Best Practices for Designing Sales Compensation Plans with KPIs that Drive Results

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4 weeks ago
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Best Practices for Designing Sales Compensation Plans with KPIs that Drive Results

Sales Compensation Plan with the right Key Performance Indicators (KPIs) that drive revenue and bring energy to your sales team. Here are six tried and tested ways to get your KPIs to do more for you and your team.

1. Set Your KPIs In Relation To Your Business Strategic Objectives –  

If market share is what you care about, think about things such as “New Customer Acquisition” or “Territory Penetration”. Sales reps who sense the direct correlation between their business and company vision stay engaged and inspired to ensure success for everyone.


2. Invest in A Few, Powerful KPIs The less the merrier when it comes to KPIs

Limit yourself to 3-5 metrics you find most valuable. For instance “Revenue Growth,” “Cross-Selling,” and “Customer Retention” all can tackle most important topics without overwhelming your team. A clear plan helps your sales team stay on task and on message.


3. Mix Quantity with Quality

Inspire multifaceted results by mixing quantitative and qualitative metrics. “Sales Volume” (number-based) with “Customer Satisfaction Scores”(Quality-based). This methodology rewards sales people who don’t just sell, but build lasting client relationships.


4. Tiered Incentives to Inspire

Ask your star employees to do better. Raised rewards (as much as double for achieving a goal) make games exciting and motivational. So for example 100 % of quota may bring standard commission, but 120% could bring a bonus or a higher commission.


5. Stay Stable

Recheck KPIs Regularly Business world evolves and your KPIs must. Do quarterly audits so you know your metrics are on point. If you are introducing a new product, move for a little while to “New Product Sales” and then get back to normal KPIs.


6. Speak Often and clearly

There’s nothing more imperative than to be clear. Know your sales team by metrics and how they’re being rewarded. Make live dashboards or periodic updates of KPIs. Transparency is a great trust-building tool and keeps you inspired.

These are best practices and by using them you’ll be able to build a sales compensation package that not only helps drive the bottom line but keeps your sales team motivated and in top form.

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