Always be aware of the actual behaviors resulting from a
sales compensation package. Negative results might take the form of poor sales
figures, declining customer satisfaction, gains by your competitors, or other
areas of concern for the business. Additionally, though, you might find some
negative results within your team itself. Let’s look at a few of the results of
poorly designed or administered sales compensation packages:
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Declining Sales Revenue. Maybe it’s
really a decline in their enthusiasm to sell your products or services.
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Decreasing Gross Margins. Perhaps
there is a lack of attention to negotiations because of pressure to move on.
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Lack of Broad Product Portfolio Sales.
The compensation plan might be driving single product sales.
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New Product Failure Rate. Maybe the
quality of order entry is poor because of overloaded schedules.
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Concentration on Limited Number of
Customers. There might be a limited reinforcement for prospecting or an
over-balance on servicing existing customers.
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Poor Customer-Satisfaction Surveys.
Perhaps your compensation plan is causing your salespeople to ignore customer
concerns, requirements, or timelines.
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Competitor Gains. Some plans drive
salespeople to look for ‘‘low-hanging fruit’’ and stay away from accounts where
there is competitive activity. Unfortunately, these avoided accounts are usually
the customers with the highest potential.
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Long Sales Cycles. Perhaps there is
too much of a comfort zone and not enough incentive to move a sale rapidly
through the sales cycle.
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Inordinate Number of Failed
Opportunities. The compensation plan you put together may have driven the
professionals to overextend themselves to the point of being able to identify
new opportunities well, but not be able to move them through the sales process.
Sometimes, they are overrecognized for new opportunity
identification, but there is no negative reinforcement for failure to position
the organization to win the opportunity.
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Negative External Perception of the Sales
Professional. In this instance, you may find negative comments being made by
other departments about your sales team’s ‘‘shoot-from-the-hip’’ approach or
their tendency to be ‘‘yes men.’’ Maybe your reward systems need to have some
additive that will support a more positive attitude about the sales team by such
functions as engineering, technical services, and accounting personnel.
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Resistance to Change. This may be
caused by salespeople’s having a preconception of possible negative results. In
other words, there will be no net under them if the change doesn’t work. In most
instances, sales professionals feel as if they have successfully mastered their
world. Any change could endanger that success, which will have a negative effect
on corporate, professional, and personal goals.
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High Turnover. The plan may place too
much at risk in a very volatile environment. In other words, salespeople’s
income fluctuates too much for them ever to feel a sense of partnership and
security.
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Risk Avoidance. In this instance,
sales professionals resist taking chances with an account because they fear that
there will be a negative backlash if the risk fails. Check your plan and do a
little simulation. What would be the consequences to a salesperson if she spent
time on developing a new market approach or a new order entry process? Your plan
should support and encourage risk taking when it does not place the company at
risk.
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Cross-Organizational Communications
Breakdown. Perhaps your sales team does not work with other departments. If
team members fall 2 percent short of their sales objective but have made a major
contribution to corporate quality improvement processes, are they punished?
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Secretiveness, Lack of Information
Sharing, and No Teaming. Perhaps your plan does not encourage partnering
among, and across, the sales team. Do team members seem hesitant to even tell
you what they are working on? A poorly designed compensation plan can cause
overcompetitiveness and mistrust in the organizational environment.
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Anger, Frustration, and Conflict. This
is usually caused by sales compensation plans that are hard to understand,
ever-changing, and perceived as being unfair.
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