Communicating the Sales Incentive Plan
Sometimes Pasteris sees the situation in which there was a great sales plan design but it failed because it was not well understood and appreciated by the salespeople.
To avoid that situation, make sure that you:
- Send an announcement letter, particularly with the new plan that spells out its features.
- Conduct training on the plan so that everyone is clear about how it will play out.
- Provide documentation to the salespeople. Often employers have the salespeople sign to acknowledge that they understand the plan, Pasteris says.
- Seek feedback from the salespeople. This can be face to face or by survey.
Pasteris, who is president of TLMP Consulting Group, offered her compensation tips at a recent BLR-sponsored webinar.
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Administration of the Plan
Pasteris suggests that employers consider the following as they implement their plans:
- Document. The plan document describes the plan in general.
- Contract. An annual employee contract, signed by salespeople and management, offers the specifics for the year’s plan.
- Measurement. Measuring performance is critical. It can be time-consuming and onerous in some cases to track sales and credit them to salespeople.
- Caps. Salespeople don’t like them, but many employers have them to deal with:
- Windfalls—huge payout when performance is not due to the salesperson’s efforts.
- Shortfalls—dramatic drop in sales not due to the salesperson’s efforts.
- Performance measurement periods. These are generally commensurate with the sales cycle. If a sale takes a year, you don’t want to be measuring on a weekly basis, says Pasteris.
- Sales crediting. This a hot topic and several clarifications are required:
- Defining a sale. (When the product is shipped? When the invoice is paid? Do you deduct for refunds?)
- Split credits when more than one person is involved.
- Sales across territories.
- House accounts. Some customers are long-standing and those sales are not really through the efforts of the salesperson. No credit is given for sales made to them.
Evaluation
Finally, says Pasteris, you need to evaluate your plan after the period has passed.
- Did the plan produce the results you expected?
- Did the plan cost what you expected?
- Were customers satisfied?
- Were salespeople satisfied?
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