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What Topics to Consider for a new Sales Commission Period

By Ana Roman

Whichever level your company is on, one thing stands- you will have to make adjustments to the sales commission structure for it to match your business phase and type so as to ensure sales reps have the motivation and continue to generate revenue for the company.

A lot of companies carry out changes during the start of a new financial year. The changes may be minor, but close to 15% of companies conduct significant overhauls on their sales program. This is an opportunity for you to change your compensation plan schemes and adopt new methods that improve efficiency. An excellent example of such a change is acquiring Blitz's commission tracking software.

Examples of small changes that companies will opt for are: keeping performance measures and payout rates in tune. Each year is different, and there will definitely be a change in strategic goals for the new year’s sales force.

There is, therefore, a need for the designs in sales competition to ensure performance measures and new company objectives are aligned.

Significant changes companies are likely to make, include the introduction of new products, emphasis on a particular product, new sales commission software, corporate strategy shifts, and mergers. Others feature changes in the approaches used for customer coverage and take-overs. All these will require thorough reviews of the plans for sales compensation.

5 steps to design your new sales commission tracker for 2020

If you plan on changing to 2020’s compensation plan, there are various considerations you need to put into mind: changes in strategic goals, aligning performances, and adjustments in pay rates.

It is also essential to consider those variables that your sales force hadn’t included before. Such things can be information that is up-to-date, visibility to groups and sales agents, and additional functionalities to the sales commission software, which may greatly help. 

As 2020 approaches, rally the sales leadership, HR, finance, product management, and compensation design stakeholders. Bring the commission accounting and sales operations on board too. As you prepare for updates on the sales compensation designs for 2020, identify accountabilities, write down a schedule and follow the steps outlined below.

Assess

This first step is the most important of them all. Without getting your priorities straight, you will lack a sense of direction, and it will become even harder to achieve your set objectives. The strategic and financial priorities of your organization have to be clarified, e.g. the type of sales desired, the center of focus, desire for larger contracts, or transactions with markets that are strategically important or new.

You also need to identify the dysfunctions and gaps in coverage. Find out the objectives being met and those that are not. Also look at the areas in which the salespeople are doing so much and those in which the performance is subpar. Identify the underused channels and coverage changes that are underway.

You should also be able to do an evaluation of how effective the incentive plans put in place are. Even though there could be changes in your performance metrics and priorities in your compensation plan, it is crucial to have an understanding of where your current strategy will do well and where it won’t. Then seize this opportunity to build on your strengths and work on your weaknesses.

Find out if your pay-levels are market-competitive and if plans are linked to the outcomes that sellers have control over. Look if there are windfalls, and disputes inflating costs.

Do an evaluation of limitations and strengths of the existing administrative processes and systems.

 Align

Set up a meeting with seniors to find out the performance and job outcomes/expectations.

Sales compensation plans have many change levers and their alternatives.

Understand your options and how they will help you address issues in your organization. This may include alignment of the plan with the job content or objectives, enhancing retention and lowering costs, or reducing the administrative workload.

Eligibility

Which roles should a sales plan have?

Pay levels

Tthe targeted cash compensation for every role

Pay mix

The existing split between variable and fixed pay

Incentive form

Either goal-based or commission-based mechanic or both

Goal setting

Process of allocating performance standards

Administrative systems

Systems used for data capture and processing and calculation and communication of payment

Communication

Presentations and materials for reinforcing plan specifics:

  1. Design

The process of designing new sales compensation plans is a delicate one, and several things could go wrong. Failed implementation can have dire consequences that can last for a long time.

The following rules should be followed to lower the risks:

Bring together a design team that has representatives from marketing, HR, sales, finance, sales operations, and IT.

Dutifully follow a well-structured information-gathering, iterative design, communication, and data analysis process.

Carry out testing of the plan under different performance scenarios in order to understand the result to be expected cost-wise.

  1. Implement

Come up with plan documents, training kits, and PowerPoint presentations. These presentations should highlight the business strategy and objectives, changes in organization structure and the processes that were used in developing the plan.

Also, analyze the plan changes, for instance, which ones are good and which are different. Also prepare calculation examples, do a wrap-up and end with a Q&A session.

Never underestimate the time required for evaluating alternative systems, integrating data and developing precise requirements.

  1. Adjustments on the fly or tune-up

In case you discover that there may be turbulence on the road and your plans may not proceed as was envisioned, you can always substitute them. Do this using the trial and error method. Come up with comparison calculators for sales reps that show earnings in the new plan. The calculators can be tested with small groups.

New and updated plans in sales commission will ensure credibility is created in the position you occupy and from the stakeholders. Transparency and positive incentives in compensation will aid in employee retention, trust, and engagement.

In conclusion

Carefully executing your commission plans using a commission tracker can motivate your sales reps and build rapport, no matter the compensation structure. Keep it simple and use Blitz to give each stakeholder a sense of accountability. Blitz is your best choice for commission data.

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Tags: Business Management, Commissions, Commissions Management

About Blitz

Blitz is a global software for sales commissions. We help our clients to track and calculate sales commissions effectively and on-time.