Sales Compensation Brief- Issue No. 200919

Should You Change Your Sales Comp Plan for 2020?

Short Answer: Probably

Sales departments have numerous customer contact jobs: sellers, pre-sales, post-sales, customer support/service, channel management and many others. More than 60 different types of jobs are available for managing customer interactions. Companies configure these jobs to meet the requirements of two variables: product characteristics and buyer needs. Buyers have varying needs, some urgent, others not so much. Some buyers have high product/vendor knowledge; others do not. In addition, the selling tasks of access, persuade and fulfill are different by buyers. Some customers are easy to find, others are not; some customers are easy to persuade, others are not; and some customers need extensive customer support, and others do not. Meanwhile, product utility varies by buyer types and application. The competitive environment plus pricing strategies affects the buying equation. Sales force strategic goals may feature one or more objectives: growth, profit, product mix, account types and contract terms. Whew! With this listing, you now have countless permutations of the sales force’s goals.

Any given B2B sales division will have a few jobs. In some cases, as many as 20 jobs or more. Each of these jobs have a role to help complete the buyer-purchasing journey. The goals for each job are unique to that job. Sales management crafts sales compensation plans to reward achievement of these goals. Each year, sales leadership scans the selling landscape through the lens of the current sales objectives. Any change in product configuration, buyer needs and strategic objectives may alter the goals for one or more sales jobs. As a result, such changes might necessitate a change to the sales compensation plans for those affected jobs. That’s why many sales compensation plans change on an annual basis. Our research shows that about 90% of all companies make modifications to the sales compensation plans on an annual basis.

Now that we know sales compensation plans need to be agile, what is necessary to ensure success in a continuously changing sales landscape?

Here are the features of successful annual program redesign efforts:

Annual Program Review. Since it’s going to occur anyway, establish and document the annual review and redesign schedule with dates.
Governance. Let people know who is in charge. Establish a governance charter with assigned accountabilities and authorities.
Leadership Committees. Ensure cross-department participation of design changes. Appoint a steering committee to provide executive oversight. Engage a design committee to work through the details of plan revisions.
Conditioned Sales Force. Sales leadership needs to communicate to the sales force that plan revisions are a normal part of the sales effectiveness efforts.
Automation and Administration. Ensure program automation and administration protocols can record performance and process payments.

The takeaway: Sales management must align the sales compensation plan within the context of buyers, products and selling strategies. Make the annual sales compensation review process a repeatable and well-tuned effort.

What Is WorldatWork’s Spotlight on Sales Compensation?

Spotlight on Sales Compensation is a one-of-a-kind annual conference on sales compensation that takes place each summer in Chicago. More than 400 attendees and 20 vendor exhibitors attended this year’s event on August 19-21. The program features five general sessions and more than 30 workshops providing exceptional value. Having attended all nine conferences (as an attendee and as a speaker), let me share my impressions about the conference; and suggest why you should attend next year.

The attendees represent a wide-swath of industries. Most of the attendees are from the HR community; WorldatWork is a highly regarded association of compensation, benefits and work-life professionals. However, the program content is not slanted to the HR community. Professionals from sales, sales operations, finance and marketing would find the content offered of high value. Each year sees a different mix of attendees. Sales compensation is an episodic topic that gets high visibility every few years. Major sales strategy changes often necessitate the need for a redesign effort. Other attendees include those whose full-time job is sales compensation. For some, sales compensation is a seasonal effort, part of a long list of compensation oversight responsibilities. Some of the attendees are VP level jobholders overseeing design staffs at major companies. The vendors include design consultants (like me and the Alexander Group) and software vendors whose products automate sales compensation administration.

Why attend? The Spotlight conference features a deep look at sales compensation. Many practitioners, like yourself, lead workshops providing real-world learning and suggestions. My session on how to communicate sales compensation topics to senior leaders had high attendance. We had a fun look at what to say and what not to say when assessing, designing and communicating sales compensation plans.

David

David Cichelli
Sales Compensation Educator, Author, Speaker
Connect with me on LinkedIn!