Sales Commission Management Best Practices Series

In a recent article published in Destination CRM, Bob Conlin, CMO at Centive, advises that commission compensation is the single most important factor influencing both the performance and morale of sales teams. To ensure quality plans that consistently optimize sales performance, morale, and effectiveness, organizations need to set up a repeatable structured approach to the design of new commission compensation plans.

Says Conlin, “Quality plan design, coupled with efficient automation and frequent communication, will help your company attract, retain, and motivate the best salespeople. It will also provide the best path to optimizing sales effectiveness and performance with a balanced ratio of revenue to cost.”

Critical steps to best practice commission compensation plan design

• Know the company goals — The key objective in plan design is to ensure your plans directly align sales with corporate goals.
• Evaluate current plan effectiveness — Identify issues with your current plans, and use that information in designing new plans.
• Define your sales roles — What roles are required to achieve corporate sales goals?
• Get market data — Establish the pay range for each role and identify the target salary, commissions, bonuses and other incentives needed to be competitive in your market.
• Build the plans — Commission compensation plans are really a combination of measures, mechanics, and policies.
• Model plan scenarios — Model your plans to evaluate the impact at both the macro (plan cost) level and the micro (individual earnings) level.
• Document and communicate — Make sure that your reps understand the plan logic and that the plans are realistic, fair, and attainable. Maintain electronic or hard-copy records of each rep's acceptance of their plan document.
• Automate the plan — Automate your plans with an affordable on-demand commission compensation management solution to ensure accuracy, efficiency and financial compliance.
• Measure and adjust — Regularly analyze actual versus modeled results in terms of both cost and revenue to make sure your plans remain effective and affordable. Adjust plans as needed.

As the leading on-demand commission compensation management solution, Compel® is built on best practices for plan design and compensation management. To learn more about the benefits of Compel, follow the links below.