Sales Compensations


An effective sales team is always highly motivated. Most important way of motivating your sales team is through their compensation plan.
This is also one of the most important aspects of the sales strategy that can have a big impact on the morale of your sales team and also to the sales they clock-in.
We need to consider different aspects before deciding on the compensation plans.
·         Competitive landscape and the compensation offered by competitors
·         Position of your product on the product lifecycle on the BCG matrix
·         Profitability of your product
·         Sales cycle time for your product
·         Complexity of the sale involved
·         Is your product/service a commodity or is it customized solution
·         Is it a one-off decision for your customers to buy your product or are they looking for a long term relationship
·         How critical is your product/service for your customers
·         Does your team sells products or solves customer problems
A good compensation plan needs to consider most of these aspects. These can also help you decide how often (frequency of payment – monthly, quarterly or annual) should you incentivize your team.
Components of the compensation plan:
Ideally a compensation plan should include the following components:
  1. Fixed pay:
  2. Variable pay (paid monthly, quarterly or annually)
  3. Training budget
Training budget is an important aspect which a lot of organizations forget to include as part of the total compensation package. Understanding the training requirements for your sales team and helping them improve their skills via thoughtful training will go a long way in keeping the sales team motivated and committed to the organization.
Having an optimal compensation plan is key to have a successful, happy, motivated sales team.

Double digit revenue growth

With the global economy showing signs of recovery, most of the organizations are looking at revenue growth. Most of the large organizations (like SAP, Uniliver,etc) are looking at achieving double digit revenue growth for 2010. 

The questions to ask are :- 

  • Should these large organizations  be happy with a double digit revenue growth (read 10-12%) ?
  • Is this the best that they can do ? If yes, why is that so ? Is their size restricting them from doubling their sales every 2-3 years or are there other reasons ?
  • Is is possible for these large organizations to achieve 25-30% year-on-year growth in their revenues ? How ?
The answer to these questions is that it is indeed possible to achieve a 25% y-o-y growth for these huge organizations. 

Let us see what can help these organizations to achieve this level of growth:

  1. First things first. The leaders should be absolutely believe that a 25% growth in revenue is possible. Without this absolute belief, everything else will fail. 
  2. They need to continue to re-define their markets. Intel did so by reaching out to the end-consumers directly. Apple did so by entering the mobile handset space. 
  3. Re-define how they sell. The world around us is changing and that at a very rapid pace. The way we sell should also change to keep up with the times. The organizations would really do well to 
    1. Add a new sales channel
    2. Identify ways to help customers reach you
    3. Un-complicate their sales organization  
  4. Improve selling process. My experience is that improved efficiencies in the sales processes alone can add another 1-2% in revenue growth. Continuous process improvements in the sales processes is absolutely essential. 
  5. Provide exceptional customer service. No company can keep growing without keeping their customers happy. If there is only one thing that an organization can do out of this list, it should be to provide exceptional customer service levels. This is the MOST IMPORTANT STEP in the sales process.       
I strongly believe that each of the above can add 1-2% to the revenue growth by itself, but if done as a combination can drive the business to a 25-30% growth. The state of economy does matter to a certain extent. But, if your product/service adds value to your customers, you can still maintain the growth despite bad economic conditions. 


One of the most important activities in the sales process is the follow-up process post your discussions with them. This critical steps can at times help you move towards a closure or take you away from the deal.

Critical questions that one need to address in this process are :-

  • Share new information: Is there any new information (read new offers, whitepapers, references, etc) from the time you had the last discussion. If so, it provides us a good opportunity to contact the prospect and check with them on the current status
  • Timing: How often do you want to follow-up with the prospect ? Writing or calling them frequently will only make them feel irritated and does not serve the purpose. However, long gaps between follow-ups may take you off their minds, which is again not good. So, we need to time this in such a way that it is not too frequent and at the same time there is not too much time gap.
  • Medium: Another key decision is also if you want to call, meet or email the prospect to follow-up. Email is the most common medium for follow-up. While using this medium, we need to be careful of the common mistakes that we do:
    • It is not a good idea just to write “Just following up on…”. It is quite obvious that you are following-up on your previous discussion, so it is not necessary to state this. You could instead use this opportunity to ask some pointed questions on the oppportunity depending on what stage of the sales-cycle the prospect is. Few examples could be:
      • Have you had the opportunity to discuss my proposal with your team/manager ?
      • Is there something I can do to help you convince your team on my product/service ?
      • Do you have any particular question or query regarding our product/service?
    • It is good practice to keep your email short and to-the-point.
    • If you have any new information, it is good if you share this info at the beginning of the email and close the email with a pointed question.

Follow-ups if done well, go a long way to keep the prospects interested and also help in fostering a good business relationship with the prospect.

Lead Generation

One of the most common ways to generate leads for B2B scenarios is Email campaigns. Are these effective ?

I have done email campaigns as well and my experience with them has been mixed. There were a few campaigns that generated a lot of responses and some which were real duds without even a single response. This made me analyze both the campaigns to understand the difference and the cause for such in-consistent results. The crux of the analysis is as below:

  • Successful campaigns were those that were targeted at my current/past customers for new products or services. These usually resulted in a lot of resposnes and also the conversion rates for these campaigns was also higher.
  • Campaigns that were targetted at new prospects (from a generic list) were the ones that were duds with no response or meagre response. Even the one’s where I got resposnes were the prospects with whom, I already had a discussion (on email or over phone or met) already.

This suggests that Email campaigns are best suited for promoting new products/services to existing customer base rather than new prospects.

Selling via packaging

The importance of right packaging and branding can never be under-estimated. A product/service when packaged (including the branding) well, can be a big differentiator by itself. 

One can create an instant connect with prospective customers with the branding and packaging. 

One such example is being illustrated by Seth Godin in his blog “Telling a story on the label