Some of the issues that we address in evaluating and designing a sales compensation program are:

• How does this company make money and what is the role(s) of the sales force?
• How is the sales force performing?
• What is the Compensation Cost of Sales? Is it reasonable?
• What are the margins and how have they changed?
• Is the organization efficiently structured? What are the spans of management control?
• What has changed in the way products are purchased, sold, distributed and paid for?
• Does the sales force have to change how it sells or whom it sells to?
• Who are the most successful sales people and what makes them successful?
• Does the sales force have the necessary skills and tools to do its job?

Once we have addressed these questions. We can attack the more specific issues involved with designing a sales compensation program:

• What are the objectives of the pay/incentive plan? What results do we seek?
• What is the selling cycle?
• What is the sales volume and gross margin per sales person? What is the range?
• What percentage of total compensation should be at risk?
• How often should incentives be paid?
• Should incentives be based on gross revenue, or gross margin?
• Should incentives be based on dollars sold or collected? Are receivables a factor?
• Is the incentive a commission or a bonus?
• Are we paying for individual or team performance? How do we promote teamwork and collaboration on sales?
• How does sales management participate in the incentive?
• Will this significantly change people’s pay? By how much? Is that too much?

Once the sales compensation plan has evaluated and redesigned, it has to be implemented and communicated in a way that is immediately understandable and that leaves people feeling informed, included and motivated. It must also be supported by accurate tracking, reporting and determination of awards.

Special Analyses

• Sales Force Effectiveness Assessment
• Sales Compensation Effectiveness Assessment