All too often Sales professionals are given a comp plan and never really sit down to review their business against how they are paid. Instead, they accept a number and simply chase it when you should be looking to maximize your sales compensation plan. What we are driving towards are what are the implications of how you get paid based on
- Compensation Accelerators
- Sales Pipeline
We understand high performance sales and the real question is how much money do you want to make given your current comp plan. The main variable we need to have yes on is the commission rate your company has agreed to pay you on.
One of the things we do with our private sales coaching clients is working through their comp plans along with their business plans to make sure they are acting in their own best interests to maximize it, This video is a sample of that exercise using a highly leveraged rep’s com plan as out sample.
Revenue Strategies to Maximize Your Sales Compensation
If you just get paid on revenue take every deal down you can that meets your company criteria. Odds are most channel partner reps are not solely revenue operated but OEM teams are with Revenue being the be all and the end all.
Things to consider if you you are Paid on Revenue
- What is Your Hit Rate 3
- What is Your Average Sized Deal $100k
- What is the Typical Sales Cycle in Terms of Time 6 Months
- What Would a Game Changer Sale Look Like For You?
|What is Your Hit Rate/ Close Percentage||33%|
|What IS Your Average Deal||$100k|
|Typical Sales Cycle||3 Months|
|Annual Revenue Quota||$1.2m|
|What Would A Game Changer Sale look like||$400k|
Simply Put You Need 12 Average Deals a Year to Hit Your Quota. In the first 90 days you need to find 9 deals right away to not be in the hole. Now’s the time to stop, look at your numbers, your sales funnel and assess where you are. I
Leveraging Profit Dollars with in You Compensation Plan
If your only measure of success is Gross Profit then there is not a single reason in the world to look at revenue. Cash is truly king and only the cash you and the company keep matters when it comes to maximizing you sales compensation plan. If you have worked for a public company this sounds like utter madness but large portions of the world in terms of channel partners, agents and independent sales agents the only number that matters it GP Dollars. To Maximize your your compensation plan in the scenario you need to ditch all the time waters, focus on the deals, products and services you can literally take to the bank. Everything else including revenue is purely ego.
|Average Revenue (From Above)||$100k|
|What Is Your Average Gross Profit Percentage||10%|
|Average GP Dollars Per Deal||$10k|
|Annual Earnings (Excluding base)||$30,000|
As always there are exceptions to the rule. The real variable is what kind of gross margin percentage will you be able to sell your products and solution for. In this case, a Game changer sale might look like a 3 million dollar deal at a 5% margin That deal alone would net a $150k in margin. And for you $37,500 commission.
When Leveraging a gross Margin plan you should consider
- Is your commission rate reduced on a low margin deal?
- Is there a “kicker” That earns you extra points in comp if you are at or above a specific margin percentage amount?
- What about an Accelerator for exceeding a Gross Profit Dollar Amount in a certain period?
Driving Adequate Pipeline
Where many newer sales people go wrong is simply put pipeline and qualified opportunities. IF you are going to maximize your sales compensation plan then close rate/close percentage and pure pipeline of qualified opportunities matter even more than someone more senior in their role. This isn’t about making a million cold calls, or crazy metrics its about working hard and smart to put yourself in front of people who have a need, a budget and can say yes to you..
How We Can Help Maximize Your Sales Compensation Plan
We help thousands of salespeople Win More Business and Make More Sales every year using our proven Sales Opportunity Management approach. If you are ready to be one of them, here’s five ways we can help you.
9 Week Premier Sales Coaching Program – Comes with a 1 Year Subscription to the RedZone Sales Opportunity Management Tool, 9 Weeks of Group Sales Training to help you get the most out of every deal and the 9 Months of Bi Monthly Group Sales Performance Coaching. The Program is available as a Single Payment and as an Installment Payment option.
1:1 Sales Performance Coaching – book a 30 minute call to learn about how sales performance coaching can help you reach your goals.
The Weekly Sales Leader Newsletter – Subscribe to get actionable and useful sales training, sales coaching and business strategies delivered weekly to your in box.
The Bowties and Business Podcast – Every week we bring you interesting guests ranging from Small Business Owners to Inspirational Leaders. All of who have built and run businesses by successfully selling their products and services. Listen and Subscribe on Apple Podcasts and Spotify.