Author: Sarah Jefferys
Designing a high-impact sales incentive plan can be transformative—get it right and unlock your team's full potential to drive revenue growth and outperform competitors. However, if you're off the mark, both business performance and morale will suffer.
6 essential steps to crafting a winning sales incentive strategy
1. Get super clear on your sales strategy
What do you need your Sales function to focus on to achieve your organisation's strategy and goals? For example, what percentage of time will be spent selling within existing markets vs. breaking into new markets? Will you be selling existing products and services or launching new offerings? Do you see this remaining stable or evolving over time? Being clear about all these aspects for the short and long term at the very outset of your project will lay a solid foundation for success.
2. Revisit and refine sales roles
Clarity of your sales team structure is another key building block that ensures everyone is focused on the right things. Identify which roles will be included in your sales plan and the role they play in delivering on your key priorities (business developer, sales, account manager, hybrid roles) and what level of product knowledge/technical specialism they need to have? Where will it be critical for these different roles to work together to achieve the greater good for the organisation? What behaviours do you want to drive in the team (e.g. collaboration and focus on strategic priorities/focus on longer term relationships vs. short term wins? Which roles should be eligible for a sales incentive, e.g. those with a direct impact in the sales process and which (if relevant) would better fit within a company performance bonus plan, e.g. support roles?
3. Determine pay mix/market gearing
To make sure you attract the best people to the roles you have defined and incentivise them appropriately, you'll need to understand how much leverage (base vs. variable pay) market is appropriate. This can vary across geographies and level of specialism and should also consider your organisation's culture. Pay benchmarking against your competitor market is advisable to establish how your pay mix compares and provide the target quanta for modelling at a later stage and if you're unsure, Gallagher's reward consulting team can help.
4. Define metrics and targets
Defining metrics is a very integral part of your plan design. In doing this we recommend you think about:
- Financial vs. non-financial metrics and which are suitable for which roles (customer experience/satisfaction, accounts retained, etc., as well as revenue, number of sales, company profitability, margin)
- Short- and long-term focus – how long or complex is your sales process and does this vary by product/service and how should and could this be balanced appropriately?
- Appropriate mix of company, team and individual metrics – how to encourage collaboration, underpin the behaviours and culture you're working to build, and focus on the "bigger picture" where required.
When it comes to target setting, you need to know what's measurable and reportable, and we recommend careful modelling and consideration of what "acceptable", "good" and "outstanding" performance might look like. You also need to know how the incentive payments will be funded (e.g. a percentage of revenue/profit or a share above a threshold etc.). This is essential to ensure the plan is affordable but will incentivise individuals to continue pushing the boundaries of possibility in their achievement.
5. Implementation and communication
Having been involved in many projects we know how emotive sales incentives can be! Clearly setting out the upside for the people involved including demonstrating possible outcomes, as well as being available to answer questions openly will help to sell the new plan, engender trust and allay any fears that can naturally come with change.
6. Build regular reviews from the outset
Organisations are continually facing change and therefore sales strategies must also evolve—meaning metrics may need to be adapted or targets may need to be tweaked or sharpened based on how the plan has been working over previous cycle(s). We recommend that you build in the flexibility to review the plan from the outset so the expectation is out there that the plan may be refined periodically to ensure it remains agile and relevant.
How we can help
We partner with you to design an effective sales incentive plan that is affordable, will be the best fit for your culture and market sector and will support your organisation's goals.
Ready to elevate your sales strategy? Contact our team today to design a custom incentive plan that drives results and sets your business apart. Let's build success together!
