Loading ...Through this week I posted a long article “Quality versus Quantity: Aligning Sales Incentives with Profitability” broken down in 5 parts.
Part 1: The first part of the series introduced the concept of aligning incentives and profitability and talked about the difference between incentive, bonus and recognition
Part 2: This post discussed four category of profitability drivers: Revenue through product preference or price protection, cost containment, risk mitigation and strategic influences.
Part 3: This third post discussed the importance and benefits of accurate reporting.
Part 4: This part focused on change management and how to prepare sales people to focus their time on new objectives / compensation plans.
Part 5: Finally, this last post reminded us how good intentions can sometimes lead to unintended outcomes and provided two such examples.
Key Points
There was a lot of content in this 5-part article, so here are some of the main takeaways:
- The sales force can be a key contributor to the company’s bottom line.
- Some sales jobs can influence profitability, some can not.
- Clear, reliable and timely measurement is key to holding individuals accountable for progress toward individual and unit profitability goals.
- All levels of the organization, from the CEO on down, must champion the effort behind any fundamental change.
- A short-term emphasis on profitability can lead to longer-term consequences.
- When considering changes to sales people’s pay, include low risk options such as SPIFFs.
Plenty of companies base their projections on factors other than the reality. Often smaller companies lose track of their expenses and their projections go off target. In such a case the need of the hour would be to use a good set of budget planners that would help them make accurate projections.