Comp & Incentive Plans

Proper compensation and incentive structures are perhaps the most critical miss in most sales plans. Yes, you may have a commission structure in place – but is it strategic? If you are using a simple split structure (base + bonus vs.plan) and offer more than one product or service – you are missing out on a strategic opportunity to drive the actions most valuable to your business. Unless of course each of your offerings are the same price, same cost and sell-cycle.

Here is a real-world example. A small manufacturer in the water monitoring market introduced a new leading-edge instrument to penetrate a market they had previously been locked out of. This market was key to the future growth of the organization as they had significant market share in their existing markets, and the new product supported significantly higher revenue per order.

Sales Compensation Plan
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However, while they were extremely well known in their existing markets, they were virtually unknown in the new segment. So, here was the situation from a salesperson’s perspective:

  • Multiple products available to sell
    • Existing portfolio of very well-known products, easy to sell, lower price-point
    • New, higher revenue product in a segment that doesn’t even recognize the company name
  • Simple commission plan based on overall revenue (regardless of product mix) with an accelerator starting at 100%
  • One of the major metrics management used to evaluate individual performance was number of outside calls per week (if you are currently doing this, please contact us ASAP).

Result was that it took almost 3-years for the new product (more and superior features, better quality, industry leading support and half the price of major competitor) to start gaining traction.Why did it take so long?

  • Far easier to sell to the established market and no financial incentive to develop the new market
  • The new market required significant research, time and effort to develop – which was in direct conflict with a major metric

Choose Growth recognizes the critical nature of strategic incentive programs and will help you drive the right behaviors to help your business reach its maximum growth potential.