The most common eligibility guidelines include the following details; the primary job must meet ALL three of the following criteria:
But what about other jobs that have customer contact? Should they be eligible to participate in the sales compensation program? What about field marketing jobs, customer success personnel and lead generation roles? And what about sales support personnel such as sales administration, sales operations and in-bound order entry?
Calibrating the Eligibility Criteria
Companies can narrow or widen the eligibility criteria.
Example guidelines that narrow the criteria include:
Example guidelines that widen the criteria include:
A Detailed Look at Persuasion Criteria
Industry professionals use the word “persuasion” a lot. Why? Well, the most important asset in your sales organization is your sellers’ time spent persuading the customer to buy your product and consequently generating revenue. And companies gear the sales compensation plan to pay those sales representatives for their persuasion activities. Therefore, persuasion is a key element to many sales compensation design components, eligibility being a primary one. Be aware…many industries/sales models have additional persuasion events besides closing a contract—obtaining technical sign-off, progressing an opportunity and driving adoption/usage.
Another key concept to leverage when thinking about sales compensation eligibility is the Types of Variable Pay Programs available. The most common type of sales compensation plans are as follows:
A common mistake that many companies make is to allow non-sales roles onto a sales compensation plan. We find this particularly acute when companies do not have Corporate Gainsharing or Bonus Plans. Some stakeholders will desire to put customer service, marketing, sales support/coordinators, sales operations, deal desk and other roles onto the sales compensation program as they seek to recognize and reward performance. However, “pay-at-risk” plans require the incumbent to have significant impact on outcomes. It is ill-advised to subject these jobs to down-side earnings when their efforts cannot directly drive outcomes.
Eligibility Application Notes
There are many guidelines, concepts, frameworks and practices when it comes to sales compensation plan eligibility. The Alexander Group (AGI) recommends that each company develop their own guidelines that align to their specific philosophies and principles. Companies should determine plan eligibility at the job and not incumbent level. When developing a new job, sales should work with HR to confirm the job role and responsibilities and whether or not it adheres to company eligibility guidelines. Eligibility guidelines do not always need to align to market practice; however, companies do need to consistently apply these guidelines and support the overall philosophy of the company. When building out eligibility criteria, sales organizations must articulate how each criterion will impact current/future roles’ eligibility, so leaders understand the impact of their decisions.
How the Alexander Group Can Help
If you need help with your eligibility criteria or any other sales compensation plan design question, please contact us at the Alexander Group. We offer a range of solutions from half-day workshops, to principle framework development, to full plan design engagements.
Learn more about AGI’s Sales Compensation practice.
This is the first in a ten-part series examining the components of sales compensation guidelines. Read Part 2 of this series.