Categories Articles, Sales and Marketing

Money has historically proven to be a great motivator. Dangling a carrot made of dollars in front of prospecting sales reps is a great way to incentivize them to step up their efforts and improve their performances. Building the right compensation plans that strike the right balance between base salary and bonuses and between effort and performance can be a challenge. The key, as always, is to look to the numbers and choose the right sales performance metrics.

Of course, this is always easier said than done. With such a wealth of sales performance metrics available at your fingertips, it is critical to select the right ones that are realistic and attainable, giving your reps a fair shot at hitting these benchmarks. At the same time, the standards should also be aggressive and challenging – after all, you’re trying to lift your team’s performance across the board.

Compensation plans should be built around two key factors: quantity and quality. Your choice of which sales performance metrics to monitor in distributing incentive payments should also reflect this division of quantity and quality, or effort and performance.

(For even more detailed information about sales metrics, check out our FREE eBook: The Right Metrics for Your Inside Sales Team.)

 

Quantity

Some of the sales performance metrics that should be considered when designing compensation plans should reflect the quantity of appointments booked. Reps should be given certain benchmarks of a minimum number of appointments, meetings or demos booked each month or quarter. Every additional meeting or demo beyond that baseline number should be appropriately rewarded with a bonus. Make sure you don’t put a cap on such a system – after all, you don’t want to put a cap on your company’s bottom line.

Sales Prospecting Call Report

Sales managers can also opt for compensation plans that are partly built around effort- or output-based activities. This means that no matter what extenuating circumstances occur – a run of bad luck on calls, for example – reps should still be able to qualify for these metrics, simply based on their level of activity and effort. As a prospecting rep, half the battle is getting on the phone and making calls. This responsibility should be reflected in their compensation plans. This can be tracked by the raw number of calls made – after all, sales managers want to incentivize their prospecting team to get on the phones as much as possible. Be wary of reps who game the system in an attempt to inflate their own call numbers to hit bonuses.

Quality

Making a lot of calls and booking a lot of demos is great, but not if these calls and demos don’t ultimately lead to deals. That’s why a great proportion of compensation plans must still be based around sales performance metrics that emphasize performance. You want to reward prospecting reps who are able to book demos and appointments that are sales qualified leads and will contribute to the opportunity pipeline.

As a sales manager, it’s your job to define what entails a sales-qualified lead. Make this definition stringent (setting a high bar for leads to become opportunities), consistent (never-changing, regardless of what the situation is) and widely-known across the entire team. Once you have this definition secured, you can go about rewarding sales reps based on who books the most appointments from sales-qualified leads that will go into the opportunity pipeline.

Sales Activities

Reps should also have some stake when the opportunities they source end up closing as successful bookings. Some sales managers might opt to give each rep an extra bonus if an opportunity they source closes. Others might stipulate team-wide benchmarks, necessitating each prospecting rep to have at least 20% of their sourced opportunities close as deals. This puts an even greater onus on prospecting reps to find quality leads that are more likely to convert to opportunities and deals.

 

There is no one right answer when building prospecting compensation plans. Whichever options you ultimately opt for, make sure that they are supported by the right sales performance metrics. Reps should know by which metrics they are measured on and be able to realistically hit these benchmarks and earn commissions.

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