Sales force commission plans are at the heart of modern business growth, but a poorly constructed commission plan can kill a company in a heartbeat.
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Here are commission plan mistakes your company really can't afford to make.
Commission plans commonly suffer from a lack of creativity. Rather than creating a commission plan designed to meet the business' unique needs and challenges, many business owners are content to implement the same plan as their competitors – with predictable results. To motivate your sales force to shine, you need to design a plan that avoids everyone else's mistakes.
Lack of Sales Force Input
It's likely that you and your sales team have different ideas about what motivates them. Sales managers have a reputation for offering incentives based on their personal preferences instead of on soliciting input from the people who actually do the selling. Team input is crucial to your plan's success, not only because it increases the level of ownership, but also because it creates a sense that everyone is in it together, even though the incentives reward individual performance.
Catering to Low Sellers
A well-crafted commission plan will inevitably rock the company boat because it will emphasize differences in ability. Business and preschool are very different creatures – not everyone earns a gold star. If your plan is designed to maintain harmony by rewarding low performers, there will be little motivation for high performers to sell and the plan will ultimately fail.
No Consideration for Newbies
On the other hand, not every team member is capable of performing at the same level because some have the advantage of experience. Although trainees and newbies can't be expected to compete with seasoned veterans, it's still important to offer them incentives based on the assumption that their performance will rapidly improve as they gain experience. Instead of throwing everyone in the same incentive pool, you might want to consider rewarding inexperienced salespeople for leads generated, product knowledge, or overall improvement.
If you want to irritate your top sellers, make sure your commission plan reduces their rewards once they achieve a certain level of sales. Effective plans ignore the principle of diminishing rewards and continue to motivate high performers at the same level as others. Some sales managers can't handle this because it gives team members the ability to earn more than their boss. But at the end of the day, sales are what matters most – not egos.
Sales teams aren't motivated exclusively by money. The best salespeople are very interested in working their way up the ladder and want to be noticed by top management. With that in mind, it's helpful if your company's top-tier managers are involved in promoting the plan to the sales team and in delivering the rewards. For some team members a day on the golf course can be a more productive reward than a bonus check.