Super-charging Sales Compensation Plans

At last month’s TechAmerica Sales & Marketing Roundtable, guests heard from a panel of experts who’ve clearly earned their stripes in the tech sales and HR trenches. The principal topic was compensation strategies for multi-tier sales channels in the tech world… both internal plans and partner-focused packages.

From a well-known, San Diego-based human resources leader came the opinion that there’s a dearth of compensation plans that adequately serve today’s multi-tier channels. Overlapping sales efforts are too common, with the development of specialized channel partners to ride alongside inside sales teams.

Often, these compensation plans are poorly-designed and reflect the wrong motivation… most often that of the company’s CEO. Prescribed vs. actual duties cause communications breakdown, misunderstanding and friction.

The sales person should be viewed as the CEO of his or her territory. And, the lead sales person in the company needs to form the plan, align it with HR procedures, and then be its champion while selling the plan upward to C-level approvers.

For emerging technologies, companies should have a business development state of mind when forming sales compensations. Everyone – from the test lab to the controller’s office – should be avid sales people. This especially holds true in new market sectors. Now, granted: the term “business development” is a fuzzy one. In fact, a friend and former colleague defines the title of “Business Development” as befitting for sales people who don’t want to sell, and for non-sales people who do!

Company-wide bonuses? Yes. As long as the plans stick to the SMART rule: Specific, Measurable, Attainable, Relevant, and Track-able. These plans enfranchise the whole company, including non-sales and non-marketing staff.

It’s back to the tried and true rules, folks: Base all plans on a floating mix of On Target Earnings; that is, base plus variable payouts. (aka commissions or incentives) And, again, make sales goals realistic, and specific, measurable, attainable, relevant, and track-able… Once they’re done, compare them with investor’s expectations for a complete gauge. That’s easier said than done, isn’t it?

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