Top 10 Things to Consider when Designing Sales Compensation Plans

1. 1. What behavior or results are you trying to influence? Different sales roles and different sales cycles will benefit from different influencers.
2. 2. What metrics are the best measurements of achievement of these results or behavior you are seeking to influence?
3. 3. How many metrics do you really need, and at what point do several become too many? There is a diminishing effect of influence when there are too many metrics or components to a compensation plan.
4. 4. How frequently should your sales people be getting paid their bonus or commissions and are their goals monthly, quarterly and/ or annually?
5. 5. How will you measure the results? What data do you need, when do you need it and in what format? Be sure you can get the data and in the form you need in the timeframe you need it in to pay commissions or bonuses.
6. 6. Are your goals or quotas achievable and do your sales people realize and believe this?
7. 7. What caveats, exclusions, or exceptions if any do you need to include in your plan so that you are not rewarding people for activities that you do not want to happen, and so people are not exploiting loop holes in the plan (they will be there in some way shape or form).
8. 8. If an employee leaves the company on their own accord, is terminated, or transfers internally to another role what rules are in place (within the plan terms) to determine how they get paid? Look at all possible scenarios to be sure your termination clause addresses them.
9. 9. Perform some "what if" scenarios to see what can happen in a variety of scenarios. This is often referred to as Plan Modeling and can and should be done at several stages along the way. This will allow you to not only see what people could earn at different levels of performance but also to compare different plans.
10. 10. Put yourself in the salespersons shoes and try to see if you can find a loop hole, sweet spot, or how you would behave under this plan.