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Productivity Metrics
After you have chosen the type of plan and measures, it's time to establish productivity metrics. You may begin by specifically defining how much a single resource can be expected to produce. Many companies seek this information in sales compensation benchmarking surveys.
| Threshold: | This is the minimum sales level acceptable. Employees who don't reach this level should not receive incentives. The sales manager should evaluate the reasons for missing the sales plan and initiate corrective action as appropriate. |
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| Target: |
This is a reasonable sales quota that you expect the individual sales person to meet. In setting sales quotas it is useful to consider the:
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| Top performer: | Because competitive and aggressive employees are drawn to sales, you should expect that at least 10% of your sales staff will surpass their quotas. Reward these employees by paying them at least 2-3 times the incentive that target performers receive. |
Keep it simple
Remember to keep the incentive formula simple. Your salespeople should be able to very quickly understand how they will be rewarded. It is also important to have transparency so that the sales person feels that he or she is getting paid what they deserve, according to their individual plans.
Examples:
- The salesperson will receive x% of the margin on each sale for all margin in excess of y%. In addition they will receive a bonus of $z for every new account in excess of their quota.8
- OR
- $25,000 bonus for achieving quota on item A; $50,000 bonus for achieving quota on item B.
Memory Jogger
If an employee does not meet a threshold standard of sales performance, what should the Sales Manager do?