Our Books Articles About Us Contact Us
 
 
 
Compensate Your Sales Force Carefully — 

Compensating a sales force is one of the most misunderstood aspects of running a business. The mistakes made in this arena are too numerous to mention. Far too many businesses simply do not compensate their sales people in a manner that benefits both the company and its sales representatives.

 

There are many ways to compensate a sales force. But choosing the right plan for your business is a key factor in determining success. Why? Because sales activities are the life blood of most businesses. If the sales compensation plan fails to sufficiently motivate and reward your sales people, the overall success of your organization is compromised. And if the plan overcompensates the sales force, profits are unnecessarily eroded.

You should be concerned, at a minimum, about each of the following issues when creating a sales compensation plan:

  1. Motivation – the plan must motivate your sales force to high levels of performance.
  2. Equity – the plan must be fair and create relatively equal opportunities for earning significant incomes.
  3. Profit – your business cannot give away too much and must avoid falling prey to the mistaken notion that sales people are entitled to large portions of the revenue or gross profit they generate.
  4. Ease of administration – avoid creating an overly complicated plan that will be difficult to administer.
  5. Easy to understand – sales people and all other employees have to be able to understand how the plan works.
  6. Reward – the plan must reward sales personnel in a manner that is consistent with their production.
  7. Unintended windfalls – protection against paying for unearned sales (not associated with effort of sales person) must be built into the plan.
  8. Recruitment and retention – the compensation plan has to be attractive enough to recruit and retain top notch talent.
  9. Longevity – a good sales compensation plan will weather large increases in sales volume and be able to remain in place for long periods of time.

One of the challenges facing businesses hiring sales people is the fact that most sales compensation plans are poorly developed and either over or under compensate sales reps. This means that these sales people have certain biases and possibly some resentment about compensation.

 

And many sales people have had bad experiences with previous or current employers altering their sales compensation plans, territories or customer base when the employer believes they start making too much money. Having a well thought out and well developed plan that address each of the issues above is critical to being able to attract and retain excellent sales personnel.

 

At this juncture it is important to dispel the notion that people are not motivated by money. When college business students are taught Mazlow’s Hierarchy of Needs, they are often told that money is not important to people. While this is without question true for many people, it is rarely the case with good sales people. In fact, experience tells us clearly that it is not true for many employees, sales people or otherwise.

 

One thing you will want to avoid as much as possible is getting greedy with your employees. Remember that a good sales compensation plan will amply reward strong performers and their overall compensation could very well end up being substantial.

 

Avoid the jealous or greedy boss or owner syndrome characterized by a feeling that one or more employees is making too much money and needs a reduction in pay. This is almost always a very negative situation for you and your sales force and will usually result in high turnover and low morale.

There is a fair amount of psychology involved with motivating your employees. People are people and have certain needs and wants. And every person is just a little bit different from the next one. Crafting a sales compensation plan for people who tend to be high energy and high maintenance is sometimes not easy to do.

The Sales Compensation Handbook is an excellent resource to guide you through the process of developing a highly effective compensation plan for your sales force. It details how to build a plan that motivates and creates equity for all involved in a straightforward and logical manner.

 

 

Disclaimer: The information above is for informational and educational purposes only, It does not construe advice. Your use of the information is at your discretion and you assume the sole responsibility of relying on this information at your own risk. 


 
 
Featured Book
The Business Plan Workbook
Developing a business plan that gets attention and impresses funding sources and others is easy with the help of this popular workbook. This step-by-step resource walks you through the entire process of preparing a high quality business plan. Read More
NOW: $29.99 $19.99
 
 
Customer Feedback
I was looking for a book to help me solve a complex sales compensation dilemma I was facing in my business. I finally found mybusinessbooks.com. I bought the book and was pleasantly surprised by how concise, straight to the point, easy to understand, and helpful the book was. Due to the complexity of my problem and its specifics, I needed further advice - advice that could not be found in any book. I contacted their support team via email and got exactly the type of guidance and support I needed.....in-depth insight to my problem and a number of helpful solutions. The good guys at mybusinessbooks.com were extremely friendly and helpful. They are absolutely amazing with their willingness to help and their knowledge and care. The problem is now solved thanks to mybusinessbooks.com. I am extremely satisfied and would recommend them to everybody. THANKS!!! Ori A. - Solar Path, Inc.
 

Paypal
  

Home | Our Books | Articles | About Us | Contact Us | Sitemap | Privacy Policy
Web Development by DWebware
 
 
Home Our Books Articles and Advice About Us Contact Us