Properly compensate your sales teams with these key strategies.
- Step 1: Building your compensation planning team. The truth of the matter is that your sales compensation plan touches several departments in your ...
- Step 2: The ABCs of the sales compensation model.
- Step 3: Pay mix and payout structures.
- Step 4: Balancing plan components and weights.
- Step 5: Communicating and monitoring your plan.
Full Answer
How to create a successful sales compensation plan?
Ideally, your sales compensation plan should be crafted in a way that’s good for your business but also good for your sales people. The important thing is to put thought into its creation, ask yourself the right questions, and calculate the right numbers in order to ensure that it’s a strategic plan. Use these tips to guide your decision making.
Is there a one-size-fits-all sales compensation strategy?
There are no one-size-fits-all sales compensation strategy. Rather, remember that different incentive plans are required for each sales role, and each plan should be tailored to the individual roles’ parts in the sales process.
What are the most important parts of a sales compensation plan?
One of the most important parts of your sales compensation plan is components and weights. Ideally your plan should be easy to understand, objective in nature to drive proper sales behaviors, and give sales teams a set of achievable components. Your incentives should also be tailored to each sales role and its part in the sales process.
What makes a strong sales compensation model?
A strong sales compensation model should be aligned with company goals, simple to understand and communicate, and give sales reps and managers target objectives to work toward. Ultimately, this will help your plan incentives drive your desired sales behaviors.
How do I create a sales compensation plan?
How to Create a Sales Compensation Plan For New RepsUnderstand the Basic Requirements of a Good Sales Comp Plan.Establish Role Levels.Determine Total On-Target Earnings (OTE)Decide Base Pay and Sales Commission Structure.Set Targets.Plan Compensation for Onboarding and Training.More items...•
How do I set up a commission in Salesforce?
Step-by-Step Guide to Simple Commission Tracking in SalesforceStep 1: Create Your Commission Field. Go to Setup, find Opportunities, and click New under the Field Division. ... Step 2: Build Your Field's Formula. ... Step 3: Set Permissions. ... Step 4: Choose a Layout. ... Step 5: Review Opportunity Settings. ... Step 6: Test Your Field.
What are the factors influencing compensation plan for Salesforce?
Factors Influencing Salesmen Remuneration PlanFinancial capacity of the firm. ... Nature of the sales job. ... Nature of the products handled. ... Types (class) of salesmen. ... Conditions prevailing in the market. ... Economic conditions. ... Methods and policy of distribution. ... Advertising activities of the firm.
What are the five steps in compensation planning?
With this in mind, here are five (5) easy steps for setting compensation.Define the job. ... Price the job. ... Determine the job's value to your organization. ... Review where a job fits within a grade/range. ... Consider organizational factors, including budget.
How is commission calculated in Salesforce?
How To Calculate Commissions In SalesforceBuilding custom commission objects.Adding custom attributes to those commission objects–like commission amount.Adding custom formulas that automatically calculate those attributes.Creating a set of triggers to initiate custom calculations.
How do you calculate commision?
Just take sale price, multiply it by the commission percentage, divide it by 100. An example calculation: a blue widget is sold for $70 . The sales person works on a commission - he/she gets 14% out of every transaction, which amounts to $9.80 .
How should a compensation plan be?
The compensation plans should have a long-term vision and lasting value for the organization. Short-term issues related to the compensation plan include bonus, expenses management, and sales contests.
What makes a good compensation plan?
Effective compensation plans focus on motivating salespeople to meet both tactical and strategic company needs: profit, growth, market share, volume, etc. 3. Effective compensation plans are tied to measurable criteria that accurately match the critical sales success factors for the company.
What are the requirements of good compensation plan?
Requirements of a Good Sales Compensation PlanSimplicity. Simplicity is a hallmark of a good compensation plan. ... Fairness. A good compensation plan must treat all salespeople fairly. ... A Secure Income. ... Economical. ... Flexible. ... Stability. ... Guarantee for Living Wage. ... Motivational.More items...•
What is the importance of providing compensation plans to Salesforce?
The firm chooses a compensation plan to maximize its profit taking into account the salesperson's likely effort levels under alternative compensation plans and his or her alternative job opportunities.
What are all the three basic compensation strategies?
