- There are so many positive things that could be said
about incentive plans, compensation programs,
and contests to motivate the sales team throughout the year.
Who's going to complain about the opportunity
to earn more money?
That being said, implementation of these programs
needs to be well-designed, communicated very clearly,
and be equitable for the entire organization.
For me, I found that anything that involves
someone's personal finances can be very stressful
in performance measurement and management.
We're focused on the objective of increasing revenue
while diligently attempting to ensure
we're fair to everyone and no one is under-rewarded.
Similar to setting sales targets,
these responsibilities are a lot more difficult
than anyone suspects; it's just not that easy.
We're going to briefly review each one
and the impact they have in sales performance measurement;
however, I would definitely recommend you explore
getting additional training for this
if you're inexperienced or feel unsure.
I also want to stress to you,
work closely with your human resources contact
along with your financial manager
to ensure you're handling correctly
and budgeting appropriately.
Incentive plans.
In its simplest form, the primary objective
is to give the salesperson a target to achieve
and the incentive program motivates them to do it.
It rewards the behavior of those salespeople
who perform at the best of their ability.
The goal is that salespeople can track their results
throughout the year and understand
they're earning bonus dollars,
or other reward, for every sales made.
With much improved revenue tracking tools now available,
salespeople can know realtime where they stand.
From a measurement perspective,
keeping plans simple and focused
is normally the most effective way to go.
You want your teams motivated and focused
on closing business, not trying to understand
the fancy incentive program you've created.
Compensation-salary.
The traditional path for salary of use,
has been the year-end budgeting crisis.
Guidelines handed down by management,
performance appraisal meetings, and then salary discussions.
My personal experience has found that these have become
less a review of achievements and now,
more tied to corporate controls.
We each have different views on this
but we're all reading about salary increase freezes,
or maxing out at 2% to 3%.
This creates a dilemma of using salary as a performance
measure since there's not a lot of room to maneuver.
However, you want to make sure you're rewarding
and keeping your best salespeople.
Contests.
Some industries use this approach really well
to increase sales or motivate certain activities
within the sales organization.
You may have heard the word spiff,
which means an immediate payout
of cash or reward for a sale made.
These performance measures are focused
for specific period of time,
such as the end of the quarter or year.
They're simple and effective since you target
specific key performance indicators
that can be tracked easily, such as sales closed,
new accounts opened, revenue achieved,
or new opportunities created.
With all of the tracking tools and metrics available,
you can now develop some creative incentive programs
and fun contests to increase revenue;
however, you don't want to make them too challenging
to explain or calculate since that defeats the entire
purpose and makes measurement assessment too difficult.
Incentive discussions and salary reviews
always draws everyone's attention, for obvious reasons.
Seek out your human resources contact for assistance
since they know the legal rules to be aware of.
In addition, the finance teams need to be on top
of what your costs are and ensuring revenue
is tying in with payouts.
When this is all finely tuned,
sales performance is impacted in a very positive way.