight employee market!
For the rest of you, now what? Do you work in an organization where the planning is done by one team who throws it over the wall to another for commission payment calculations? Or worse yet, designed by one group, sales attainment by another, and commission calculations by a third? Or are you just at a loss as what to do now or how you can help the company achieve its goals?
There are many variables when creating the new sales commission plans and sometimes despite the best intention and planning schedules, the sales compensation plans are released late to the sales organization. When the change is significant, it may take awhile for the sales organization to modify their behavior to align with their new plan, and longer yet until they deliver results. Even if the plan changes were relatively minor, it may take a little time for the sales team to really understand what they should do. If your new plan is confusing or not documented clearly, you may find the reps clinging to their old ways because at least they are familiar!
Think of it this way, you are the captain of a five-masted fully rigged tall ship (a really big sail boat with lots of sails for you land lovers). You first must know your destination, plot a course to get there, modify for wind and current, and adjust the +42 sails. With a ship that big, you’d have a lot of help but imagine your destination as a sales rep is to achieve quota and reach President’s Club, plotting the course by deciding which prospects to reach out to and how to spend your time, adjusting for wind and current in the day to day dealing with your fickle prospects and adjusting the sails by deciding where to spend your every valuable sales minute to achieve the results that you’ll get paid for. Now if your sales compensation plan is unclear you quickly can find yourself adrift.
As a plan designer, what can you be doing right now? Plenty. First of all, I’d check with some key sales compensation plan participants and have a conversation. You want to ask questions to gauge their understanding of the plan, after all if you are the only one who understand the plan – kiss your year goodbye now! In this conversation you will gain valuable insight and if there is enough confusion you’ll need to send everyone an addendum or even the “Guide to Understand this Year’s Incredibly Complex Sales Compensation Plan” hot off the press by VSSCPD (very smart sales compensation plan designer).
Next, I’d meet with the sales manager and have pretty much the same kind of conversations I’d have with the reps. Plus things like, are the reps on track? What type of questions are you getting about the plan? How long did it take to change their direction to bring their activities in line with the new plans?
Then I’d talk with HR to see how the hiring process is going for all those open positions you need filled ASAP to achieve the revenue goals and ask about any exit interviews they’ve conducted this year.
Finally, I’d start looking at the numbers. Things like revenue, expenses, attainment percent, rep’s actual earnings, close ratio, etc. More on this in subsequent posts.