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4 Sales Compensation Challenges and Where to Focus for Real Sales Motivation

blog author
Written by Mike Schultz
President, RAIN Group

Sales compensation is typically the first topic discussed when looking for ways to boost sales motivation.

Want to increase motivation? Create a compensation plan focused on driving the actions that will create results.

The thought process goes like this: incentivize the right areas, see motivation increase, get the best results.

Sounds simple, right?

Not quite.

It's simple in concept, but exceptionally difficult to achieve.

4 Challenges to Changing Sales Compensation
  1. Choosing the right areas to change: One argument goes, "We don't need to compensate on activities, we need to pay when we get results!" Another argument is, "We need to pay on activities, and the results will come." Except in some cases, either way the results don't happen.

    Other times compensation changes lean towards more base/less variable, then less base/more variable. Then it's only pay on this, not that. The challenge is, what seems like it will drive behavioral change often doesn't, and you don't find out for a long time. (See next point.)
  2. Change can take a long time: Sales compensation plans are often based on achieving or exceeding annual quota. When considering changing compensation plans and annual quotas, company leaders need to take into account the effect changes have on the P&L from an overall revenue perspective, product-mix perspective, cost of selling, etc.

    Most companies' compensation plans are more complex than a base-plus-commission structure and may include other motivating factors, such as recognition and awards, trips, adjustments based on region covered, product-mix bonuses, hurdles that trigger different bonuses and percents paid, and more.

    Thus, compensation plans tend to take a long time—often a year or two—to change.

  3. Short-term negative culture effect: Changing compensation usually has a short-term negative cultural effect—people don't like it. It can wreak havoc on a sales organization—often creating a Pyrrhic victory at best—even when compensation changes are eventually a long-term positive for motivation, which many times they aren't.

    The confusion around plan change cannot be understated. No matter how clearly and often you communicate changes, people will still interpret them their own way for their own purposes. It's almost impossible not to be distracted for months as leaders deal with communicating the compensation changes. 

    Then there are the winners and losers, those who are initially in a position to make more (or less) money. Even those who are in a position to make more money often don't see it, get disgruntled, and leave.

    Even if the changes are ultimately good, the first few months are usually quite a challenge.

  4. Long-term negative effects: Changing compensation also has a long-term negative cultural effect. When compensation is changed, especially more than once in a several year period, salespeople don't trust that their long-term efforts will yield the long-term remuneration they were promised.

    Trust becomes an issue when compensation plans are changed. This negatively effects motivation and can lead to top sellers leaving and higher attrition overall.

When you assume that money is the driving factor to recruit seller motivation, you may be doing more harm than good. Compensation is just one motivating factor in an ensemble cast, and it's often a bit player at that.

Beyond Compensation: Ways to Increase Sales Motivation

In our study, The Value-Driving Difference, we found a surprisingly strong correlation between value-focused companies and sales motivation. In fact, nearly all Value-Driving Sales Organizations we studied (96%) agree their company culture supports motivation compared to less than half (44%) of the Non-Value-Driving Sales Organizations.

Value-Driving Sales Organizations were significantly more likely across a number of factors to have highly motivated sales forces.

When sellers believe in what they sell and the difference they can make for buyers, they can (and do) sell much more of it.

However, like changing compensation, fostering a value-driving culture is a long-term initiative often requiring significant change.

What if there was something you could do that would:

  • Allow you to make a significant difference in weeks not years
  • Generate a positive effect on culture
  • Create a material and measurable effect on sales motivation and results across the whole sale organization
  • Be durable and builds on itself over time

There is.

Through our research and work with thousands of professionals globally—sellers and non-sellers alike—we've identified 3 Habits and a series of productivity hacks that, when applied consistently, are proven to inspire and strengthen motivation systematically across teams.

These 3 Habits are the subject of our new report, Beyond Compensation: 3 Proven Ways to Build Sales Motivation, and are:

  1. Recruit Your Drive: We all have a fire in our belly to achieve; sometimes we just need help lighting it. Setting goals, planning actions, and tracking progress can help you to be the match that ignites the flame.
  2. Ignite Your Proactivity: Proactivity drives productivity. Procrastination kills it. You can learn to be more proactive by managing your time and focusing on your most important tasks, using positive self-talk, and beginning tasks immediately (even when they’re hard or overwhelming). When you're proactive and producing at a high level, you're much more motivated.
  3. Reengineer Your Habits: Some habits help to build your motivation while other habits drain it. The good news is you can change even the most embedded habits if you know how. The key is to start new productive habits and break old ones. Doing so will drastically increase your motivation. 

In the report, we dig deep into each of these Habits and share productivity hacks you can apply immediately to boost your own motivation and that of your sales teams.

If you want to boost sales motivation, you need to look beyond changing compensation and the challenges that come with it. Instead, work towards building a value-focused sales organization and consider the 3 Habits the most productive people employ to manufacture their own motivation.

Download Now: 3 Daily Habits to Increase Sales Motivation


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Topics: Sales Performance Improvement Extreme Productivity