Things To Know When Making Changes To Sales Compensation Plans

Michael Finnigan
Dec 17, 2020

Are you a leader who thinks about changing your company’s compensation plan for every single sales representative? If yes, we would recommend having an actual purpose in place at the heart of the plan. It is important to design it to incentivize salespeople to work like how your company leadership wants, to support the enterprise’s objectives.

To incentivize them in an effective way, it is a must to understand the notion of motivation. The term ‘motivative’ means to urge someone to perform something.

True Motivation

It is commonly believed that people enter the sales profession out of motivation to earn money. Many individuals enjoy being compensated on the basis of their performance. Anyhow, we have no data supporting that money is the only thing that motivates all or the vast majority of salespeople.

It may motivative a few of them, but not all of them. While the satisfaction they can have from performing a task well, provokes some, it does not encourage the rest. Some are driven to become the best possible salespeople, so they are likely to reap the rewards. Anyhow, knowing that their work is important for their customers, is enough to motivate other successful sales staff.

The key to getting the best out of them is to not motivate one and all at once. To become better at motivation, be aware of what inspires every single staff member, and incentivize them to perform well in an individual capacity.

No Motivation Required?

Unfortunately, our data also indicates that several managers assume that they are not aware of what motivates their staff. This could happen if most sales managers are promoted on the basis of being strong sales professionals and very motivated in an individual capacity. Therefore, the managers bring the firmly established belief that sales reps should be capable of doing it with no inspiration or motivation. That thought process is shown to have been wrong on many counts.

For one, it can leave the performance from salespeople to fate. Besides, when relying excessively on the monetary rewards in the plan to drive the right employee behavior, leaders would be frustrated due to the following:

  • Sales representatives not maximizing profit with every single opportunity; or,
  • The professionals becoming comfortable in negotiating to get a better rate instead of selling value to their clientele. Too often, they are keen on discounting in order to keep up their end of the deal.

Discounting Instead Of Selling Value

External factors such as recognition, rewards, and others motivate just 18% of salespeople. Therefore, leaders have to know how their sales staff will become inspired so that they can truly motivate them. That way of thinking contributes to the following considerations that concern you as a sales team leader:

  • Whether you know the things that motivate every single salesperson.
  • Whether the compensation plan is made in a way that can motivate them.

To put it another way, consider whether your company has the right individuals for the plan mentioned above.

Discovering The Answers

If your relationship with sales staff is not close enough, they are unlikely to let you know what their motivational factors are. They’ll tell you what they feel you wish to hear. It is a must to do a detailed session of planning personal goals with your staff to recognize the following:

  • Their reason for working in sales; and,
  • The way of tapping into them to help them shine at what they do so that they can attain their personal objectives.

Furthermore, to completely understand the way of incentivizing your sales force expertly and precisely, do an objective evaluation of them. The evaluation should include the tools to understand what motivates that sales force and how motivated they are.

Lastly, it is worth reviewing your company’s compensation plan and culture because it concerns how you recruit. Are you aware of whether the present plan will or will not motivate them?