Crafting a compensation plan that attracts high-level talent and keeps your firm profitable is as much of an art as it is a science. The canvas is the array of incentive KPIs. In this article, we’ll explore how to spot patterns in the KPIs to find the recipe for sustained profitability.
The Symphony of Data:
Imagine your organisation as an orchestra. Every salesperson like an individual musician, your data the symphony they collectively create. To find the trends, the organisation needs to be able to interpret the data. Dive in. How is each ‘musician’ doing – look at the sales numbers, the conversion rates and who’s doing well and where the performance is falling off.
Imagine that the sales team did better than expected during its sales promotion and you end up with a burst of revenue. If you dig into the data, you might then discover that certain product lines or certain promotional approaches were responsible for the uptake. That insight would become a note on the scoring of future bonuses.
Aligning the Stars:
The constellations in your sales universe are the sales goals of your business. Good sales compensation plans align with these heavenly aspirations, and positive reinforcement between individual motivations and the organisational goals of the business is the result. Each incentive is a star, pointing directly at the prudent maximisation of profit.
If your company’s North Star is greater customer retention, incentivise to customer satisfaction metrics. Reward sales reps for keeping clients happy and you’ll reduce tension between individual and group targets: everyone will be less concerned about making a fast buck – today – if the company is rightly incentivising long-term relationships, which research shows in turn lead to bottom line profit gains as customers stay with you for longer.
Riding the Waves of Real-Time Insights:
In the vast seas of sales, success can be as much about riding the right wave, as the right time. Real-time insights are your sextant, helping companies adjust their sails to changing tides faster.
Suppose that a team of salespeople notices its rate of conversions has taken a sharp turn for the worse. Real-time analytics might show that a recent shift in the way the firm’s product is demonstrated has caused the slump. A quick tweak to the firm’s incentive package, perhaps updated training bonuses for getting the hang of the new demo strategy, can help a team to ride out the squall and come out the other side stronger.
The Psychology Behind Performance:
Sales compensation is not mathematics; it’s psychodynamics. You cannot engineer success by distributing targets and ratchets to your sales force. Motivation must be tapped at its source, by designing incentives that tap into the intrinsic rewards that meet your sales force’s deepest needs.
Designate a ‘Sales Star of the Month’ programme that provides the winner with both a financial reward and well-publicised recognition across the company. The need for recognition, both within us as human beings, and among our colleagues, is hard-wired into human nature, creating a positive competitive fire that will drive many to greater heights of performance.
Determining trends in incentive KPIs is a
brushstroke that paints the picture of a winning sales compensation model
Identifying trends in incentive KPIs was an imperative theme in sales
compensation for over a decade till date. This brushstroke paints the picture
of success because by taking ownership of the data symphony, correctly aligning
incentives to strategic objectives, riding the waves of real-time insights, and
harnessing the psychology of performance, a compensation plan can becomes a
tool for attracting the best talent and driving sustained profitability. The
ability to suss out trends is the brushstroke that paints success in the tapestry
of sales.
