In this video, we are focus on sales engagement — particularly through the lens of a sales incentive plan or sales commission plan
How to best Communicate your Sales Commission Plan
As we work with clients to implement their ICM software, we get to see all sorts of sales commission plans. And it's time that responded to what we see in the marketplace, especially in terms of what you need to do well to communicate your sales commission plan to your sales force. Hence, we have the five most important things that you need to be doing. And it all starts with messaging.
What Messages Are Your Sales Team Already Receiving?
First off, we can pretty much guarantee that your sales team is receiving an avalanche of product information and sales strategy about your company values and mission. They’re also receiving information about their own commissions, their performance and their targets.
Your top salespeople's commissions, performance, and target information are going to be at the forefront of their minds. This is really self-evident, but you would be surprised at how many companies take this for granted and therefore tend not to do a good job of communicating that info.
What Are Some Common Mistakes You Might Make When Internally Marketing Your Sales Comp Plan?
Common internal sales performance marketing mistakes fit into three categories:
The first is that there’s a lack of sales craft around how the commission plan is documented. You see a lot of commission plans that are 30 pages long but the actual details of the plan are hidden somewhere halfway into the document.
Then there’s incomplete or sparse documentation. Many companies tend to work up a plan in a PowerPoint and forget to have a properly communicated legal document with their sales force.
Finally, we see the other extreme where there is a lot of legalese (some people writing plans become frustrated lawyers!) and you get a lot of technical jargon that is overly complicated and detailed.
The key point here is to remember not to take your sales force for granted. You actually do need to sell your commission plan to your sales force. And when there’s a lack of marketing and plans aren’t properly communicated to the different parts of the audience, you miss the points of influence. Many companies don't often think about who’s going to have internal influence with their sales force. They don’t track how effective their communication is, and they don’t provide a platform for communicating openly.
The Five Point Plan
To address these common mistakes, we propose a five-point plan that you should schedule into your plan launch in the new year:
- Develop engaging content
- Leverage sales leadership to drive communication
- Reporting and the "What If Calculator" - get off spreadsheets and into the cloud to communicate to salespeople
- Pump it up!
- Measure how the plan is being received by the sales force
1. Develop Engaging Content
In terms of developing engaging content, good sales organizations will typically do at least three or four things:
- There will be an official sales comp plan document
- There will be a "What-If Calculator"
- There will be reporting
- There will be a presentation deck that’s used at the sales kickoff, but also used for new inductions of salespeople, for team meetings and so on.
For those of you familiar with our Ready-Set-Go framework, this is the framework that we actually use to design and implement incentive plans. There are 15 modules, and it’s a sequential framework in terms of from start to finish, from purpose to evaluation, of how to actually design and implement an effective compensation plan.
So we also recommend that when you document your plan, that you sequentially step through these Ready-Set-Go points.
You need to describe up the “why” upfront, the purpose of the incentive plan. What are the underlying design principles? What’s the total pay opportunity? What amount is at risk, and so on. This is to logically step salespeople through how the plan works.
A lot of companies take measurements for granted and assume that their people will know what revenue is. But you need to clearly define how performance is measured, how it’s weighted and then the mechanics of how we connect performance to reward. Too many commission plans tend to jump straight into the mechanics and produce a detailed labyrinth of tables and what have you about the mechanics of the plan. What they don’t provide, however, is the necessary background about what is the purpose and the principles of the sales comp plan.
If you can’t describe your plan succinctly in one-to-three pages, then you’ve gotten too complicated. A good incentive plan section typically describes important points of the plan in one-to-three pages. That way, a salesperson can pick it up, read it, understand how they are going to get paid, and how they are going to get measured as a salesperson.
So that’s a bit of a tip on going through, in terms of framework and using that framework to actually write out the document.
2. Leverage Sales Leadership
It’s amazing how many companies don’t leverage their sales leadership. If you look at sales success, it always comes back to the strength of the sales leadership team. Sales comp is no different.
Make no mistake, if you are working operations or HR, obviously you are a key part to helping communicate the plan. But it needs to come from the leadership team. The sales leadership team needs to stand behind the plan. They need to actively communicate it at the kickoff, and they need to be actively communicating it at sales meetings for new inductees and so on.
There’s no point in blasting information out to the salesforce and hoping it’s going to stick, but that’s what we see happen. There is a real risk that when you have a heavy plan design phase and a lot of energy’s gone into that phase, only form people to forget it and move onto the next thing. No one makes that crucial leap of investing in the actual communication of the plan.
3. Reporting and the What-If Calculator
If you are a customer of Performio, you know how configuring dashboards is one of the best ways to illustrate the plan in action for any relevant salesperson. You can provide clear reporting of performance and reward, comparative reporting, and access it anywhere, anytime through Performio.
