Sales&Marketing Management has a topical email newsletter that hits on some common issues. There is no link to their email so I’ll post the entire message here (emphasis mine):
Sales force productivity remains a big problem for many executives. According to a one survey of executives at 67 companies across a wide range of industries, 60 percent are dissatisfied with sales force efficiency and effectiveness, with almost half saying that goals were not met. So what should managers do to boost productivity? Perhaps they should take another look at their compensation plans.
Here are some tips to make sure your comp plan is up to speed:
1. Make It Simple
Having fewer measures creates focus for the sales force. Simplicity brings clarity to what the company needs to do to succeed.2. Pay for Performance
More than half of respondents say their comp plans do not differentiate enough between top and average performers, which ends up being a demotivator. Focusing rewards on the right people is important because it will maximize the “bang for the buck” that a company will get for its compensation dollars.3. Reward the Right Behaviors
Plans should clearly identify which selling behaviors the comp plan will reward. This is the key link to how the company’s strategy will be executed in the field. It takes some careful thought on the part of management to identify these behaviors, because the right ones to emphasize might be changing as a company changes its approach to the marketplace.
All 3 points are valid, but #3 is critical. Often we encounter positions that require a priority on one type of selling but the comp plan rewards the opposite. For instance, if the position requires new business development, it is imperative that the comp plan pay a higher commission on new customer business as opposed to existing customer business.
It’s not rocket science, I know, but you would be surprised at how many companies overlook this simple point.