To stay ahead of intense competition, today's top sales organizations must attract and retain top sales talent. More often than not, this starts with the company's sales compensation plan. At their very core, compensation plans are meant to motivate sales rep behavior. When designed effectively, they help businesses meet their growth and revenue goals—but they also help attract top talent and retain high-performing sales reps.
So how much does it costs your business to replace a sales rep? Many organizations might throw a guess at the cost, but in fact, they forget to consider more than just recruiting a rep. When top sales talent leaves, companies also lose money from potential lost deals as a result of lost sales relationships while new hires ramp and onboard. In fact, it costs up to three times a sales rep's salary to replace them. Additional research from Aberdeen Group shows it can cost more than $30K per rep.
To attract and retain top talent, you need to have effective processes in place to recruit and motivate sales reps, and provide ongoing communications and recognition programs. Here are the practices used today by best-in-class sales organizations to attract and retail top sales talent.
1. Understand Your Ramp Time
This is one major thing companies forget: Getting a sales rep ramped up to productivity takes time. When an experienced rep leaves, you lose that experience level and go right back to the hiring drawing board, slowing down sales—or worse—losing out on opportunities. (Learn more about predicting sales rep attrition here).
This is where effective sales capacity planning comes in. Organizations must hire at a rate to cover for unexpected attrition. In the event a top sales rep leaves, it's better to have a new rep ramped and ready to step into the departing rep's territory than to wait for a new hire to ramp. While they may not perform at the same level as the top-performing rep, they will still provide steady flow that a new hire would not be able to.
2. Benchmark for Competitive Compensation
One of the top reasons sales reps leave a company is for a better-paying opportunity. Therefore, the key to attracting and retaining top talent is a competitive sales compensation plan. So how do companies ensure their pay is fair and competitive within their industry? By benchmarking against industry and peer data.
Benchmarking pay and performance data allows sales operations and leaders to leverage data insights and ensure that compensation plans will attract top players in the industry and keep high-performing reps on your sales floor instead of a competitors.
3. Drive the Right Sales Behaviors
A well-designed sales compensation plan encourages sales behaviors that help businesses achieve their revenue and growth goals. Ideally, incentive plans should follow the ABCs of compensation and be Aligned with corporate goals, Benchmarked against industry data, and Constructed to drive the right sales behaviors.
Plan simplicity ensures easier rollout to the sales team and execution for the compensation administration team. Simple incentives make it easier for sales reps to understand what's expected of them and how their sales commission structure operates. For compensation admins, easier plans make it easier to calculate commissions and ensure that everyone is paid on time and correctly.
4. Communicate Plans Clearly
In addition to simplicity, sales leaders need to be transparent in company policies as well as compensation and incentive plans. Not surprisingly, sales reps are very interested in knowing how their incentive payments are calculated. Let them know what’s coming down the pipeline in terms of payment – and when they can expect the check.
To attract and retain top sales talent, compensation plans must be simple and clear about how the sales team benefits from the plan. The more concise and clear a compensation plan is, the less confusion there is about what's expected of sales reps, the behaviors they need to complete, and how each action earns them a portion of their variable pay.
Ensure Compensation Motivates Top Sales Talent Effectively
Analytics can help you easily spot your top performers—and they help identify the effectiveness of your sales compensation plan in motivating your sales team and attracting and retaining top sales talent. With better understanding of how your team performs and how your incentive plan impacts that, you can course correctly sooner and keep your organization on track to hit goals.
Ready to learn more about attracting and retaining top sales talent? Download our guide "How to Build and Retain Sales Reps to Drive Top Performance."