Sales compensation can be a tricky affair to master. Any plan should answer these basic questions:
Basic questions
- What's your overall goal?
- What is working and not working about the current plan? (see Understanding Sales Compensation and Insurance Needs.)
- What do you need to eliminate or improve and what should you exploit further?
- Who is involved in designing the plan? Who can impact the plan and how will they be treated?
- What math will you use to establish a base salary, commission, bonus, any caps on income, frequency requirements, etc. – a percentage of what, when, how, where, etc.?
- How can you test the plan before you roll it out?
- Where can the plan be manipulated or even sabotaged?
- How does your plan compare to that of the competition? (see Forklift Safety and Sales Compensation Insights for one perspective.)
- Who can review or provide a second look at your plan?
Frequently Asked Questions
How often should a sales compensation plan be reviewed?
Review plans at least annually and after major market or product changes to ensure incentives still align with business goals.
What is a safe way to test a new compensation plan?
Pilot the plan with a small, representative group and compare results to a control group before full rollout.
Who should be involved in approving compensation changes?
Include sales leadership, HR, finance, and legal to balance fairness, cost, and compliance considerations.