A diagnostic framework: What to watch for
As you consider your sales compensation framework, be alert to some important signs. Identifying and taking steps to address symptoms as they emerge can help you be proactive in managing costs and driving sales productivity.
1. New products aren’t selling
When new products aren’t selling, a common response is to increase sales incentives. But, while higher incentives might help, there are a few other potential issues to consider:
- Your sales incentives may not align with the longer sales cycle that new products generally experience as the market warms up to it.
- Your sales teams may not have sufficient knowledge or training they need on the product features to convey the value proposition effectively.
- Target customer segments may not be aligned with the product’s value proposition.
- Channel strategies may no longer match customer buying preferences.
The introduction of a new product represents a great opportunity to proactively review incentives, segmentation, value propositions, and customer buying preferences.
2. Few sellers are making their quota
It’s common to assume that when sellers aren’t meeting quotas, higher incentives are required. Salespeople, though, aren’t “coin-operated” — they tend to follow the shortest path to the most money, not just the most money. Sellers are typically efficient in that they quickly learn where money can be made and where it can’t, regardless of the path’s alignment to company objectives.
Potential issues here might include:
- Setting unreasonable quotas
- Understaffing
- Territories that are too large
- A mismatch between talent and what needs to be sold
- Poor training
- Lack of sales support
- Sales reps who are overburdened with non-selling responsibilities
Sellers want to sell. Missed quotas don’t just impact the organization; they can lead to low morale and high turnover in the sales organization.
3. Constantly recruiting sales talent
Reviewing the competitiveness of new hire pay is important, but it’s a starting point. Persistent recruitment challenges can signal deeper systemic issues.
For instance, if candidates apply but don’t accept offers, issues related to the sales organization’s reputation, or talent scarcity may play a role. If new hires leave too quickly, onboarding, the work environment, management quality, achievable quotas, and career development gaps may be missing the mark.
4. Sales reps are challenged to use technology efficiently
Technology has become a critical aid for sales reps, with 81% say that AI is helping them spend less time on manual tasks, saving about two hours a day. But too much technology can have the opposite effect; 45% of sales professionals are overwhelmed by the number of tools in their tech stack.
It’s important to ensure that reps understand when and how to use the tech tools available to them and that they receive appropriate training and ready access to help and support.
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