An estimated 85 percent of companies in the United States use incentive plans, accounting for approximately 40 percent of total sales compensation. That’s a lot of money and managerial effort. Yet in a recent survey of 700 firms by CSO Insights, 20 percent reported that their compensation plans had “minimal or no impact on selling behavior,” 12 percent said they “do not know” about the impact of their plan and only 8.9 percent found their pay policy “consistently driving precise selling behavior.”
One reason for disconnects between incentives and salesperson behavior is that, in many firms, the people designing pay plans do so according to an obsolete vision of sales tasks. There’s no such thing as effective selling if that selling doesn’t link toyour firm’s strategy. To bridge this gap, businesses should adhere to the following when designing their compensation plans…
