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Some nonsalespeople assume sales representatives are solely money motivated They believe the best (and only way) to manage the sales force is with an overly lucrative sales compensation program Of course, this is not true This monetary-centric view of sales representatives promotes a cursory view and inaccurate assumption about sales representatives It can lead to some false and unfortunate conclusions about the importance of the sales compensation program The source of effective management has many competing theories While the names and themes of these theories might vary, they all subscribe to at least two critical elements: leadership communication and performance measurement Great sales compensation plans optimize both of these elements: communication ( this is what s important ) and performance measurement ( your incentive payment for last month s performance ) However, clear communication messages and measurement systems don t always fit tidily into a sales compensation plan There are other and more powerful ways to manage salespeople For example, day-to-day, hands-on committed sales supervision is considered the best system for optimizing sales performance A typical conversation between the first-line supervisor and his or her sales charges would sound something like this: Now, ladies and gentlemen, we are on the line here to achieve this month s sales objectives I have a commitment from each of you to reach your monthly quota It s important to me, and it should be important to you At our next sales meeting, we will put the numbers up on the board to see who we cheer and who we sneer! If you are having any trouble closing a deal, I can help you Call me, and we will schedule joint sales calls Remember, your success is my success! This pitch by the first-line supervisor shows the importance of leadership communication ( it s important to me, and it should be important to you ) and performance measurement ( at our next sales meeting, we will put the numbers up on the board to see who we cheer and who we sneer ) Notice, no mention of money was made, but a heavy dosage of personal accountability and peer pressure is evident Interestingly, this vignette illustrates how sales compensation is considered cross-elastic with effective sales management In other words, the better the sales supervision the less the need for aggressive
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incentive plans to manage sales performance Further, sales compensation is not a birthright of salespeople We estimate that 20 percent of all sales personnel are paid with a salary-only program without any variable pay plan Regardless of the pay plan, high-performing sales organizations feature ongoing leadership communication and robust performance measurement systems, whether these functions are found in the sales compensation plan or projected through effective sales management, or are a combination of both Yes, we agree, the economic transactional value of the incentive compensation dollars does provide motivation for increased performance However, we consider it complementary to other factors such as pride of performance, supervision, affiliation, and goal accomplishment Well-run sales departments treat sales compensation as one of several levers of effective management Along with other management tools, sales compensation can play a contributing role to successful sales production However, it cannot be the only factor because alone it cannot provide leadership, commitment, and purpose of endeavor that effective sales management can so ideally provide
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A well-designed sales job and sales compensation program can provide dramatic improvement to a company s sales resultsWhen products, customers, sales leadership, jobs, measures, and rewards are in alignment, sales results can be more than remarkable Sales compensation can provide the right focus on revenue growth, profit improvement, product focus, account penetration, and solution selling If sales compensation programs are so powerful, why do they seem to be so noisy In a league of their own, like no other compensation program that the company has, sales compensation programs seem to produce a disproportionate amount of challenges and conflictsWhy is that There are several reasons Some issues are to be expected, but others are a result of poor design and poor alignment Here are examples of some challenges and conflicts: 1 The chief executive officer (CEO) and the chief financial officer (CFO) are unhappy that the sales compensation program is too
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