Sales incentive plans are necessary for motivating and rewarding your sales team. However, creating a successful plan can be challenging in today’s market. In this post, we share four key elements needed for a successful sales incentive plan.
Align incentive plan with business goals
For your sales incentive plan to be successful and produce long-term results, it needs to be aligned with your overall business goals. This includes communicating your business goals to the sales team, reinforcing desired behaviors, and compensating appropriately while also being budget-conscious. Your incentive plan should also fit within your company’s culture. For example, if your culture is focused on developing and thriving as a team, don’t create a plan that only rewards individual goals and accomplishments.
Balance base salary and variable pay
The second key element is to balance pay and performance. Your plan should offer a fair and competitive base salary, along with variable pay that is tied to individual, team, and organizational performance and results. Commissions, bonuses, quotas, incentives, and recognition programs are all a part of variable pay. If variable compensation is aligned with your business goals and is managed well, it can increase your employees’ engagement and performance.
Offer simplicity and communicate frequently
When we see sales incentive plans that aren’t successful, it’s often because they’re too complicated. If the plan isn’t easy to understand, salespeople will be frustrated and unmotivated. Simplification and communication are keys to a plan’s success! A simplified plan is one where there are a limited number of performance measures, payout formulas, and eligibility criteria. Communicate clearly and frequently to let the team know the plan details and expectations and provide regular feedback.
Monitor, evaluate, and change plans
The fourth key element is to continually adapt to the changing needs of your sales team and your customers. This means that you need to monitor how many salespeople are eligible to participate and how many actually do, how much you’re paying for incentives in relation to the budget, and what’s the return on investment so far. You also need to evaluate if the incentives are well-received by the sales team and if the incentives are properly aligned with your business goals. Be ready to make adjustments and improvements as needed.
At Incentra, we’ve helped many clients implement successful sales incentive plans. We can help you create a plan that motivates and rewards your sales team and helps you reach your business goals. Give us a call or visit our website to learn more.
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