Your Sales Compensation Plan Needs THIS to Be Competitive

Jan 07, 2018
3 min read
A sales compensation plan is the engine for your business. Use these strategies and tactics to help make your plan competitive and motivate sales reps.

When putting together your sales compensation plan, you already know that you should start with hard data. Your sales organization likely has access to these numbers through various tools like CRMs, BI dashboards, or sales performance management solutions. This means your sales commission plan is already off to a great start, but there’s just one problem.

So is your competitor’s commission plan.  

When everyone is using SFDC for the basics and common BI tools for sales ops, the edge a sales organization can gain over the competition is nominal. The “THIS” in the title, then, comes down to the strategies and tactics you utilize to leverage that data.

With so many ways to attack this challenge, deciding the best use of sales data for sales compensation planning can be difficult. For this reason, we’ve compiled a few of the most effective strategies and tactics for leveraging sales data in your comp plans. To start, let’s talk strategy.

Sales Metrics Must Be Aligned with Company Strategy

Data can be a sales operation alignment tool. The metrics that are measured inform the behaviors that drive the bottom line for the company. If the top KPI (key performance indicator)  for sales reps is any sale, you’ll drive sales in general. But if the KPI is based on sales involving 5-year contracts, an organization is able to drive specific initiatives that are aligned with quarterly and annual goals of the company.

In theory, this is simple enough to do, but in practice, it's tricky to deliver on. Ask each of your reps what the company strategy is and then their respective goals. You're almost guaranteed to get wildly varying answers. To fix this look to your keeper of sales metrics, a.k.a. your sales ops manager or the closest equivalent.

Sales ops can play a critical role in strategic alignment. With the right sales data tool, sales ops managers can be the guiding light for an organization, presenting game-changing information. When sales analytics are made easily accessible, there’s no ambiguity about what’s driving the business. And easy-to-access is key here, leading us to our next point about sales analytics.

Make Sales Analytics Accessible & Comprehensive

When it comes to sales analytics, lack of accessibility and depth stand as a barrier to success. Most BI tools, dashboards, or standalone analytics excel at a few key features but fail at providing a comprehensive view of how your sales organization is doing. This means covering more than the pipeline, but also quickly tapping into industry and internal benchmarking, YOY (year-over-year) quota attainment, payouts, and rep performance.

You can do this with a variety of tools or you could use a single sales analytics tool like Xactly Insights for Sales™, which provides out-of-the-box reporting on benchmarks, stacked rankings, and historical analyses from a single easy-to-use dashboard.

Regardless of the solution you choose, you must make sales analytics easy to reach and grasp if you want to make the data work for you, not against you. As you likely know, data can be as much a curse as it can be a blessing. Too many numbers can lead to too many choices, too many areas that could need your attention. The question then is: where should you look? 

Use Data as an Early Warning System

Sales analysis paralysis is real. When looking at SFDC reports, BI tools, and dashboards Sales leaders and ops managers can feel like they’re swimming in a sea of indecision. A simple but effective way of circumventing this powerlessness is to leverage data to identify anomalies, outliers, and opportunities across the organization.

What is an anomaly? Anomalies are any data points that are vastly different from a company’s historical sales metrics and industry benchmarks. Some telling areas to zero in are:

  • Low performer concentrations
  • Pay/performance discrepancies
  • High and low turnover

With numbers in critical zones like this, you’re not only equipped with what you need to look out for but also data-backed arguments at the next compensation planning meeting.

Use Data to Take Charge of the Conversation

Sales analytics can function as a common core of data for planning conversations. Meetings that have departments working from their own datasets result in unfocused attention. This lack of focus will generate conflicting goals and opinions about plans.

Sales analytics can make the conversation more productive and enable sales leaders to move the team towards a direction that will equate to success. It’s from this common understanding that a compensation plan competitive enough to give you an edge arises. 

Sales Comp Planning Action Items

Sales analytics and reporting are par for the course at most modern companies. Knowing that, the way data is accessed and leveraged to inform compensation planning can be critical to beating the competition. Key ways to accomplish this are:

  • Align sales metrics with company strategy
  • Use data to identify outliers and identify areas of growth and risk
  • Benchmark externally as well make historical comparisons
  • Drive the comp planning conversation with data-backed arguments

Enacting the above action items will help you lay the groundwork for a commissions plan that is competitive. Without these components, it's difficult to develop a commission plan that goes beyond mere best practices into a winning strategy. 

  • Benchmarking
  • Incentive Compensation
Ronald Sierra
Ronald Sierra
Content Writer

Ron Sierra is a Content Writer at Xactly. He earned a literature degree from UCSC and specializes in creating value-driven content for professionals in everything from construction to tech to sales & finance.