A sales compensation plan is a crucial tool to motivate, reward, and align your sales team with your business goals. But how do you communicate it effectively to your reps, managers, and other stakeholders? Here are some best practices to follow when designing and delivering your sales compensation plan.
Before you present your sales compensation plan, you need to understand who you are talking to and what they care about. Different audiences may have different questions, concerns, and expectations about the plan. For example, your reps may want to know how much they can earn, how their performance is measured, and how they can track their progress. Your managers may want to know how the plan supports their coaching, feedback, and retention strategies. Your executives may want to know how the plan aligns with the company's vision, budget, and culture. Tailor your message and tone to each audience and anticipate their needs and objections.
I loved this part of my job as a manager. Explaining the sales compensation plan gives you the opportunity to hook your team. Tell them and explain to them HOW THEY WILL MAKE MONEY! That's the name of the game. If you show them how and how much they'll be getting, they'll work every day towards that goal. Is your responsibility as manager to teach them how to make money and make sure they GET IT! Have different TIERS to make more money, even better! Now, the key ingredient of this? MAKE A PROJECTION TO YOUR TEAM and give weekly updates, don't wait until the end of the month to show what they could've done, show them before so they make their best effort to hit target and make money for themselves!!! THIS IS HOW I BUILT MY COMPANY!
A sales compensation plan is not just a set of numbers and formulas. It is a reflection of your sales strategy, values, and culture. Therefore, you need to explain the why and the how of your plan, not just the what. Why did you choose this plan over other options? How does it support your sales goals and objectives? How does it reward the right behaviors and outcomes? How does it balance simplicity, fairness, and flexibility? How does it handle exceptions, disputes, and changes? By answering these questions, you can help your audience understand the logic and rationale behind your plan and gain their buy-in and trust.
Compensation is a philosophy hence you should start with the “Why”. This should include the kind of culture you want to build in the sales organisation. Then comes the how, here you need to communicate the data points taken into consideration while designing the compensation plan. If you can build a compensation calculator for the reps, they can work out scenarios for themselves.
I concur. I would mention that creating a feedback loop is vital in adding further clarity when communicating a sales compensation plan.
One of the biggest challenges of communicating a sales compensation plan is avoiding confusion and ambiguity. You don't want your reps to waste time and energy trying to figure out what the plan means or how it works. You also don't want to create misunderstandings or conflicts that could damage your sales performance and culture. Therefore, you need to use clear and consistent language when describing your plan. Define your terms, acronyms, and metrics. Use examples, scenarios, and visuals to illustrate your points. Avoid jargon, slang, or technical terms that may confuse or alienate your audience. Repeat and reinforce your key messages and themes throughout your communication.
Different people may prefer different ways of learning and absorbing information. Some may like to read a document or a slide deck. Some may like to watch a video or a webinar. Some may like to listen to a podcast or a call. Some may like to ask questions or discuss with others. To accommodate these preferences, you need to provide multiple channels and formats for communicating your sales compensation plan. You can use email, intranet, social media, or newsletters to share written or visual materials. You can use live or recorded sessions to deliver verbal or interactive presentations. You can use surveys, polls, quizzes, or feedback forms to collect input or feedback from your audience. You can also use a combination of these methods to reinforce and complement each other.
Communicating your sales compensation plan is not a one-time event. It is an ongoing process that requires follow-up and monitoring. You need to check in with your audience regularly and see how they are adapting to and performing under the plan. You need to address any questions, issues, or concerns that may arise along the way. You need to provide updates, reminders, or revisions as needed. You also need to measure and evaluate the impact and effectiveness of your plan and your communication. You can use data, reports, dashboards, or analytics to track and analyze your sales results, behaviors, and satisfaction. You can also use feedback, testimonials, or stories to capture and share your success and learnings.
I love the concept of “teach it back”. If I want to ensure understanding of material I will regularly ask for the individual to teach it back to me. I give them the opportunity to demonstrate their understanding in a safe and open environment. This let’s them feel confident that I truly want them to understand the material. This also gives me the confidence that I will not leave the individual in an uncertain position regarding important information.
Sales Coach @ Gert Scholts Sales Coaching Pro | Confidence builder. Sales Leadership
If you have to communicate the reward scheme as a formal event, I think one has missed a trick. Instead, include the sales team in the build of the scheme. Listen to what is important to them and get them bought in. This way will ensure success more than rules, letters and monitoring ( these are important too).