That's why more and more companies are moving to the cloud and to platforms like Performio to provide a scalable way of engaging and communicating with their sales force.
One of the things you can do with Performio in terms of engaging your sales force is to track the actual target online. We’ve often seen situations where the sales comp plan goes out, the targets have been issued, and then six months later salespeople say, “I never got the targets.”
That's a communication breakdown. With a product like Performio, you can embed the targets within the tool and get people to sign off on their targets. So you’re actively engaging the participants in the sales comp scheme and tracking that they have indeed seen the targets and signed off. Simple but effective.
Additionally, more companies should be providing an Excel calculator tool. It allows a salesperson to change the numbers to work out what they would get paid if they adjusted their actuals and targets. In terms of bang for your buck, you could spend twenty hours trying to explain all the mechanics of the scheme in the document, or you could spend two hours on a spreadsheet like this. It’s going to be a more effective communication tool because salespeople can play with it to understand the mechanics of how the plan works.
4. Pump It Up
For customers of Performio, hopefully you're familiar with the group email feature. This is a feature that is frankly underused and should be used a lot more because it’s brilliant at pumping out communication to your sales force.
Let's say you have a sales force of fifty people. There might be account managers or sales consultants, maybe an executive director. The group email feature allows you to be very specific about how you communicate with your team throughout the year.
So you’ve already launched the plan but now how do you drive communication out to those participants? With this feature you can prepare a template — perhaps something called the “congratulations” email to people who are on more than 100 percent of target. You might have an email to people who are below target. So you’re sending them an email that says, “Dear first name, or surname, congratulations on earning…" So it’ll be personalized to the individual.
This month’s statement will be attached, and you can tell them to go online at acme.performancecenter for more details. So you’re pushing communication out that’s relevant, it’s timely, and it’s also bringing them back into the site so they can see a broader picture of the plan. So you’re just reinforcing the communication loop.
As opposed to most companies, where they might get a pay slip three weeks after the end of the month. Perhaps a commission statement in their inbox occasionally, but this is about a programmed approach to communication and engagement.
One other point to make about pushing out communications is that if you’re a sales office manager, if you’re in HR or if you are responsible for the policy, you should be scheduling sales meeting drop-ins, actually going in and sitting in on a weekly sales meeting and getting your finger on the pulse as to how the plan’s being received.
All this technology is awesome, but you also need to actually press the flesh and hear what people are saying about the comp plan. Good sales managers will always be talking about the comp plan and talking about how it works and asking if people are doing well in the comp plan.
The final thing in your five-point plan to drive communication is measurement.
In terms of measurement, drop-ins on sales meetings are a good way of getting anecdotal measurement about how your plan is being received. If you want to quantitatively measure how your plan is tracking, however, the pièce de résistance here is that Performio allows you to access your analytics, so you can see the level of user adoption within the program.
You can see how many people are logging in or the number of users who are logged in — the percentage adoption metric. Ideally, it should be 100 percent. If it’s not, you can drill down into different teams to work out why it may not be 100 percent, or on the other hand, where the adoption is high, you can find out why.
So you can use the tool to measure to what extent are people engaging with the reporting, with the documents, and see the level that people are buying into the sales comp program. So you can get a feel for the highest value areas of the site. For example, we talked about the “What-If Calculator.” You would able to see how many people are hitting this page, how many are downloading the calculator and so on.
So by measuring the scheme, you’ve got hard data as to what is going on. So for example, if you see that there’s a very low adoption rate in one area, you can target those sales drop-in meetings and talk to the sales leadership team to try and find out why they aren’t buying in. That’s one of the benefits.
Why Do You Need to Communicate Your Sales Plan Effectively?
So there you have your five-point plan. The better you communicate your sales comp plan, the better the chance you will have it accepted by the entire organization. It’s one thing to know. However, it’s another thing to do it. So we recommend you take those five points and set up a calendar reminder. So that a month out from your sales kickoff, you remind yourself, "We are going to tick these boxes."
Do we have the bandwidth to create the right content? Are we engaging with sales leadership at the level that we need to? Have we launched Performio? Are we using their pump feature to send a group email feature? Are we using analytics to track effectiveness as well as we could?
If you can do those five things, you are way ahead of about 80 to 90 percent of other companies in the space. If you can do three or four of them, you’re probably still ahead, but go for gold and aim to get these five things covered in the new year.
Let Performio Help You Create a Great Sales Compensation Plan
When you combine a powerful tool like Performio with our five-point plan above, you can build a meaningful and thorough sales commission plan in and develop a strong strategy to communicate it to your organization. If you are serious about creating a high-performance culture in your company, we offer a 14-day trial of our software. We invite you to give our outstanding product a try.