Moe Revenue » Incentive Process

Salesopedia Interview-Chief Revenue Officer

Carl Moe — Mon, 30 Nov 2009 21:58:00 +0000

Welcome back from a long holiday weekend. We are into the home stretch for the remainder of this year and incentive plans are the hot topic amongst my clients. That fact was the driving force behind my recent Salesopedia article – Incenting the Incentive Plan.

I recently completed a podcast interview with Clayton Shold from Salesopedia which you can listen to here. In it, we discuss incentive process as one part of our four-part CRO revenue system. Please have a listen when you have a moment.

Incenting the Incentive Plan

Carl Moe — Wed, 25 Nov 2009 16:30:00 +0000

It is that time of year where CRO’s are developing sales quotas and incentive plans for next year. I have an article up on Salesopedia.com that you can read as you prepare your 2010 plans.

Follow this link to read the article.

If you don’t have time to read the entire thing, here is one critical point to consider:

Sharpening CRO incentive plan tools starts with defining the sales compensation philosophy. The general structure I recommend:

Recognize Effort = Base compensation

Reward Results = Incentive compensation

In Recognize Effort, I refer to compensation paid to the salesperson for executing the required sales behaviors: sourcing referral introductions, making cold calls, scheduling and attending appointments, qualifying prospects, submitting forecasts, providing proposals and quotes, attending trade shows, etc. In essence, the salesperson’s engagement in the behaviors necessary to achieve sales goals.

By Reward Results, I mean the incentive paid to compensate those who translate their efforts into the company’s desired revenues.

Ineffective Sales Plans

Carl Moe — Tue, 29 Sep 2009 03:05:50 +0000

Probably the most common mistake I see companies make is developing a performance-based incentive plan where they pay the same commission for both new account business and ongoing business with established accounts.

New account business is ALWAYS worth more than ongoing business with existing accounts because:

it’s more difficult business to obtain than continuing business with already established account relationships
it’s the only way your business will generate sustainable growth

By paying more for new business, you train your salespeople to GROW your company instead of just booking the easy business (low-hanging fruit) that was likely coming to your business anyway.

To address this situation, start with the following value definition for your sales rep roles:

Recognize Effort = Base compensation

Reward Results = Incentive compensation

In recognize effort, I mean compensation paid to the salesperson for executing the desired sales behaviors: sourcing introductions, making cold calls, scheduling and attending appointments, qualifying prospects (Critical Qualifying Questions), submitting accurate sales forecasts (Four Aces), providing proposals and quotes, etc., in essence, engaging in the behaviors necessary to achieve sales goals.

By reward results, I mean the incentive pay used to compensate those who are effectively able to translate theirefforts into company desired revenues. Here is where you want to separate the new business and existing business incentive plans. If you don’t differentiate this value contribution, everyone is sales will want to pursue the account manager role.

Developing new business is critical for all companies and incentives are a primary resource for making that happen.