Let your reps game the heck out plans that align the employees’ self-interest with the company’s and its customers’ self-interests.
- Recruit, hire, and engage via intrinsic motivation (recognition, competition, appreciation, training, coaching/feedback, promotion, clear job roles, clear goals, sense of control, culture) & extrinsic motivation (money, one-of-a-kind experiential incentives)
- Consider base pay, short-term incentives (SPIFs), medium-term incentives (variable comp), and long-term incentives (ex: options or restricted stock)
- SPIFs should be simple and unpredictable. They can run for anywhere between one day and two months.
- Be mindful of the indirect impact of compensation plans on employees on other plans
- Pay rapidly after outcomes. If it takes you two or more months to measure and compensate for a specific goal, you’ve created a rewards program, not an incentive one.
- Provide real-time access to compensation and quota data
- Ensure incentives differentiate between high and low performers
- Avoid capped commission plans
- Avoid ambiguous metrics (often true of the following: market share; cost of a sale, close rate, gross margin per deal)
- Use no more than 3 metrics to measure performance; keep it simple.
- Craft fair and attractive territories
- Set attainable goals
- Analyze the expected compensation cost of sale outcome of comp plan
- Set quotas at the highest frequency possible
- Rank reps objectively (avoid subjective MBOs)
- Do not use comp to drive CRM adoption
- Do not assume all reps are motivated by the same things
- Invest in having great managers
- Use public leaderboards
- Know many people (and how much) you are playing per deal
- If your incentive plan is not working, take the time to figure out precisely why not
Commentary on the book: While it was a fast read, I was expecting a lot more on sales compensation design. The whole book stays at a rather high level covering ground that is familiar if you have read your share of business books; even the last chapter, billed as a “how-to” does not go into much depth. While I very much appreciated references to academic studies and to sound commercial surveys, I found there was a lot of unnecessary filler. Finally, the book had a fair amount of repetition.