A Sales Compensation Program Can Hurt Your Results?
A sales compensation program is suppose to help motivate your salespeople to perform better. We would also hope it is good enough to keep the competition from stealing our top performers.
Though compensation, or money, is not the primary factor that drives high performance (See “ The surprising truth about what motivates us.” Opens in a new window), a sales compensation program can cause serious damage if it becomes a distraction.
Unfortunately, salespeople enjoy nothing more than complaining, or better yet having an excuse not to work so hard. If your sales compensation program is deficient, or simply perceived as non-competitive or poor, you may find yourself punished in numerous ways.
How your sales compensation program can hurt you…
The first and most important is the increased likelihood that the competition will steal your top performers and with them your key customers.
Second, your compensation plan may become the source of low morale. This is important because the last place you will find a high performing sales team, is where morale is low.
Additionally, and maybe most important is that a well-designed compensation program can directly impact the bottom line by increasing sales rep’s use of optimum selling behaviors. The use of more optimum selling behaviors will increase revenues.
A good sales compensation program used in combination with real empowerment by management can become a driving force for performance. It should be noted that providing “empowerment” may be the key factor in making a rich compensation plan work.
Comp plans can also be a strong source of high morale. Sales compensation programs that include creative contests and spiffs generate an atmosphere of excitement and friendly competition between the reps. And there’s noting like competition to drive higher performance.
A well-constructed and creative sales comp plan can create a far more compelling dialogue with potential hires to bring them on board.
You can also use your sales compensation program as a risk reversal tool in your hiring. When hiring top performers you can use the plan to assure that you get the performance you sought for the higher salary you paid. You can use it in the same way to close the deal with an unproven candidate that has great but yet unproven potential.
The moral of the story is that a poor sales compensation program may not only distract salespeople from their duties, but can lower morale. Additionally, a poor comp plan can have significant opportunity costs when it fails to move salespeople towards better selling behaviors.
I have just produced a new training video for my sister site, TeleSalesUniversity.com, on how to create a great sales compensation program. It will be part of the training on the membership site. However, if you would like to watch it without obligation enter your name and email below.