Will your Compensation Plan support your Strategy?

compensation plan, commission plan, bonus plan, Sales plan

Time to draft next year's Sales Commission Plan! ... or Bonus Plan .. or Individual ... or Team Target... Quarterly or Monthly ... New Business Plan ...


A well-designed compensation scheme needs to reflect your Strategy and Sales Plan, to drive revenue and margin growth, to motivate every individual and boost the Sales team.

Benefits of an effective Sales Compensation Plan:

  • Clear focus on the business that will drive bottom line growth;
  • Rewarding contribution and excellence;
  • Customer first! Not commission first;
  • Easy to understand, to calculate and to check;
  • Motivation boost when the Plan is fair and reliable.

First time Compensation Plan? You may want to start in Year 1 with a Bonus Plan. A bonus is a positive reward of exceptional result (>100% achievement), ideally you will want a mix between team achievement and individual achievement. Insert 2 KPI's into a Bonus Plan to ensure full focus.

Ready for a new Compensation Plan? Key measurements for success are:

  1. When 70% of your Sales team exceed targets, your net Revenue Growth target is reached (at the very minimum). Do not let commission payment eat your margin;
  2. Your 'A' players earn above market income, inciting loyalty and satisfaction;
  3. Your 'C' players earn below market income, inciting them to drastically change or leave;
  4. Every Sales can state what they need to do to achieve target;
  5. 'Inspect what you expect' - Tracking is easy and Sales understand how many deals they need to (over)achieve.

Align with marketing, finance, HR and management to confirm training, onboarding, achievable yet challenging quota setting, frequent analysis and coaching to ensure all are on board. Review risks and flaws and make adjustments as early as possible. It's better to launch a Plan in Janaury and make small adjustments (communicate every change, be transparent!) than to wait until end of March with a 'hesitating' Sales team!

Need some help? Hook up with THOS to draft your Sales Compensation Plan - regardless if you're 3 or 300 - and expect:

  • A clear and concise Compensation Plan;
  • Just enough Rules of Engagement to clear out grey zones and avoid (internal) battles;
  • A full Communication to boost your Sales team;
  • Reward Top performance and attract Talent;
  • Reporting package for your Operations & HR.