Here are the three most popular types of compensation packages and a few notes on who might be most attracted to them.Straight salary compensation. ... Salary plus commission compensation. ... Straight hourly compensation.
What is a compensation package example?
Compensation may include hourly wages or an annual salary, plus bonus payments, incentives and benefits, such as group health care coverage, short-term disability insurance and contributions to a retirement savings account. A total compensation package can have several components.
How to Set up an Effective Sales Compensation Plan
When it comes to creating your sales compensation plan, there’s no one best approach, but these steps can help guide your decision making. Read on.
Consider Your Staffing Goals
Consider your staffing goals as well. Are you looking to hire and retain long-term sales people who will be able to maintain strong relationships with clients? Or is a rapid turnover acceptable in your business? If you want to hire and retain people for the long term, you’re going to need to dish out more cash.
Keep Cost of Sales (CoS) in Mind
If you want to attract and retain the best sales people in order to build a strong sales team, you need to make sure you can actually afford it. This is done by calculating your cost of sales.
Know Your Options
Unlike other departments, there are many options for you to choose from when setting up your sales compensation plan. Organizations use a wide variety of plans, based on their goals and finances. Some focus on base salary, others on commission. But most include accelerators that increase commission rates when target levels are achieved.
Rhys Metler
Rhys is a tenacious, top performing Senior Sales Recruiter with 15+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America.
How do you structure bonuses for sales ops?
But how do we calculate them? What should they be based on? There are two competing philosophies on this: revenue-based versus project-based .
How do sales teams get paid?
To answer, we must first dig into how sales teams get paid. Reps typically get a cut of whatever revenue they generate. Want to earn more money? Then bring in more money. This is often referred to as variable compensation, where you get a bonus based on if you hit or exceed your quota. It’s simple, direct, and easy to measure.
How do I advocate for bonuses?
When you’re considering job offers as a sales ops leader, ask if the company typically scales compensation for the position and if so, what they tie that variable to. You should have a crystal clear understanding of how it’s measured and where those metrics are pulled from. A tactic I’ve seen deployed with much success is pitching your own compensation plan. You get direct input into a variable compensation plan that’s aligned with the company’s revenue targets, and can feel confident about hitting your goals.
Why do you tie sales ops bonuses to revenue?
They’ll have the same goals and incentives, which translates into cohesive and complementary priorities. The worst thing that could ever happen is a sales rep says they need some form of support to help them hit a number, and then the sales ops leader says no because it isn’t aligned with their compensation.
Why does the sales ops leader say no?
The worst thing that could ever happen is a sales rep says they need some form of support to help them hit a number, and then the sales ops leader says no because it isn’t aligned with their compensation.
Is sales operations a must have?
Is this a trick question? Yes, of course, they do. In 2020, sales operations went from nice-to-have to must-have — with 89% of sales professionals considering the role critical to growing the business. This team (or sometimes a single person!) is responsible for informing your sales strategy, forecasting, managing your sales tech, and training — all of which work together to drive productivity and scale processes that ultimately contribute to a business’s top and bottom line.
Is the sales ops function going to take on a bigger role beyond 2020?
The sales ops function is only going to take on a bigger, broader role beyond 2020. By developing a clear bonus structure, you’ll not only keep your sales ops leaders incentivized, you’ll ensure they’re in lockstep with your sales leaders.
How to Build a Sales Compensation Plan
Building an effective sales compensation plan can increase profitability and productivity, and help you achieve your corporate and sales goals.
Your Options
When it comes to building a sales compensation plan that works, you have many options. Base salaries, commissions, incentives, bonuses—you can use them alone or blend them together, depending on what will motivate your team more effectively.
You Get What You Pay For
You might want to reduce your costs by capping sales compensation, but in the end, this can be bad for business. If you’re not compensating your sales reps appropriately, you’re going to lose them. You’ll have a high turnover rate, which means you’ll have to pay more to hire and train new workers more often than is needed.
Reviewing Your Sales Compensation Plan
Once your plan has been designed, test it out. It doesn’t have to be set in stone at this point. Ask your sales managers whether they see positive effects. If not, refine your plan.
Rhys Metler
Rhys is a tenacious, top performing Senior Sales Recruiter with 15+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America.