Keys to a successful sales compensation program

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Companies turn to implementation of a sales incentive program for a number of reasons. Either the sales team needs motivation or the company uses the program as an offensive tactic to push a designated item. However, there is one common theme across all use of incentive programs: In order for such an initiative to be successful, the organization needs to dedicate its time and attention to refining a strategy. Luckily, for companies out there with little experience in such matters, recent research on what goes into a well-run program provides firms with some guidance in their endeavors. When fitting a program with widely used incentive elements, businesses can look at a study produced by Best Practices, LLC for some direction. In it, the most common program aspects were annual salary increase (97 percent), individual performance rating (95 percent), individual performance review (92 percent), short-term incentives (82 percent), long-term incentives (62 percent) and non-monetary rewards (54 percent). Through the research of 47 industry-leading compensation programs, the study also developed a set of best practices for companies to abide by, including: offering multi-faceted, varied incentives and boosting talent recruitment and retention efforts through performance bonuses. The research also provided an 11-step process for companies to follow along when trying to build a successful compensation program. The first steps call for the business to align incentives with goals and establish baseline merit increases. The research also makes a case for deploying sales compensation software and formulating a plan of communication and education on the program. The latter stages of implementation consist of having the business track and measure the effectiveness of the program, and then using those results to inform its next plan of compensation action.

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