Compensation Plan or Accountability Plan?

Most salespeople are not motivated by money. I wrote about it recently. They instead have their own reasons for executing and achieving.

Now don’t get me wrong. By and large, salespeople would love to be paid more for their work, who wouldn’t? But as I pointed out previously, 74% of salespeople, whether top tier or not, are motivated by accomplishment, winning, providing guidance to a client, or any number of other reasons and not solely by money. Money alone won’t cause them to work harder, generate more business, achieve their quota, or sell more.

While the compensation plan is one piece of the puzzle, it is incumbent upon the manager/leader to understand what really will inspire the salesperson to achieve or even over-achieve. Since only 13% of salespeople are purely motivated by extrinsic reasons – which could either be money OR recognition and other non-monetary rewards, it is safe to assume that there are some people on your sales team that will not go to the mat JUST for the money.

Accountability Planning

Here’s what needs to be done: Start with a comprehensive goal-setting session. What are the individual salesperson’s goals, dreams, and aspirations? Managers must take a personal interest in what the salesperson is working toward. Why do they get up in the morning and come to this job? What are their hopes for their future? Managers need to start here so that they can support and help the salesperson achieve their goals.

Next, there needs to be some correlation between what the individual does in their work for your company and what their personal goals are. If this can’t be achieved they may not be the right person to have in the spot, which is potentially a hard truth to realize, but one that must be faced. People just taking up space, that are not truly invested in the success of the company and how their personal goals intertwine with the company’s, can be a cancer in your organization.

But let’s assume the individual’s goals are aligned with your company’s goals. Let’s also assume that the salesperson requires a certain level of compensation to reach their goals. To know this, the salesperson must be open and granular in their goal-setting session about what they want and how much it will cost to get there. It will then be possible to tie what they do in their job to the income they produce so they earn enough to accomplish what they want.

The only time this does not work is in a salary-only environment, where salespeople have no variable component to their compensation. Even in a scenario where salespeople are compensated based on team achievement or in a bonus system that is triggered by individual or team production, there is important information to be gathered by understanding what the individual salesperson is working toward and how their bonus or team spiff can impact their ability to reach their personal goals.

Here’s Where to Begin

As the leader, my suggestion to you is to start with your own plan of attack. Use the Simple Profitability Plan to guide your thinking, set your course, and understand the impact of sales closing efficiency and price on your team. Then work with your team to educate them about the impact of price in conjunction with sales effectiveness. Help them understand how they can impact their sales success and accomplishment of their goals by getting paid for the full value of what they and the company provide, as well as by being the most efficient qualifier and therefore closer of business.

The one-two punch of price and efficiency can really illustrate to a salesperson that they can work less and generate more revenue, profit, and personal income. And it works regardless of whether you pay based on a commission-heavy compensation plan, a balanced plan, or a salary-heavy plan,

Not All Goals Equal Money

One other thing to keep in mind is that personal goals do not have to be purely monetary. They could consist of wanting more time off or getting to a position where they work part-time in pursuit of other hobbies or loves. They might want more time to volunteer. It is the manager’s role to help each salesperson understand how overachievement in the sales role can help make those dreams a reality. Then it is far more effective for a manager to remind a salesperson of the necessary activity to accomplish their goals as opposed to the less effective: “You need more appointments.”

Choose an accountability plan over just a compensation plan and watch revenue and profits rise, along with confidence and a culture of overachievement. Once you have set your course with the Simple Profitability Plan you may want assistance in rolling the concepts out to your team. We have worksheets and resources that you or your sales managers can use if desired. Email me if you want these tools or would like to talk about an accountability plan with your team.