Sales Incentive Plans

September 23, 2011

Q: Our current sales numbers are running way below our typical year. Do you have any advice on a sales incentive program to stimulate more activity, generate more RFP’s, get more quotes generated? I’m getting desperate for new ideas.

A: You’re not alone. A number of members report weak sales. Even companies who felt that they weathered the 2009-2010 dip are now feeling the pinch. Don’t let this cause you to make bad decisions in your sales comp plans.

I’ve spoken with several business owners who are struggling to make payroll, yet at the same time crafting all sorts of hybrid interim sales incentives in order to keep their sales people from leaving. It’s not a simple answer, but my best advice is to, “encourage hard work, but only reward results.”

What that really means is your sales comp plans need to have a reasonable base salary that both you and your employee can live with. It also means that until somebody actually books new business, you don’t pay anything additional and they don’t earn additional income. The trap that many have fallen into in order to generate sales is to have an incentive program for a number of contacts, sales calls, quote or whatever. I wouldn’t go beyond a gift card, small stakes contest, or something fairly simple.

It reminds me of a sales management course we have titled “Nothing Happens Until Somebody Sells Something.” However, if you are paying anything above the base salary for good intentions, something is happening… you lose money. I know it sounds tempting and it seems like a way to generate income, but don’t do it. The right people paid the right base, is a much better approach.

I would encourage you to be more involved than ever in the sales process. Listen to what your sales manager and sales team are saying. Find ways to get out there with them, give them full support and share your experience with them. Give those customers sitting on the fence an incentive to buy, rather than giving your sales team an incentive to generate activity. In the end the sales team will work harder and earn more commissions again. But in this scenario, you actually sold something. — CW

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