Why Your Sales Compensation Plan MUST Connect Payment With Performance
Have you thought about how important it is that your sales compensation plan connects payment with employee performance? Let me answer that one quickly: it’s imperative!
If your sales compensation plan doesn’t make that connection obvious, then you risk losing your best salespeople and you can kiss your business’ revenue goals goodbye. Sales is a competitive marketplace and the best salespeople can always get a job. Communicating the link between pay and performance is critical to creating that environment where salespeople are focused and motivated to achieve. Here’s why it’s of vital importance to create that linkage.
Show Me the Money!!
Most of us don’t go around admitting that money is our primary motivation, however, while there are many other ways that you can reward your reps that don’t involve money – such as recognition, prizes, flexible hours – these things won’t work if the underlying link between payment and performance isn’t there. Unlike the stereotype of the salesperson who buys lunches and plays endless rounds of golf, a career in sales can be stressful with long hours and personal sacrifices just part of the norm. If you don’t make the pay outcome commensurate with the effort, performance and results, you will not get the 100% commitment that your team needs.
Appreciation is Important
The point of a sales compensation plan is to motivate your reps to perform in a way that helps you meet your business goals. Therefore, it’s important that your sales compensation plan clearly rewards (financially) and demonstrates appreciation for those reps who are delivering. A sales compensation plan is no motivator if it fails to differentiate levels of performance. Plans that reward and recognize everyone in the same way just for showing up in the morning, spawn a mediocrity that acknowledges non-performance and fails to appreciate top performers. Sales compensation is one of management’s primary tools to encourage the best out of your reps. As mentioned above, at the end of the day, money is the number one way to initiate and reinforce good behaviours and show your top sellers that you appreciate all the hard work that they do.
The Best Sales Pros are Achievement Motivated
A fundamental question for sales management is: what kind of person do you want in your sales team? Are you looking for someone that likes to take the easy way, who is not particularly motivated and happy to settle, rather than persevere? Or is it someone who is highly motivated, is driven to succeed and never stops until they achieve their goal? I think we can all agree that it’s the latter. And it makes sense. A study from the Harvard Business Review showed that 84% of top sales performers tested “very high” in achievement orientation.
The best reps are focused on achieving their goals and regularly measure their performance against these goals. How does this translate to linking payment with performance? Well, it follows that if a great rep is motivated to achieve the business goals you set, they’re likely to have their own professional and personal goals too. The best want to be the best… and won’t settle until they are recognized and rewarded for their performance. If you are not offering a competitive sales compensation package, tied to performance that rewards achievement, it’s highly likely that your top performers will be looking elsewhere. For your sales compensation plan to be effective, you simply MUST connect payment with performance. If you fail to create that strong link, your sales executives may quickly get disillusioned seek an alternative.
Take a look at how you evaluate your sales compensation plan’s effectiveness here.
About The Author
David Johnston is President and CEO of Sales Resource Group Inc. David has a broad international consulting background and offers experience and a participative approach to consulting with clients. He brings with him 20 plus years of experience in working with organizations from diverse fields, such as broadcast media, pharmaceuticals, telecommunications, information technology, retail, manufacturing, membership organizations and financial services. David is a sought-after speaker in the area of sales performance management and organization effectiveness as well as sales compensation. David holds Masters Degrees in Clinical Psychology and Business Administration. He teaches sales compensation for WorldatWork and is a member of The Canadian Professional Sales Association.