COMP PLAN DESIGN:

BUILD YOUR SALES TEAM

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CONNECTING THE PIECES

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Top and bottom line growth

Market share

Customer satisfaction

Strategic product revenue growth

New account acquisition

Top talent retention

Account/revenue retention

WHAT ARE YOU TRYING TO ACHIEVE?

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Without incenting profits, margins can collapse as the sales team chases pure revenue numbers.

Consider adding a bonus for overall profitability each quarter.

Don’t overload incentive pay with too many variables. Zero in on the main company objectives.

WHAT SHOULD YOU MEASURE?

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Set Territories based on zip codes, area codes, named accounts, vertical markets, company size)

Check industry databases to ensure that there are enough opportunities in each territory.

Not everyone makes quota, so don’t make the sum of quota your annual goal!

If everyone is at quota, how much will the company payout in total commissions?

CHECKLIST

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AnnualQuota Targets

QuarterlyQuota Targets

>80%of quota

67%

>80%of quota

60%

TIMING YOUR CASH FLOW

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• Make it immediate • Majority of variable should be

individual• Team bonuses can be

accelerators or contests• Awards – President’s Club • Weekend escapes• Gift certificates

THOUGHTS ON REWARDS

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When the deal is won?

Once the client is “live”?

After accounting recognizes the revenue?

When cash is in hand?

WHEN SHOULD YOU PAY?

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Are You Selling at Different Margins?

Product Mix?

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BUILDING YOUR SALES TEAM

CAPTAIN PROSPECTOR FARMER SPECIALIST HUNTER

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FIRST YOU HUNT REVENUE & GROWTH

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HOW MUCH PAY AT RISK?

Flat Salary3% 1% - 15%

10%

16% - 25%17%

26% - 40%23%

41% - 60%30%

>60%16%

2011 Sales Compensation andPerformance ManagementKey Trends Analysis

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DON’T GET DISTRACTED

You can set goals for anything that you measure:• Units sold • Revenue dollars• New customers• Profits.

If you track multiple metrics make one the primary measure.

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QUICK STEPS FOR PAYING THE HUNTER

Conduct a salary survey to set target pay.

How much of the target pay should be variable?

Pick metrics to base rewards on that meet corporate goals, focusing on the most important one.

Check out how much you’ll spend on sales if everyone makes quota

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HOW MANY MEASURES?

1 2 3 4 56 7

PER

FOR

MA

NC

E

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WE ARE GETTING BIGGER

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THINGS ARE GETTING BIGGER – NEED A CAPTAIN

Have you promoted your best rep out of the field or have you truly found a sales leader?

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CAPTAINING THE CAPTAIN

If the entire team hits quota, what is the Captain’s performance toward goal?

If the Captain hits their goal, where is the company against plan?

Captains will usually assign higher numbers downstream in case of a rep not performing.

Are there open positions in the Captain’s team? How does the Captain’s quota reflect open positions, new reps and experienced reps?

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TIME TO SEPARATE SOME ROLES

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HOW MUCH CAN YOU GET FROM THE TERRITORY?

Do they have the right personality?What is the opportunity?

How much can the Farmer influence?

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CHECKING THE FARMER PLAN

Make sure you know what line items in a transaction reflect the appropriate renewal and up-sell revenue the Farmer owns.

Don’t assign quota based on things the Farmer does not control.

What periods should you track? If all of your renewals are at year-end, a monthly quota does not make sense. Try annual quotas instead.

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PAYING THE FARMER

How much will the Farmer make if the renewal rate stays the same?

Is there room for customer abuse?

WARNING!Calculate total payouts as a percent of total renewals at different renewal levels, make sure that the payments you will make to the Farmer are worth the revenue and profits you will gain.

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PRIME THE PUMP

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NOW ITS TIME TO GET YOUR HUNTERS FOCUSED

People not afraid of the phone

Will this be a stepping-stone towards becoming an account executive?

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STAKING THE CLAIM

Are you measuring lead quality? Is your CRM set-up to handle passing leads

to the appropriate reps and tracking what happens?

Check: What has lead flow been in the past? Do you have the right environment for a prospector to find new opportunities? How many qualified leads are needed to

become a closed opportunity? How long does it take?

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PANNING FOR GOLD

Do your prospectors develop their own lists or is marketing providing assistance?

Is the plan incenting the prospector to deliver the right types of leads?

Check the relationships between prospectors and sales reps, and watch to see how many they can support.

How much of the closed revenue do you want to pay to ensure that only good leads are passed?

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GET SOME EXPERT HELP

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HOW COMPLEX IS YOUR PRODUCT LINE?

Combining knowledge and presence

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SPECIALIST: DO YOU NEED THEM?

How technical is your product vs. your potential buyer?

Is it a difficult demo?

Is the concept you are selling a new one to prospective customers?

Will the support person need to respond to competitive claims during demos?

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PAYING THE SPECIALIST

The complexity of the product will increase a specialist’s percent of salary consisting of variable pay

Quota = combined quotas of supported team members

Reward for other specialist’s activity, like fairly supporting sales staff, helping move new products, etc.

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GETTING BIG – NOW SHARING CREDITS

1 DEAL

5 Commissions

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FINAL THOUGHTS

What are you trying to achieve?

Who is going to sell for you?

How much leverage and upside?

What are you going to measure?

When will you write the check?