Now that Q1 has ended, it’s time to look at your sales compensation plans and evaluate their effectiveness. A good rule of thumb is evaluate often, change rarely. Changing your sales plans too often creates confusion and can make it even harder for sales reps to achieve their goals. If possible, stick with your plan for the entire year to avoid the pitfalls of changing mid-year.
How to evaluate your sales plans:
- 1. Did your company make their Q1 sales goals? If not, ask:
- Is it a sales management issue or a sales compensation issue?
- Do you have the right sales reps in the right job roles?
- Do you have the right marketing activity to deliver quality leads?
- Do your sales plans clearly support your company strategy?
- Do the reps understand their commission agreements?
- 2. Is the cost of sales in line with your expense plan? Track this against the annual plan to see if you are on target. This is easy to do in Makana Motivator’s Sales Portal as shown in the figure below.
- 3. Are the most productive people making the most money? Evaluate what you are paying for performance. If there is room for gaming in your comp plan, you will pay more to the rep who figures that out. In the example below, each dot on the graph indicates a rep, how much they were paid, and how they are tracking against their annual goal. You should understand why the first rep was paid more for lower attainment than the second and third rep.
- 4. How many of your reps are at 25% of their annual goal adjusted for seasonality?
a. At least half of your reps should have attained their Q1 number and this target is a bare miniumum.
- 5.Are you able to hire and retain the best talent?
a.Have you been able to fill your open positions? Has any prospect declined after the compensation plan discussion?
b.What is your sales rep turnover rate? Are the right reps staying?
Remember your sales compensation plan is a powerful tool in executing your company’s strategy through your sales force. You need to evaluate the effectiveness of the plan often to ensure alignment with the company’s goals and address any issues that may show up in the analysis before it is too late. Makana Motivator has many reports and charts that help you easily assess the areas that need attention.
