Sales pay plans often produce unintended results due to basic design flaws. You'll learn how to find correct flaws that keep your pay plan from working.
14. 1. Enhancers and Inhibitors
2. Seller’s Profile
3. Pay Plan
15. What do You Want
to Sell?
Sales Objectives and
Nature of Sale
Testing the Plan
Editor's Notes
This presentation was prepared for DCMC, Meeting in Key West, Florida, May 2010
A lot of issues at play – Challenges, Demands, & Opportunities Creating effective pay plans for sales people is harder than it’s ever been
New Challenges and Greater Demands
What has changed? Economy changed & Revenue down, Sales pay is down as a result Demands from reps greater due to this Leads harder to get: Do not call list cuts leads Other regulations Diminished product/service quality from cost cutting More complex selling environment More products and services More regulations Competitors for consumer dollar Customers are different – getting sales is harder Pressure Investments down – Pre-need funds and Care funds Revenue and cash Owner demands for more earnings New Complex resources FaceBook, Twitter, E-marketing
Pay Plans for Sales People Are Not Working We hear this from many people Why? Tweaking to meet crisis, creates flaws Sales representative demands Expecting pay plan to do too much, manager’s job
What’s Our Real Goal More revenue and profit, long term Optimum resource allocation High performing sales teams Pay plan to reinforce Behavior and Results
Write this down Sales people will discover successful behavior, In other words, they will find the path of least resistance, just like the rest of us Don’t fight it, use it Sellers are Risk averse We need to create that path so it meets our goals
How Do We Get there Solution: Three Step Approach: Fixing sales pay needs to be done within a framework; Pay plans are easier to implement when basics are sound; Problem: where to start, so many things to look at
1.Enhancers and Inhibitors A Lens Through Which to Examine Everything
Enhancers & Inhibitors What is affecting sales now; Increasing sales with no additional selling effort, is equivalent to increasing commission Increasing sales, without added sales effort, Is like Increasing Sales Pay, But NOT Sales Commission rate Strength of Product/Service Offerings Time Traps Sales Success Model Automation Management
2. Seller’s Role: Right people, right knowledge; right behaviors What is the role of the sales person; has it changed; What is the expected behavior, What is the nature and character of the person, Who can be successful in your market; How is success measured?
Hire Right Competency --Attitude --Know How --Accomplishment Record Determining Accomplishments --Interview --Test Communicate Expectations
Target Pay and Mix Sellers are Risk Averse Target-Pay Attracts Competency, and Mix Attracts Psyche and Behavior Base pays for: effort/input, and Bonus pays for results; output Pay Plan only gives direction and rewards results It does not Manage Behavior
3. Pay Plan Tune-up Target pay – for competence level Mix and focus of pay plan to direct behavior
What = rule of 5, because It’s understandable Path of least resistance Rank, weight and combine Long range value Financial impact Nature of the sale Modeling/ testing of plan Look at past 2 years Pick seller and timeframe Transition
When people change
Cost of Pain is Lost revenue and profit, Dry sales pipeline lost future revenue Service Quality, reduced because funds are not available to keep up. Personnel Turnover Quality of personnel
Many Things Are Outside Your Control Economy, Competitors Uneasy Consumer, More Demands
But, Things In Your Control, Enhancers and Inhibitors -- Marketing strategy and plan Your Competitive message Seller’s profile: who you hire, competency, training, management Your Sales Pay Plan, Can Dramatically Change Behavior, Which Changes Revenue What’s the Solution?
Conclusion Fixing the Sales Pay Plan Needs To Be Done Within The Framework – Consider the overall Marketing mix First, removing barriers and adding enhancers Design and test the Pay Plan
Resolution You Increase Your Probability of Success, When Your Sales Pay Plan Sits Atop A Sound Foundation, and Reinforces “Correct” Behavior and Rewards “Desired” Results