New Sales Incentive Structure That Can Boost Growth
Since the dawn of time, sales incentive plans have been used to motivate and reward top-performing sales teams. Successful sales incentive structure caters to a salesperson’s specific strengths and weaknesses, stimulates sales team teamwork, and complements the unique characteristics of a deal.
Prospects relied almost solely on salespeople’s experience to make a final purchase decision before the Internet. Representatives played an important role in educating prospects and establishing customer relationships at the start of the buying process. This structure allowed for the setting of broad-scale objectives based on predictable and easy-to-measure criteria.
The sales representative was usually in charge of the customer relationship-building process and for closing the deal. Companies were able to more easily forecast outcomes and standardise KPIs based on business goals.
The salesforce was previously compensated purely based on quantifiable output instead of behavioural performance.
How Have Modern Sales Incentive Structure Changed?
As the buying journey and sales procedures have become more complex, the customer persona varies, making it difficult to predict behaviour. According to a Gartner report, 77% of B2B buyers said their most recent transaction was complicated.
Customers today rely on salespeople only for supplemental information at later stages of the buying process since they are empowered to get information on their own. As a result, salespeople no longer control the entire purchasing process.
Representatives are using tactics like social selling to obtain access to buyers at important points in the purchase process. In today’s world, using social media to engage with prospects is simply one of many strategies to develop meaningful relationships.
However, as the selling and purchasing processes have evolved, so has the position of sales representative. Customers today want to interact with a representative who they believe is trustworthy, understands their needs, and is looking out for their best interests.
To find the ideal ratio for success, sales managers must focus on both individual-based selling as well as team-based collaboration.
They must consider the unique characteristics, skills, weaknesses, and specialties of each member of their team while determining how to motivate them. Additionally, they must motivate their entire team to work together to close complex deals with several stakeholders.
How can sales managers achieve this without making the sales incentive plan too complicated? How do they get representatives to perform at their best individually as well as a group?
The answer is to align the sales incentive with the methodology, KPIs, targets, and objectives of the team or company. It will be equally crucial to reward representatives individually and collectively in multi-channel scenarios.
Because no two teams, representatives, or roles are alike, it’s critical to have a thorough grasp of the alternatives before picking which sales incentive structure to implement.
Five Types of Sales Incentive Schemes That Can Enhance Growth
New sales incentive plans are multifaceted. There are different factors to consider as well as several compensation choices.
A successful sales incentive structure should encourage representatives to collaborate to improve the company’s competitiveness and profitability. The incentive plan should also be in line with your company’s culture and encourage a positive and productive workplace.
Finally, the incentive program should excite salespeople and feel respected and motivated to work hard.
- Role-Specific Incentive
Your incentive plan should empower representatives to play to their strengths, much as there are many sales approaches that help representatives through your sales process. The most effective method to do this is to reward salespeople based on their unique strengths.
You might have a sales superstar on your team, for example, who constantly surpasses the average representative. If you create a broad incentive plan, your sales superstar will almost certainly beat the rest of your team to the finish line.
If that is the case, what encourages your top salespeople to keep working hard even after they have met their sales targets? Instead, create a tiered monetary incentive structure with a bigger payout for each successive milestone achieved. Your sales superstars will be encouraged to outperform themselves, but your average salespeople will still have an attainable target to reach.
- Split Incentive
Many products and services are quite complicated, necessitating the use of sales specialists to help frontline sales representatives in closing deals.
A SaaS company selling white-label applications, for instance, may add more features to its software development kit on a regular basis. As these features become available, the sales team’s specialised product manager may be called upon to provide in-depth explanations of the product’s new capabilities.
The sales representative and the sales expert or product manager are the two key parties in this transaction.
Alternatively, the sales manager may partner with two or more representatives on the team to close a deal jointly. For instance, the representatives may work in separate regions and need to enlist the aid of their regional prospects to seal the deal.
If this is the case, a split incentive plan may motivate the sales representatives to collaborate and work together. It is also the most equitable method of compensating all parties involved in the settlement.
The sales manager has the option of splitting the incentive in half or by a predefined percentage. Whatever structure is adopted, make sure the benefits are clearly established ahead of time to promote fairness and avoid disagreement.
- Presales Incentive
Today’s sales process is more complicated than ever. Consumers are inundated with marketing and outreach activities from companies selling similar products and competing for market share.
As a result, the customer spends more time comparing and contrasting their options. They could ask for demos from each company and spend time investigating the advantages and disadvantages of each. As a result of the extended review period, the entire customer experience is lengthened. A sales representative may stay in touch with a prospect for a year or more.
In long-term sales scenarios, it may be worthwhile to reward your salespeople at key stages of the sales process to keep them engaged. This will promote both short- and long-term goals.
The sales manager should give the representatives a well-balanced portfolio that includes both short and long sales cycles. Presales incentives, on the other hand, can assist in keeping the representatives on track if a deal turns into a long-term project.
- Omnichannel Incentive
Many customers interact with both humans and computers at various phases of the buying cycle as digital channels and AI continue to evolve.
Nevertheless, no matter how advanced computers become, they will never be able to replace human emotion. Representatives will always be required to listen to customers’ needs, identify pain areas, and develop relationships as part of the consultative process.
When used effectively, omnichannel incentives can help salespeople see digital channels as a resource rather than a threat. Representatives are rewarded for their contributions to the overall process through omnichannel incentives.
For instance, if a customer cited an automated targeted email series as the reason for contacting a representative, and the representative went on to clinch the deal, the representative may be credited for his/her efforts after the lead was qualified. Take into account the function the representative plays when a digital channel is involved, no matter how you set it up, and compensate accordingly.
- Advanced-Analytics-Based Target Setting
Forecasting customer demand and setting realistic targets, objectives, and quotas can be challenging in several complex sales settings. As a result, creating a fair and motivating incentive plan can be tough.
Using powerful big data analytics to help produce more realistic sales projections is the best method to tackle this issue. To create a predictive model for customer demand, the system will examine previous data sets based on numerous factors.
Over time, the more you use these technologies, the smarter and more accurate they become. This can assist you in developing a systematic incentive plan that compensates sales representatives for both metrics and value-driving behaviour.
You can, for instance, use activity-based selling to replicate the results of a representative’s precise efforts in moving a deal through the pipeline. Instead of focusing exclusively on the outcome and outcomes, activity-based selling places high importance on the actions that a salesperson makes throughout the sales process. Advanced analytics-based target setting aids this method greatly since data helps you learn what works and what doesn’t, allowing you to change as needed.
Modern sales processes are more complex than they’ve ever been, and sales incentive plans must evolve to keep up. Above all, motivating the sales team entails making them feel valued and adequately compensated. This also aids in the retention of employees.
Remember to integrate your sales incentive structure with the organization’s goals and structure when creating a sales incentive plan. Self-discipline, teamwork, and cooperation should all be encouraged through sales incentives.
Like the sales incentive ideas mentioned above, the incentive plan must be transparent and implemented such that it fosters enthusiasm and excitement. It can be used to motivate your salespeople to go above and beyond standards and sales targets.