Sales Compensation Plan Design
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Make sure your sales compensation plan is rewarding the right behaviors.
Learn the right approach to take when designing your compensation plan. An effective sales compensation plan can have an enormous impact on company success. A market competitive and motivational incentive plan that is focused on the right business results will spur your sales team to overcome obstacles and close the sales you need them to. But a poorly designed plan invites disengagement, turnover, and legal risk. And one size does not fit all: what works for one company can be disastrous for another. This topic takes you through the process of designing a sales compensation plan that is right for your company: one that drives your financial and strategic objectives, aligns with the responsibilities of each sales role, and considers key sales dynamics like one-time vs. recurring revenue, sales cycle length, and the volume and frequency of sales. Fortunately, there is established methodology to guide the decisions and this material will take you through it.
AuthorsElliot Scott, Canidum LLC
Introduction to Sales Compensation
• What Is Sales Compensation?
• How Sales Compensation Is Different From Other Forms of Compensation
• Objectives of Sales Compensation
Designing a Sales Compensation Plan
• Setting Total Target Cash Compensation (TTC)
• Determining the Appropriate Salary Incentive Mix and Upside
• Selecting Performance Measures
• Determining Incentive Form: Commission or Quota-Bonus?
• Calibrating the Incentive Plan
- Payout Curves
- Commission Rates
• Setting Sales Crediting Rules
• Timing of Measurement and Payment
Documenting and Communicating the Plan
• The Plan Document
• Communication Strategy and Tactics
• Plan Governance