SALES COMPENSATION
Five targets for sales compensation
Companies should have five priorities when setting pay and incentives for their sales people during the current turbulent economy, according to consultants Watson Wyatt.
With many sales people unlikely to reach their current targets, companies need to find ways of motivating their sales forces without adding significantly to the cost of each sale.
“Driving sales activity is crucial for companies to survive the downturn,” said Scott Cullen, a consultant at Watson Wyatt. “At the same time, cost control has to be a high priority. Companies we are working with are creating the right balance by maintaining their long-term sales compensation strategy but making tactical tweaks to enhance short-term results.”
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Watson Wyatt’s five golden rules for sales compensation in the current turbulent times are:
1. Ensure focus: The sales compensation plan should provide an appropriate focus on the most attractive sales opportunities for the business still out there.
2. Review the core plan: Make sure that the core plan is aligned to strategic business objectives – these are likely to have changed since the credit crunch. Make sure that the plan drives the right behaviours in the sales force.
3. Maintain targets: Lowered targets will increase the cost of sales. And they will be hard to bring back up again in better times.
4. Use clever sales contests: Use cleverly designed sales contests* to enhance the focus on critical short-term results.
5. Drive the middle: Focus is often on top or low performers but small productivity improvements to the middle are achievable and create meaningful impact on the top line.
How Watson Wyatt defines a “sales contest”
“A sales contest is a short-term plan on top of the core sales plan that is designed to focus sales people on a particular issue, such as a product launch or a particular product or client. It might take the form of a bonus based on the achievement of a target within a given time period or be based on a ranking where sales people are ranked in terms of performance and the top X% get a bonus/prize.”
A final word
“Companies recognise that closing deals is now more difficult and time consuming and that sales people will be under more pressure than usual. Managing the sales compensation structure well will help in retaining the best sales people and keep them motivated to maximise those opportunities that still exist.” Scott Cullen, sales effectiveness and compensation consultant, Watson Wyatt.
Want to know more?
To contact Scott Cullen, sales effectiveness and compensation consultant at Watson Wyatt, tel: 020 7227 2383, email: scott.cullen@watsonwyatt.com.
Watson Wyatt is the “trusted business partner to the world's leading organisations on people and financial issues”. The firm’s global services include: managing the cost and effectiveness of employee benefit programmes; developing attraction, retention and reward strategies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 32 countries and is located on the web at www.watsonwyatt.com.