There are multiple forces at work maximizing sales, including the individual sales rep's motivation and skill, the sales mgmt compensation, and the company performance. Sales are typically compensated on their individual contribution, neither benefiting or suffering from the company performance and change to the reputation. What are the keys to aligning company goals, management goals and the sales rep's compensation?
I believe that sales reps are smart and sometimes lazy (or perhaps just amazingly efficient!)
To simplify, I believe the simplest way to align is to assign revenue targets fairly and then get out of the way by managing using the REAP tool.
R - Results - are the results satisfactory - if so validate, recognize and then focus on others. If not - then
E - Execution - does the rep execute effectively (listen, understand, present, propose, etc.) If not then coach them up. If yes - but the results are not being seen then
A - Activity - are the busy enough generating appointments, proposals etc.If they execute well but not frequently enough - help identify and remove barriers to productivity, If this does not work then ask the rep to develop a
P - Plan for how to increase activity
If a rep executes well and often enough and still is not achieving results then perhaps the problem is with the company and not the rep. You may wish to consider compensating the rep despite not meeting expectations since this is not a person you want to lose.
So - what do you think of that?
In reality this is how DEC managed their sales force for their first thirty or so years from Startup to 15 Billion in annual revenue. 10 years after moving to a 60/40 commission leveraged model from a 100% salary based model the company went out of business. Coincidence?