The Anatomy of a Setback and a Comeback
Information Is a Deposed Emperor without Clothes

Fine-Tune Your Incentive Plans to Deliver More Next Quarter

Cabrera_newToday's blog post is by Christopher Cabrera, CEO of Xactly Corporation, the industry leader in sales compensation automation.


Now that Q1 has come to a close—let’s pause for a collective sigh of relief from sales manager and sales rep alike—it’s time to give your incentive plans a good look.

Last year, only about half of sales teams met quota (CSO Insights). Here’s a 4-step action plan to make sure your company’s commission plans deliver the results you want in 2012.

1. See What Worked:

  • Clear half a day in your schedule. It’s never too early to start analyzing the impact of different content special incentive funds (SPIFs) and incentive compensation plan rules.
  • Get all the right people in the room. Too many people means too many agendas—but if too few people are involved, you won’t have enough information to gauge your plans’ success.
  • Generate customized sales performance reports for a holistic view of your sales team’s performance across each territory, product, and channel. Look at your margins. Delve into each bonus plan and commission structure.
  • Get granular. What elements of your compensation plans are doing the best? Are you leveraging all elements of your incentive plan? Look at your highest performers. What behaviors have they put into practice that you could incent others to emulate? What about your lowest performers—Would some 1:1 training help them perform better, or is it time to pull the plug?

Above all, you want to make sure profits are aligned for your company and your salespeople. Don’t stress if your sales reps are taking home big checks. This is what your sales compensation strategy is created to do: Create incentive plans that generously reward high-performing sales people.

However, if your cost per sale is too high, you probably didn’t have right analytics and modeling before you implemented your incentive plan.

2. Change What Didn’t Work:

The next step is to change or get rid of the elements that haven’t worked in your compensation strategy:

  • Pull up your incentive dashboards to instantly see which sales reps most need your help. Make sure your team’s quota attainment approximates its incentive plan attainment. If, for example, your team averages 60% quota attainment and 150% target incentive payout, you need to rethink your commission plan. 
  • Ask the right questions. Did you start a SPIF that only paid two people? Are all your sales people struggling to sell one particular product? Use your analytics reports here.
  • Use only metrics that matter. Some of the most popular sales metrics aren’t actually meaningful or truly actionable. You can find out which 6 key metrics to watch on this quick-tip webinar with Sibson Consulting: Test Your Sales Comp – Is This Thing Working?
  • Immediately correct what needs to be corrected. Don’t wait until it is too late. If you don’t fix what you can now, you may not be at the table when your team writes incentive plans for next year.

Step #3: Communicate Changes

Securing everyone’s support for incentive compensation is no walk in the park – especially when it involves tweaking the original. To effectively communicate the redesign and get your company on board:

  • Assemble a killer communications team.
  • Be as transparent as possible.
  • Make sure your reps see what’s in it for them.

Step #4: Plan for Q2

After you’ve refined your plans, it’s time to look ahead at where you want to go next. In Q2, your sales teams should:

  • Test your initial results – How much are you spending? How much is your team selling? How does that compare your goals?
  • Ask salespeople for feedback – Are there more disputes? Does the team understand the new plan?
  • Ask operations for feedback – How much time is the system taking? Do they have the data they need?

The key in each of these steps is good, clean data. You’re dead in the water if your company’s post-sales information is scattered across a variety of systems—including ERP, HR and payroll—so make sure all of your pre-sales and post-sales data is centralized in one place.

So, how did your commission plans deliver in Q1?

Share your comment
Share this post on Twitter
Email this post to a friend


Feed You can follow this conversation by subscribing to the comment feed for this post.

Life Quotations

This is helpful information for me. I am happy to find your distinguished way of writing the post. I will be happy to see you writing on Fine-Tune Your Incentive Plans to Deliver More Next Quarter. Now you make it easy for me to understand and implement the concept. Thank you for the post. Really this is a great effort.

The comments to this entry are closed.