Aligning the Sales Organization To Customer Success Using Compensation Plans
I’ve been in incentive plan roles for seven years at the time of this writing. In quarterly internal surveys, we are asked to rate our Team’s ability to link our work to customer success (and business success as a result). There is a saying that if you don’t know where you are going, any road will take you there. I’m not sure who originally coined the term, but it seems to encapsulate the peril of not knowing where you are or want to be. Still, linking incentive plan design, quota setting, and plan operations to customer success is hard to see when there isn’t a direct customer interaction. Answering this question is more difficult when your involvement is just a tiny part of the many disciplines that make up the value chain. In the book “What Your CEO Needs to Know About Sales Compensation: Connecting the Corner Office to the Front Line” Mark Donnolo shares SalesGlobe’s Revenue Roadmap. The author discusses four layers to this roadmap that drive profitability: insights, sales strategy, customer coverage, and enablement. With this map in hand, the linkages become clearer.
The Revenue Road Map
Insights
For profitable endeavors, we need to start with the voice of the customer. This layer also informs the organization about the market environment, competitors, and how the business is performing. Sales Leaders need to know if there are any gaps in customer needs and expectations. They also need to understand where the market is going to maintain or create competitive advantages. If the organization misses here, its sales strategy won’t connect.
Sales Strategy
The next layer defines the sales organization’s action plan to achieve C-suite goals. Sales strategy includes products and services offered, segmentation, value propositions, and going to market.
Customer Coverage
This layer identifies how the organization will deploy resources utilizing sales channels, sales roles, and processes. The business may use inside sales, retail locations, or wholesalers as a few examples. Each channel will contain different sales roles, for instance, frontline reps in retail locations or telesales reps taking inbound calls. Several channels may be required to meet customers’ needs when, where, and how they desire. This omnichannel approach has become necessary for many businesses in the Internet age.
Enablement
The rubber meets the road in this last layer. Enablement includes:
- Compensation (incentive plans and quotas).
- Recruiting and retention
- Learning and development.
- Tools and Technology.
Enablement is how we operationalize the sales strategy. The incentive plans allow us to reward the salesforce and compete for talent. We need recruiting and retention to develop the inventory of talent for the long term. Training and development activities ensure our salesforce has the necessary capabilities and a path for rising in the organization. Lastly, the right tools and technology enhance effectiveness and help gather data used to analyze performance.
Why Not Start With Compensation?
Starting with this layer would be a mistake because the compensation plans shouldn’t dictate strategy. Instead, it should align sellers to strategy. It would be a grave mistake to think we can throw money on the table and the salesforce will deliver the desired results. Money can’t fix poor strategy; attempts to do so result in poor performance and high turnover (I’ve covered different types of motivation in Why are Incentive Plans Necessary?). Given these reasons, why do Sales Leaders start with compensation? The plan is visible and easier to discuss than having a more complex conversation around insights and strategy. Before designing or making changes, we need to address insights, sales strategy, and deploying resources. Some standard plan components rely on upstream layers.
Pay Mix
Before the Sales organization designs the plan, we need to know if we are looking for customer acquisition or retention. We hire a different salesforce depending on the strategy, such as hunter and gathers for growth. The pay mix for new customer acquisition may be 50% variable compared to 20% for retention (more on pay mix here Incentive Plan Pay Mix). With all these different variables, each channel and role will most likely have its own plan. Â
Sales Cycle
We need to align the timing of the plan to the length of the sales cycle. Paying based on a monthly quota when the product is capital intensive and has a yearly cycle creates many lean months. We need monthly draws or more base pay in the plan to retain talent.
Performance Measurement
Key performance indicators, appropriately chosen, let the salesforce know what is essential to the business. These KPIs must align to the strategy determined upstream, or we end up muddling the message. The salesforce needs to be able to impact these performance measures and know how they can drive results. Â
In Summary
Insights inform sales strategy, sales strategy dictates customer coverage, and enablement supports these upstream layers. The continuous change in markets and competitors make competitive advantages temporary. This roadmap should be part of an iterative process that is always seeking to align the sales organization.