Monday, March 13, 2017

Sales Compensation Plans Should Foster High Business Acumen

Sales Compensation Plans Should Foster High Business Acumen

Sales Acumen Is Not The Same As Business Acumen
Sales pros with high sales acumen know how to qualify and nurture prospects, and how to close deals.  They don't rely on leads generated by the marketing process, so they have a plan for approaching the right suspects in search of new prospects.  They interpret and respond well to objections and know when to persist or move on.  Only after understanding needs do they recommend a solution. Following up on each sale conveys authenticity and by quickly resolving issues they earn renewals and referrals.

High Business Acumen Is A Key Differentiator
Business acumen blends perspective in Finance [P&L and balance sheet], Market [opportunities and threats] and Strategy [goal attainment methodology].  Business acumen elevates a sales pro's position to partner when they earn the right to collaborate with customers to solve a business problem.

Sales Pros With High Business Acumen Understand How Their Company Wins
Sales compensation programs should encourage participants to develop both business and sales acumen. In addition to motivating short term behavior, these programs should also support the company's business strategy that doesn't vary much from year to year.

Participants understand that sales overhead [salary, benefits, memberships, certifications and expenses] is covered when they fully implement the process, and build a strong customer portfolio and a healthy sales funnel.  Real time feedback will keep participants on track to meeting this basic requirement.

Depending on the nature of your business, you can add the right incentives such as:

  • Situational incentives i.e. off-season sales, new accounts, new market segments, etc.
  • A % of gross profit is paid for closing large opportunities if the sale exceeds targeted %GP, includes a plan to close the deal, and the proposal leverages a unique value proposition.
  • Achieving Annual Quota earns a budgeted commission with YTD payments.
  • Participants who exceed their quota are eligible to earn a share of Company Net Profit Contribution where NPC = [Total Gross Profit - Total Sales Overhead].