Sales Comp - a Moving Target

I often get asked if I know of any best practices on how to compensate sales and business development professionals. This topic has been a moving target since the first sale of anything ever happened! How do companies balance their need for more sales against the motivations and drivers of their sales and business development people in order to get what everyone wants?

You won’t get the silver bullet in this post, however, we’ve made observations worth sharing. Part of the problem is that the One-Size-Fits-All-Sales-People Compensation Program that companies adopt creates that moving target that makes you crazy. If the “one size fits all” doesn’t work, then a more flexible structure could be explored.

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I think a sales compensation system could be based on two things (HR and accounting folks will cringe because this will require more work for them):

1. Strengths of each sales/business development professional
2. The specific business development activities they accomplish

Let me tell you what I mean by these. Everyone has strengths and weaknesses. Some sales and business development people are excellent at building relationships, others at qualifying leads and others at closing the deal. What if a company would pay their sales people to do more of what each sales person is good at?

See if the attached graphic explains what I mean. When we do an analysis of the Business Development Function for our clients, we use a fabulous graphic, designed by Lissa Levinson, to highlight the many activities needed to complete the “race” of business development. (download it here elements-of-bizdev-flyer ) Each one of these activities is worth something to an organization. Perhaps the organization places a high value on information and intelligence collected on prospects. The test to gauge how much value a company places on information is to watch how comfortable management feels when sales people leave with all the data they collected on prospects while on company time.

Or perhaps the organization doesn’t care as much for the contact data or even for relationships built but just wants the revenue numbers to grow. Period. In every case, the compensation structure for each sales person could be built around the specifics of what management truly values. Those specifics would then be married to the strengths of their sales force. Different compensation programs for different strengths.

Is there a company out there doing this? I’d be interested to hear what others think.