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Fitting a sales compensation program to the sales cycle

By April 17, 2013June 11th, 2024No Comments

It goes without saying that sales compensation programs can provide team members with the motivation needed for them to go above and beyond. However, incentive programs should not be pursued just to get team members revved up to sell, they should also be implemented with the company’s overall goals in mind. A program that does not link the two could prove to be a waste of valuable time and resources. As sales initiatives change, so too should compensation The sales process and cycle is never set in stone. There are a lot of variables that go into the equation, and performance bonus programs need to reflect this. If at one point the company emphasizes growth over the sale of a desired product or service, sales programs that incentivize selling the one product – as opposed to diversifying the menu and promoting better holistic growth – will not accomplish what they had been implemented to do and then become a drain on resources. As such, companies should constantly remember that they need to align their overall objectives with incentives, or else a convoluted mess of wasted money and potential emerges from a once beneficial deployment. In order to accomplish this, businesses can take a cue from the compensation and sales growth cycle alignment guideline set out by David Cichelli of the Alexander Group. As profiled in a post by the Manufacturers Alliance for Productivity and Innovation, the sales cycle consists of four cycles, with each necessitating its own refined compensation strategies. Phase one should focus on persuasion selling, and aggressive incentives should be used to motivate the team. Phase two is volume growth and building the client base, which then requires compensation plans to have a variable volume component, as suggested by Cichelli. The last two phases are trained at evaluating progress and optimization. To have compensation correlate with those phases, it should feature metrics that support those strategies, like rewarding sales performance on new value propositions or price realization.

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