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DNA in Sales Compensation: What is essential?

Sales Forces Compensation is a topic which commonly arouses considerable interest within organizations. However, it is very common to find important areas that can be improved, leading to desirable results and at the same time to more satisfied sales forces.

This article offers us an overview of Sales Compensation through the DNA graphic, which includes the essentials of a correctly made Sales Compensation plan or great aspects to be checked at many feet high.

In general, and following the DNA, a Sales Compensation Plan has to be designed based on five blocks:

1. Alignment Block
2. External Competitiveness and Internal Equity Block
3. Technical Design Block
4. Performance Measures Block
5. Governance Block

Alignment Block

Pursues that the plan’s design corresponds to the sales-business strategy of the Company. Structure, roles and sales positions as well as indicators, must be correctly aligned. In simple words, design has to be observed and verify that it “does” what business and sales strategy indicates.

External Competitiveness and Internal Equity Block

Pursues that compensations correspond to market’s payment policies and that “equal” treatments are observed when distributing remunerations.

Technical Design Block

Pursues to define payment system and the way it addresses sales forces, the payment mixes between fix and variable remunerations, the calculation formulas and when a sale is effectively produced.

Performance Measures Block

Consists of the fundamental incentives in the construction of charts and in the correct way of fixing them: compliance, minimum compliance, over compliance, compliance in advance and maximum opportunity, if applicable.

Governance Block

It is referred to the governing structure that will govern the incentives plan. That is to say: formal approval of quotas, plan documentation, plan supporting technology and reports, among others.

Correct observance of the above mentioned DNA, together with other technical precepts should lead you to:

1. A higher “correlation” between what is intended to be achieved and the incentive plan design.
2. Positioning and control in the management of quantities to be granted.
3. Correct pay mixes, an adequate addressing of Sale Forces to products-services and a correct design of formulas.
4. Optimization of results: higher sales with the same sales force.
5. Adequate control and following of the incentive plan, its effectiveness and of costs model.

More information available in our book

"Sales Compensation"

 

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