Monday, July 22, 2013

Designing a Compensation Plan

Need to Build or Design a Compensation Plan?

First, if you have one, submit it for Review

The Compensation Plan establishes a pay structure for your sales force and is critical to your success.

First, it must keep the company profitable.  Good intentions or grand ideas of paying huge checks to sales reps is quickly deflated when the company runs out of money.  Failure to manage cashflow, inventory and commissions will bring destruction.  On the quest to build an awesome compensation model in your mlm softwarel, you must face the desire from the field for exciting bonus, but face the reality of cost of good, inventory/warehousing costs, corporate overhead, marketing expenses and more.

Second, it must incentivize the sales force to find to consumers.  Many put this as the first priority of the compensation plan.  Reality Check... your company must stay in business to pay the next round of commissions.  Thus, company profitability is first.  That said, a generous commission structure is important.  We find that 95% of your sales force would like to earn larger money now, thus first levels.5% of your sales force consider themselves leaders and seek smaller earnings on close levels, opting for depth and width to generate larger numbers.  Additionally, these 5%'ers will want overrides and other specialized bonuses that they can meet.  Reality check... Would you rather have 95% of the sales force happy or 5%?  Would you rather have 95% of your sales force motivated or 5%?  Would you rather have 95% of your sales force earn commissions or 5%?  Would you rather have 95% of your sales force upset for not earning and demand refunds or 5% upset with the company and insisting you change your comp plan?

Third, it establishes the culture of your company and it's sales force.  Based on your angle of directing funds towards persons for sales performance, you can either benefit people quickly and in relation to their performance or benefit people over time, as they grow depth.  You could twist the comp plan to encourage recruiting or to encourage retail selling to customers.  Every point and step of the compensation plan will establish the culture and drive of sales reps which will market the company and it's products.

Another important factor about compensation plans is that they can get very creative.  When we say very creative, we mean unusual, new, exciting compensation plans... in theory.  Creative, Unusual, New = Hasn't been done before, or maybe not in the combination you are suggesting.  Hasn't been done before = Custom Programming, Testing and Theorization of potential success.  Custom Programming = Cost.  Testing = Time.  Theorizaton of potential success = Risk.  I'm not suggesting not to do it, only to be prepared for costs of custom programming, cost of time, and cost of potential loss/failure of the concept in actual use.  If it is a success... AWESOME!  You set new bench marks in the industry... Hoorah!

In conclusion, company profitability, incentivising sales reps, establishment of the culture, creative design, costs, time and risk must all be weight with sincerity and with council as you explore them.  Inspetta has provided personalized assistance in these critical areas and is available to you.

For more information, visit 

Add me to your Google+ Circle or join mine!
Also, Like us on Facebook.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.