How to Communicate Your Sales Compensation Plan Effectively
Picture this: the sales compensation design team has spent months analyzing performance, designing, re-designing, tweaking and modeling the upcoming year’s new sales incentive plans. The outcome of the team’s efforts are perfect in your mind.
There is no doubt that company leadership is going to love what is presented because there is huge potential for the company’s overall financial growth, and the sales team is going to see the opportunity to make huge money if they exceed target. You think the hard work of design is over, and the rollout can be done by simply distributing the plan documents. Think again…
Communication is the last, extremely important, step in the compensation plan design process, and it is the step that is most often overlooked. A common mistake plan designers fall victim to is subconsciously assuming that because they understand how the new plans work, everyone understands it just as well.
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As compensation plan designers, we must remember that the salesforce’s first glimpse into their new incentive plan is during the rollout, and for changing compensation plans, first impressions make all the difference. At first glance, sales reps are going to judge the overall success of the new plans based on how it is rolled-out and how well they understand the components and mechanics.
It’s important to remember sales reps have been out selling on the previous plan while the design team has been hard at work. There is a chance that reps are oblivious to all the work going on behind the scenes, so the roll-out and communication message has to be on-point. To avoid sales rep pushback, we’ve put together a three-step approach and best practices for communicating your incentive plan effectively.
A Three-Touch Approach to Communication and Rollout
As a consultant, I have used this approach for years, and when executed properly it is very effective because it hits on a number of effective communication strategies. It is important for sales leaders to remember that every person learns in a different way (visual, auditory, kinesthetic, etc.) Using this 3-pronged approach will help sales managers address each of their sales reps’ individual needs.
Compensation plan communication is a critical step in the sales planning process, and a strong, confident, and clear presentation can help motivate sales reps for the year ahead. Sales reps should hear a consistent message a minimum of three times. The messages should start broad and eventually grow more detailed as they get down to the individual level.
- At the annual Sales Kickoff Meeting: the new incentive plan should be an item on the agenda. This initial introduction to the new plans should be presented by the highest level sales person, likely your VP of Sales or someone who is familiar with the new plans and has already given approval. This presentation should be high-level and explain why the changes are being implemented, how the changes will affect the entire salesforce, and how the sales people can benefit from the new plan.
- From the Sales Manager: The second message should come from the Sales Manager in a team meeting following the annual kick off. Focus on how the new incentive plan will affect the their specific sales team, and reinforce the advantages and benefits for the team as a whole. This will also provide an opportunity for the sales reps to ask questions they may not have felt comfortable asking in front of the entire sales team.
- One-on-One Explanation: The last message should be in a one-on-one meeting with the manager to discuss specifically how the plan will affect the individual. Again, it is important to emphasize the benefits of the plan for each sales rep. This provides an opportunity for the manager and sales person to meet one-on-one, have an open conversation regarding the upcoming year, and answer any final questions before being asked to sign the plan document. Many companies use this meeting to also discuss each individual reps’ goals and present annual quotas and targets.
Other Tips for A Successful Plan Rollout
Alongside your plan communication strategy, there are several additional best practices you can follow to ensure that your plan is well-received by sales reps and the design process goes smoothly.
- Vet the proposed plan with several of the organization’s top sales people. Their feedback will be invaluable, and getting them to buy-in to the new plans early will be helpful in influencing the rest of the salesforce.
- Conduct a train-the-trainer with the Sales Managers to ensure they understand the plan clearly, and the message is effective and consistent across the entire sales force.
- Create a list of Frequently Asked Questions (FAQs). This will serve as an aide for Sales Managers to ensure that a consistent message is being conveyed and help them address questions their teams may have.
- Include calculation examples in the presentations. You may even consider a plan calculator in the form of an Excel spreadsheet that will allow the sales people to do “what-if” scenarios.
- Remember that sales reps are used to change and are willing to accept change as long as they understand the “why.” Use your plan communication as a time to emphasize how reps will benefit under the new plan as opposed to the old plan.
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