Sales organisations work hard to recruit and retain stars – their most talented sellers – and today’s compensation plans must do more than stack pay and payout grids. Now, compensation plans that weave elements of recognition, reward, and career mapping, in addition to total compensation, play crucial roles in motivating and rewarding your best sellers. This guide provides practical input on how to infuse recognition, reward, and career mapping in compensation structures to better engage your sales stars.
Table of Contents
Section 1: The Evolution of Sales Compensation
Section 2: Strategies for Integrating Recognition into Compensation Plans
Section 3: Incorporating Rewards into Compensation Plans
Section 4: Creating Career Advancement Opportunities within Compensation Plans
Section 5: FAQ – Addressing Common Questions About Sales Compensation
Q: How to create a recognition system for my sales staff that works for everyone?
A: Your system needs to factor in everyone’s work product and emulate your company culture. While sales organisations do use poorly designed incentive compensation systems, your goal should be to avoid this. You don’t need complicated ranking systems to motivate your enterprise’s sales team. To implement a solid system of recognition based on compensation, you must have systems in place that are aligned with the company’s culture. The main thing is for one employee not to feel exploited and robbed of recognition after seeing a colleague receive a substantial reward. Absolutely nobody should be disheartened by a possibly inferior incentive programme decision. Sales professionals should be able to predict their compensation rewards based on their perceived output, not on any arbitrary (and possibly small) measure. The importance of ensemble management cannot be overemphasised, as it is the key to managing and motivating people.
Q2.What role does technology play in facilitating recognition and rewards within sales compensation plans?
Q3.How to make sure that these career advancement opportunities are available to everyone in sales, regardless of tenure or background?
Q4.How do I balance the need for recognition and rewards with budget constraints?
Q5: Sales compensation plans must not only serve the needs of the company they work for; they also need to incentivise and keep the best talent. How can you measure the impact of your plans in this regard?
Section 1: The Evolution of Sales Compensation
Over the past several decades, we have learned many lessons, changed our minds, and incorporated new concepts into our designs – but sales compensation evolved far beyond commission plans. It’s now a comprehensive approach to engaging people through rewards to achieve challenging goals. Here is a snapshot of the evolution of sales compensation.
1.Away from ‘Commission-Only’ to Total Rewards: Commission-based pay arrangements are not new to sales organisations. However, most will now supplement the basic rewards of commission with recognition programmes and career opportunities as part of a total reward framework.
2. The rise of recognition: In the flat world of social media and the web-centric world of work, recognition is becoming an increasingly common currency in sales organisations. Companies use peer-to-peer recognition programs as well as public shout-outs to communicate recognition in ways that both reinforce desired behaviours and build a culture of appreciation.
3.Career Growth and Advancement: Almost as important as pure monetary rewards, salespeople view professional growth and advancement potential through compensation programmes as major elements influencing employee loyalty. Firms presenting career pathways, both vertical and lateral, have an advantage in recruitment and retention over those that don’t.
Section 2: Strategies for Integrating Recognition into Compensation Plans
As a universal human need, recognition does not compete with money. Here are the recipes you need to translate these ideas into action: sales compensation plans.
1. Peer-to-Peer Commenting: Reason number 37, 517, 943 that millennials are lazy is that they seek praise from everyone. Solution: encourage millennials and those of us who are not that far off to recognise each other. Platforms such as Bonusly and Kudos allow each person on the team to give (and receive) comments in real time.
Example: At ABC Corp, on the company’s intranet, the ‘Kudos Corner’ column invites employees to nominate each other for public praise when they go the extra mile: You feel great, you earn extra recognition points, and your corporate peers get a fresh nudge of the ‘preferred’ behaviour.
2. Supervisory Recognition: Motivate managers to recognise employees’ accomplishments. Sending a personalised note, setting time for one-on-ones, and calling out exceptional work in front of a team meeting are easy to do and especially motivating.
