Over the years, I have seen many and varied commission plans, incentive schemes and bonus structures. All of them have had merit, some have failed, many have worked but none have been perfect. The reality is that the perfect scheme probably doesn’t exist, although that doesn’t mean we shouldn’t make it as near perfect as we can. I dream of that perfect scheme….
Here are a few things you may want to think about:
Clarity – Be clear on exactly what it is you wish to achieve. Is it to grow sales? Improve margin? Remember, your initiative is meant to change behavior, so make sure it does.
Alignment – Ensure the objectives of the organization are aligned to the objectives set out in your scheme. This may seem straightforward however there are often conflicting objectives between management, sales or channel partners which you need to consider.
Achievable – Whilst you want your targets to be stretching, you need to ensure they are attainable. If a sales person doesn’t believe they can hit a target, then there’s a good chance they won’t.
Make it Matter – The reward must match the achievement. Small target, small reward. Big target, big reward. If the reward isn’t seen as being sizable enough, then the achievement of the target won’t be motivating.
Avoid Internal Conflicts – If there is a need for two people or groups to work together to achieve something and they carry different targets that may deter them from cooperating, then try to remove the conflict. If not, inertia may reign. You may even have to consider paying double commission if it’s the right thing to do for the business.
Avoid Channel Apathy – Ensure your partners are fully engaged and that they feel suitably rewarded for their efforts. They’re likely to have choices about which promotions or incentive schemes to run with so make it worthwhile, and if you can, fun.
Go Public – Good salespeople are competitive by nature. Post targets and results publicly. The desire to be ‘top dog’ will drive extra effort. Make sure to keep the board up to date. People lose interest quickly if it’s always wrong.
Be Flexible – The scheme you start with may not be the scheme you finish with. Don’t chop and change too frequently but be prepared to make changes as your business needs change. Also, consider short, sharp incentive schemes to boost activity, increase particular focus or product initiatives.
Keep it Simple – Try to make sure that everyone understands how the targets are set and how achievement is calculated. If the salesperson can make a direct correlation between an activity they’ve undertaken and the reward, they will receive you’re on to a winner.
So, good luck with your scheme. If you think you’ve created the perfect one, please let me know – I’d love to hear about it!