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What Your CEO Needs to Know About Sales Compensation

Connecting the Corner Office to the Front Line

By Mark Donnolo
15-minute read
What Your CEO Needs to Know About Sales Compensation: Connecting the Corner Office to the Front Line by Mark Donnolo

These blinks explain how compensation can be optimized to motivate sales representatives and ensure the growth of the company. It offers advice on finding the right people, crafting a strong sales compensation plan that drives your team to hit their targets, and implementing that plan effectively.

  • CEOs looking for the best way to energize their sales teams
  • Sales managers who want to maximize their strengths
  • Directors of sales compensation

Mark Donnolo is a consultant and a managing partner at SalesGlobe, where he consults on executive professional services. He’s previously worked for Siegel & Gale/Saatchi & Saatchi and CoalTek, among others. He has an MBA from the University of North Carolina at Chapel Hill.

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What Your CEO Needs to Know About Sales Compensation

Connecting the Corner Office to the Front Line

By Mark Donnolo
  • Read in 15 minutes
  • Contains 9 key ideas
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What Your CEO Needs to Know About Sales Compensation: Connecting the Corner Office to the Front Line by Mark Donnolo
Synopsis

These blinks explain how compensation can be optimized to motivate sales representatives and ensure the growth of the company. It offers advice on finding the right people, crafting a strong sales compensation plan that drives your team to hit their targets, and implementing that plan effectively.

Key idea 1 of 9

The sales compensation plan connects the sales representatives to the company’s larger strategy.

Sales compensation seems simple, right? If a sales representative makes a sale, they get compensated. But it’s actually a lot more complex, and if a company implements a successful sales compensation strategy, it can be extremely profitable.

It’s important to recognize that sales compensation is one part of the company’s strategy. It needs to align with the rest of it.

Every company needs a solid plan for becoming profitable. These plans are always very complicated, however. They require CEOs and management teams to make difficult decisions in several areas, like sales strategy, customer coverage and enablement.

The sales compensation strategy comes at the enablement level, so the CEO has to make a number of strategic decisions before they can focus on it.

It’s very important that these decisions all fit perfectly with each other. If they don’t, the plan will contradict itself and be ineffective.

Imagine a company that produces copying machines, for instance. The upper management knows their customers are primarily large corporations, so they develop a sales strategy based around sophisticated technology that’s suited to them.

However, the company will suffer if the team doesn’t allow for the fact that they’ll need a lot of time to correspond with customer companies. If their products are expensive, their customers need more time to decide if they’re a worthy investment.

Sales reps don’t aim to implement any specific company strategy; they’re motivated by their compensation rates. So your sales compensation plan has to skillfully connect their work to the company’s strategy at large.

Imagine a sales rep working for a copying company that just released a new product. Even if the new product’s digital technology requires a longer, more sophisticated sales process, they’ll probably use the same tactics they used to sell the analogue one. The key to solve this problem is to craft a sales compensation plan that motivates them to do what’s best for the company, not for them.

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