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].

By John Bernardi

What Is The Role Of Sales Commissions In Your Company?

What Is The Role Of Sales Commissions In Your Company?

If I Were a Customer and You Were My Sales Rep ...

... Here's How I'd Like You to be Paid

How do you feel when your sales rep earns a commission or wins a trip when you buy from them?

How does the customer win?

• Does the sales rep understand your needs and interests?
• Will they navigate your buying cycle so that you can do things at your pace?
• Are they concerned about your entire experience before, during and after the sale?
• How do you know what's behind their recommendation?  Is it truly your best interests, or an internal SPIF, or selling what's in stock, or inventory liquidation, etc.?  Do they need this sale in order to make quota?

I'd prefer to know that the sales rep is being compensated based [to a large degree] on my level of satisfaction.  If the entire team that is involved in designing and delivering my solution also shares in the rewards and recognition, then, I'll know they have a vested interest in my satisfaction and I'm not doing all the work.

Does anyone other than the sales rep win?

• How does the account team or project team win?
• Does their company win?

Companies can differentiate themselves by taking a fresh look at their compensation programs.  They need to be designed so that the degree of customer satisfaction and the degree to which their company wins determines the degree to which sales team members become eligible to win. Earned deal or project compensation can be shared among team members depending on individual roles and contribution.

By John Bernardi

What Is The Role Of Sales Commissions In Your Company?

If I Were a Customer and You Were a Sales Rep

Here's How I'd Like You to be Paid

How do you feel when the person with whom you are dealing will earn a commission or win a trip when you buy from them?

• Does anyone other than the sales rep win?  Do you win? Does their company win?
  
• Do they understand your needs and interests?
• Will they traverse your buying cycle so that you can do things at your pace?
• Will they be concerned about your experience after the sale?
• How do you know what's behind their recommendation?  Is it truly your best interests, or an internal SPIF, or selling what's in stock, or inventory liquidation, etc.?  Do they need this sale in order to make quota?

I'd prefer to know that the sales rep is being compensated based on my level of satisfaction.  Companies need to take a fresh look at their sales compensation schemes.  They need to be designed so that when their company wins, the sales rep becomes eligible to win.

Customers Not Responsible for Your Quota

 

"What can you do to close this sale before the end of the month?

We need this in order to make our quota."

Don't introduce incentives or pressure the customer to sign because it's in your best interest.

Bad things will result if you venture outside the boundaries of making sure that all commitments are up to date [yours, your team's and the buyer's team]. Also logical next steps to manage the opportunity to closure must be mapped out.

By interrupting the natural flow, you will reduce the profitability of the sale, mar the customer relationship and create inefficiencies for your sales reps who need to be working on other opportunities and relationships.

Leverage a sales opportunity's sales cycle. Strengthen the relationship and create an above the funnel entry for the next opportunity.  That's the essence of smart account management.

Successful People Surround Themselves With Others Who Complement Them

I hear successful executives say this all the time, "I know what I'm good at and what I'm not good at.  My success depends on finding other people to fill my gaps."

Sales organizations are quick to title their people as "sales executives".  If they are truly executives and want to be successful, then why should it be expected that each one is fully competent in everything necessary to produce a thriving sales organization?  No one is good at all the things necessary to fulfill the sales role including proposal writing, finding new business, giving presentations, relationship building, closing the "golden spike" deal, etc.

I think the compensation system disables sales leaders from doing the right thing with respect to organizing for success.  In most sales situations, team selling is essential.  If companies were able to break down the role into positions just like on a baseball team, there'd be someone playing first base, pitching, driving in runs, etc.  And the right compensation scheme would naturally fit into place.

So, how can we make this happen and not let singular sales rep commission entitlement be the deciding factor?