Data – The Rudolph of Your 2015 Sales Comp Plan Review

5 min read

Ho, ho … holy smokes! The holidays, not to mention the end of 2015, is just weeks away. You know what that means? It’s time to do a sales compensation plan review! Depending on what you find, this end-of-year review can manifest itself in two ways – more tactical updates, or a full-blown revamp. In either case, it’s critical to rely on data – not just a gut-check alone – as a base when changing plans. Good analysis takes three forms of data ­– historical sales information, recent data from the current plan year, and industry benchmarks. An automated incentive compensation system gives you a major advantage in pulling this information together easily and quickly to use in plan analyses, modeling, and testing. Once that data is in place, there are three key questions you should evaluate to make necessary plan adjustments, better motivate sales reps, and make more effective and strategic decisions in the New Year. Did your plans meet company growth objectives? Is your incentive compensation plan driving the top- and/or bottom-line growth that management is looking for? Are your reps selling the right mix of products and closing the longer-term deals necessary to drive sustainable growth? You should be able to analyze your current 2015 data by customer, product, and territory to identify the growth levers, where the plans are lagging and where they are excelling. Armed with this information, you can adjust resources and incentives to align with 2016 goals. Were your 2015 plans too complex? Did your sales reps understand their plans, or were they misinterpreting what you wanted them to do? Did you spend 2015 constantly explaining plan ins and outs and handling compensation disputes? Looking back at this year’s data, you’ll have the necessary information to answer these questions definitively and make adjustments for 2016. Do this step now and you will also have time to model possible outcomes to see how they will play out in the field, what needs more tweaking, etc. Ideally, a plan should have three to five core measures – no more. Did top performers hit their targets or were you plagued with under-performers? As you know, your top performers are the people you need to keep happy – in 2015 did you compensate them adequately to get the right performance? Did you lose top performers? Did an expected amount of them reach goals like an end-of-year President’s Club? If not, that’s a clear signal that commissions are out of whack and you need to rethink your 2016 plans. Similarly, it’s critical to look at low performance issues. Was under-performance at all linked to a compensation plan issue? With a comprehensive compensation program that goes beyond just tracking performance against quota, you can measure and determine relevant factors, such as looking to see if reps are fulfilling training courses, if they’re including senior managers in necessary deals, etc. When you review these factors, it’s easy to correlate salespeople who are using all the available resources and how that impacts their performance. This kind of analysis will enable you to determine whether individuals need more training or coaching or whether they are just not the right fit for the company. These are just a few of the numerous data points that a comprehensive end of year analyses can tell you. Other key factors to review include seeing if you are paying out more in incentive compensation than you anticipated, or seeing if your sales rep churn rate is in line with industry benchmarks. Like Rudolph’s nose lighting the way in the foggy night, data shines a light on the hindsight and the foresight you need to create more strategic, effective compensation plans in 2016. And it can be the difference between 2016 plans full of coal or full of success.