How to Develop a Sales Compensation Plan
Your sales compensation plan is your business' way of compensating your sales representatives. Use it to motivate sales on the part of your sales representatives and to provide them with clear, actionable information that they can rely on to know how they will be paid. If your business derives profit from the sales that sales representatives generate, this plan is a critical component of your business.
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Instructions
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1
Review your marketing strategy, or develop a marketing strategy if one does not exist. Typically, especially for established businesses, managers and owners have a marketing plan in place. This is usually set forth in your business plan. Consider how you will use your sales compensation plan to put your marketing strategy to work.
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2
Drawing from your marketing strategy, explain in your sales compensation plan what your sales strategy will be. Set forth each element of your business, and describe the goals you are trying to achieve.
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Further drawing on Steps 1 and 2, list benchmarks and performance measures that your sales representatives will be compensated against. Explain what your sales force must accomplish in order to reach sales goals. This will help focus your sales team.
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Describe the incentives for meeting benchmarks and performance measures. Here is the "meat" of your sales compensation plan. Explain a base salary (if you wish to implement one, otherwise use a commission-based program). Next, detail various bonuses for exceeding minimal expectations.
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5
Explain how questions over sales compensation will be covered. Finally, detail the steps to resolve conflicts and issues should they arise.
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