But your company is not alone. Many businesses continue to isolate their salesforce from the rest of the organization, paying them based on short-term sales performance against quotas and targets. In many cases, this has led to immeasurable problems when quota-driven salespeople promise things their company can't possibly deliver.
In contrast, today's most successful companies emphasize not only overall selling performance, but also measures of customer retention and penetration, as well as product or services that are either strategic to the business or most profitable. The pay solution at these companies is used to connect business strategy with action, and the selling process and business strategy are closely linked.
Great companies are making the sales organization an integral element in the overall business process. Designing your company's sales compensation is a major opportunity to gain advantage by communicating accurately with the salesforce and creating a solution where rewards are based on achieving business-aligned goals.
Even the view of the salesforce as separate from the rest of the workforce is outdated, as the sales function becomes more complex and customized. Increasingly, multifunctional customer teams are partnering sales professionals with marketing, design, manufacturing, and finance professionals who work together to close the deal and service the customer.
Selling is becoming increasingly complex and interdependent. Everyone in the company is becoming a stakeholder in delivering what the selling organization has promised. Companies are using sales teams and customer teams to help the individual salesperson close the sale and satisfy potential customers, who have higher expectations than ever.
But before you change pay to reward everyone on staff with the same approach, heed this warning: Pay solutions should differ across the company in terms of design, but sharing goals should be the link across the workforce and business. This means the salesforce will likely be paid for more than just sales volume and that measures and goals may change periodically as the role of the salesforce adapts and adjusts to competitive business realities.
Salespeople may share measures and goals with other members of the workforce, such as goals of new product introduction with marketing, customer retention with customer service, delivery with manufacturing, and profitability with other parts of the workforce. This is what we call aligned business goals.
What goals does your company communicate to its salesforce? Are they aligned with business goals? Ask yourself these five questions:
- Does the company pay undifferentiated commissions based on "top line" sales? The new approach is to pay differentiated awards based on strategies concerning customers and products.
- Are salesforce goals focused on targets from month to month, quarter to quarter ? Instead, there should be a longer-term focus on adding customer value and integrating sales with all other people at the company who impact customers and products.
- Is there a "one size fits all" mentality? Do products compete internally for the sales focus? The sales strategy should be solid, but the sales tactics should be adaptable. The salesforce needs to adapt as the company business situation evolves.
- Is the role of the sales professional to overpower customer resistance and sell what's available? Today's sales professional should be a listener, information gatherer, educator, relationship builder, value-adder to customer businesses, and the primary source of customer input to the company.
- Are sales professionals the only customers of the company's sales compensation, and is keeping them satisfied critical? Don't make this mistake. Sales compensation should have many customers, including external customers.
Business strategy, marketing strategy, sales goals, and the definition of the sales role impact sales compensation design. How sales compensation is designed is also an extension of the company s total reward strategy. It communicates what is necessary to accomplish the company's business goals.
So what's the bottom line on rewarding salespeople? The more "yeses" you had in answering these five questions, the more likely that change is needed. How salespeople are rewarded is a critical business issue. They are the front-line contact with your customers, and they must be on the same page with everyone else on your company's business team.