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Why Sales Compensation FRUSTRATES Executives

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In this episode of the Sales Management Minute, learn the three questions that serve as the foundation when developing a sales compensation plan.

“My salespeople focus on the wrong things.” It’s the executive scream of frustration. Their salespeople spend time on tasks that are out of alignment with what the company needs done. Oftentimes, when dissecting this situation, the reason for this breakdown is that the sales compensation plan sends marching orders that don’t align with the mission.

How does this breakdown happen? When most executives begin the sales compensation plan development process, they start by asking, “How much do we want our salespeople to make at 100% of quota?” That is certainly an important question to ponder during the compensation development process, but it should not serve as the foundation. It’s not the starting point.

The sales compensation foundation should be based on the answers to three questions:

1. What is our corporate business objective and what role do the salespeople play in achieving it? Every company has defined objectives. The question is identifying the contribution needed from the salespeople to make that happen.

2. What are the key sales behaviors that are needed by the salespeople and with what level of frequency? In essence, what do we need them to do and how often do we need them to do it?

3. Given the expectations we have of the salespeople relative to sales behaviors, what is the right incentive model to keep sales activity aligned with our business objective? There are many ways to structure a sales compensation plan and the right one for one company is not necessarily right for another.

With these three questions answered, the foundation is set for the development of a sales compensation plan that keeps salespeople focused on the activities critical to achievement of the business objective.

See you next time on the Sales Management Minute.

Lee B. Salz is a leading sales management strategist specializing in helping companies build scalable, high-performance sales organizations through hiring the right salespeople, effectively onboarding them, and aligning their sales activities with business objectives through process, metrics and compensation. He is the Founder and CEO of Sales Architects, Business Expert Webinars and The Revenue Accelerator. Lee has authored several books including award-winning,  best-seller “Hire Right, Higher Profits.” He is a results-driven sales management consultant and a passionate, dynamic speaker . Lee can be reached at lsalz@SalesArchitects.net or 763.416.4321.