Example: The sales team at ABC Solutions conducts a monthly ‘Spotlight Awards’ ceremony in which members of the management team congratulate the month’s top performers by sharing their successes with the entire team. This has a dual effect: it increases morale and inspires others to excel.
3.Tying Recognition to Incentives: Building on the benefit-of-the-doubt relationship we’re starting to form with other leaders, also tie in recognition metrics into performance evaluations, and tie those evaluations to some sort of incentive – whether that be a bonus or even some extra paid time off. Now we’re going to incent a sales professional to participate in our recognition program and incent a manager to establish a culture that fosters appreciation.
For example: If an ABC Enterprises salesperson receives x number of peer-to-peer recognitions each quarter:I receive a bonus payout.This not only gets ABC’s sales personnel into the app – but can also help to strengthen their collegial relationships.
Section 3: Incorporating Rewards into Compensation Plans
Instant payoffs are huge drivers of performance trends. This is how to make rewards work in successful sales compensation plans.
1.Payout-Based Bonuses: Create bonus structures that incentivise sales staff to reach certain performance goals; for instance, bonuses payable only when certain revenue targets are met or when customer satisfaction quotas are achieved.
Example: When it pays quarterly performance bonuses to professionals at ABC Corp on the basis of reaching individual sales targets and receiving ratings from customers, sales professionals are motivated not only to focus on closing deals, but also to focus on paying attention to customers’ requests.
2. Tiered Incentive Programs: Use tiered incentive programmes based on the sales professional achieving certain levels of performance. This method of paying for multiple levels of achievement provides an atomised sense of individual progress.
Example: The commissioned sales staff at ABC Solutions is rewarded through a progressive incentive programme where bonuses are tied to quarterly sales targets. The higher the level a rep achieves, the greater the earning potential. This encourages sales professionals to raise the bar and reach for an even higher score on the next ring.
3. Non-financial rewards: besides cash incentives, use gift cards or travel vouchers or turn to experiential rewards such as team outings or professional training. Those rewards can be adapted to different tastes in order to broaden the scope of impact.
Sample: ABC Enterprises rewards its sales staff with a ‘Reward Points’ system: if they reach and maintain or beat their individual or team targets, they can accumulate points and apply these points to purchase discounted gift-cards, travel vouchers, and tickets to sporting events or concerts.
Section 4: Creating Career Advancement Opportunities within Compensation Plans
Career advancement is an important factor in employee engagement and retention. Learn how to incorporate it into sales compensation plans:
Boosting drivers’ perceptions of growth on the job – and clarifying career development within a company – have both been shown to improve employees’ labour productivity To reinforce stability and structure, consider instituting structured career paths. Outline the skillset that will help salespeople scale the ladder and clearly identify the milestones and competencies they must acquire. For example, each level might require that the sales staff master BANT, SPIN, SNAP or beauty visualisations, making success tangible and predictable.
For instance, ABC Corp creates a clear career progression path from entry-level sales consultant to senior sales director for the sales team. This makes the process transparent and boosts employees’ long-term commitment to the company as they know exactly how to reach different positions.
2. Professional Development Programmes: Offer training, mentorship and certification programmes in order to expand the skillset of sales professionals and advance them in their careers.
For instance: The sales team at ABC Solutions receive regular training in sales techniques, product knowledge and leadership. Additionally, all junior sales professionals are paired with a senior mentor to provide advice and support as they gain career experience.
3. Incentives Based on Promotion: Connect promotions to performance levels and years of service, moving sales pros who are performing above expectations and show leadership potential down the line. You create a sense of meritocracy where advancement is based on merit. Example: ABC Enterprises has an incentive programme that rewards sales professionals based on their performance, tenure and contributions to the collective operations of the team. Promotion to higher-level roles is given to those who accumulate the highest scores, provide case examples and execute projects. The process motivates employees to hold themselves accountable, and to accept more responsibility.
