How to build and incentivize a your sales team

1. 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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Annual
Quota Targets
Quarterly
Quota 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 Salary
3%
1% - 15%
10%
16% - 25%
17%
26% - 40%
23%
41% - 60%
31%
>60%
16%
2011 Sales Compensation and
Performance Management
Key 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 5
6 7
PERFORMANCE

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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?