Why Compensation Planning Season Starts Now

Sales incentive compensation is the number one driver of team performance. Learn why comp planning should start early, and analysis should be continuous.

7 min read

To many people involved in planning sales compensation, it’s a process that starts in late autumn, intensifies around Halloween and (fingers crossed) is all up and ready to go at the start of the New Year. But given the importance of sales compensation to every business’ success, it’s crucial that you leave enough time to get your plan right.

Here are four reasons why you should start your compensation planning right now, when you’re applying the sunscreen (and not in three months when you’re breaking out your woolly hat). 

1. Understand What is and isn't Working

Too many businesses plan commission schemes without a view of what has worked in previous years. In organizations still using Excel and homegrown systems to track sales compensation, that’s understandable – it’s difficult, if not impossible, to track how a scheme is progressing during the year.

Drilling down into the details of which elements have worked – and which haven’t – can be extremely time consuming, and simply not possible in between the end of an old plan and the start of a new one. However, when you consider the amount of money that your company spends on commission, that is crazy.

To design a successful scheme it’s best to start by doing your homework and begin early with a thorough review of how your planning is working at the moment.

Using an automated commission platform, you can pull reports on the progress of the scheme to date. Considering this information now – and not all in one go at the last minute – will put you in the best position to make the right plans for the year ahead.

2. Get the Right People involved Early 

Sales commission schemes impact many people in the business—not just the sales team. Finance, HR, marketing and, of course, the C-suite can add valuable insight into the sales compensation planning process, and how it can help shape the direction of the business for the year ahead.

But of course, getting the views of all of these people can be time-consuming, and a logistical headache. However, leave them out and there’s a risk that there will be issues further down the line, as the plan doesn’t match up to their needs.

By starting early, you can get the sales compensation plan onto everyone’s radar and give them the notice that they need to make a considered contribution. That way, you’ll end up with a plan that meets the company’s wider objectives, without the last minute panic of going through round after round of painful approvals.

3. Compensation Should Drive Behavior—Not Just Sales

Sales compensation is one of the single most powerful levers for driving the direction of the business. Commission doesn’t just encourage sales; it can incentivize certain behaviors and reward those activities that really make a difference to a company’s success. However, that takes planning.

Consider the territories where you need to grow, the products and customers that will make the difference in the year ahead, and even which bits of your sales funnel need a boost. Then it’s a case of working out the behaviors that you can incentivize to get the outcomes that you need.

All of that can combine to make a truly powerful (and influential) compensation plan, but it needs time and thought.

4. Start the Year Strong

All too often, companies leave it too late to implement their commission plans for the new calendar year – which can leave sales teams with a gap. Without a new compensation plan in place, sales teams can be working to old bonus schemes – or worse, have no idea where they can earn their commission at the start of the year.

It’s easy to end up in the dreaded compensation chasm, which can leave sales reps low on visibility and low on motivation, getting the year off to a slow start. By planning early and getting your compensation scheme ready to go on January 2nd, you can show sales reps where their focus should be for the months ahead and help to nip those New Year blues in the bud. So don’t leave compensation planning until it’s too late!

Making an early start can be the difference between a scheme that falls flat, and one that drives your business forward for the year ahead. Don’t wait until the nights start to draw in. By commencing your planning in summer, you can ensure that the sunny weather continues for your business even through the winter months.