“How do we make sure that your comp plans for next year are aligned to metrics that are important for the business?” - Ryan Milligan
In Comp Planning 101, QuotaPath’s compensation experts Graham Collins and Ryan Milligan delivered an introductory course on the essentials of compensation planning. In Comp Planning 201, they’ve shared 5 levers you can pull to drive sales productivity in 2024.
“You need to align the comp plans of everyone in the organization with your North Star metric.” - Ryan Milligan
If you want everyone to move in lock step toward the same goal, your whole organization should be pursuing the same north star metric (also called metric X). Common metrics are customer acquisition cost, burn multiple, and gross revenue retention. Ask yourself what you’re trying to solve for and how individual contributors can impact metric X.
“Nearly 40% of revenue leaders admit their comp plans contradict the goals of the business.” - Graham Collins
Review the results from your existing comp plans to identify areas for adjustments. If your incentives are not always aligned with your north star metric, your sales reps might be working toward the wrong goals. Ask yourself if your comp plans are driving improvements in metric X.
“My biggest piece of advice is to grab 1:1 time with reps and ask them what they like and don’t like about your comp plans today. ” -Ryan Milligan
Try to have these conversations a couple times every year. You can collect data through employee surveys and/or through 1:1 meetings. The insight you uncover can help you get creative with your SPIFs.
For example, if your survey shows that your reps are motivated by team competitions, create a team wide SPIF to win a prize. Your team can increase team bonding, hold each other accountable, and benefit from peer mentorship while striving for Metric X.
“If you roll out comp plans by having HR send out a Docusign, you’re doing it wrong.” - Graham Collins
Many comp plans are black boxes of commissions and sales reps have no insight into the strategy behind your plans. Without giving your reps more visibility, they may focus on closing deals that give them more commission but don’t align to your north star metric.
“Pick metrics that are easy to understand and that the whole company can rally around.” Ryan Milligan
Compensation motivates everyone. Apply variable compensation plans to the rest of your company and make it easy for them to track progress on company-wide incentives. Incentives can be a one time cash bonus, a percentage of base salary paid as a bonus, or even team based events or trips. Align all incentives with your north star metric.
QuotaPath’s latest report shows that 83% of companies report reps exiting their business due to commission errors. While we don’t know what 2024 will bring, we do know that creating the right compensation plan will help your reps succeed while still driving your business toward reaching your north star metric.
Looking for more great content? Check out our blog and join the community.
.png)
