Traditional manufacturing sales teams drove sales success with relationship development and feature-benefit product knowledge. Today, most sales teams are rapidly advancing toward more consultative, collaborative selling models. As with any change in the sales model, the sales compensation plan faces an inevitable shock. The old incentive plan no longer supports the new selling approach. Sales leaders can use lean management concepts to better align the pay program to the emerging sales models.
Sales Teams of the Future
Manufacturers are facing decreased competitive product cycle times erasing first mover or technical competitive advantage. Sales functions need to develop global processes, increased scale and multi-product coordination. Successful sales teams are now embracing their customers’ non-linear buying journey. New customer access methods such as digital engagement allow sellers and marketing teams to meet influencers and buyers on their terms. New sales models feature fewer, deeper, more intelligent relationships with their channel partners.
The good news is you can realign your sales pay program using the lean management discipline, including embracing seller focus changes, reducing distractions and a willingness to adjust to changing business circumstances and marketplace challenges.
A lean sales compensation program clears the clutter of poorly designed, misaligned and obsolete incentive plans. By drawing on existing improvement concepts found in manufacturing entities, you can create a lasting program that delivers ROI through a disciplined approach.
The “leaning” of sales compensation can borrow traditional lean constructs. By embracing a continuous improvement process, astute sales executives can develop compensation models that best serve their organization’s current sales objectives. The key here is to take a consistent, long-term approach to sales compensation alignment, rather than a one-off quick fix.
Why People Matter
Ultimately, changes to the sales compensation plan affect employees, your sellers. Engage the right team. Seek field contributions. Sales leaders need to solicit insight from field sales managers. Listen to sellers’ opinions. Use a multi-faceted design team, including HR, sales operations, finance and IT.
Provide assurance to your sellers that you are not reducing the overall sales compensation budget, but making changes to bring alignment to seller efforts and current sales objectives. Sure, the sales compensation plans might change how sellers are paid, but confirm that individuals can earn equal or greater levels of pay with the new plans. It is a formula for a winning outcome for both the sales culture and sales results.
Remember the No. 1 cause for sales compensation plan failure is loss of hope. Ensure every seller has the chance and opportunity to earn his/her target compensation and more.
Successful Program Adoption
Your implementation team should be immersed in the sales world. Seek out conditions that will both aid and hurt implementation of the new pay plan. Sales leadership must prepare their sales team for the impending change, putting a spotlight on potential rewards and opportunities.
Use multiple communication techniques, including leadership speeches, webinars, one-on-one personalized discussions and breaking news stories, to share the excitement of the new compensation program, as well as how sellers and the company will benefit.
Navigating Your New Sales Compensation Future
When you are ready to “lean” your sales compensation program, it’s important to commit to a process and build the muscle memory you’ll need to communicate and educate your teams. You will want to conduct an in-depth review of your compensation plans annually. Challenges and opportunities will continue. The realignment of sales compensation should keep pace with the evolving assigned strategy of the sales function.
When going through a major sales compensation design, especially an effort featuring a high degree of change, design the “ideal” program, then adjust and modify this “perfect program” to accommodate existing realities to arrive at the preferred program. Avoid the trap of creating designs for individual sellers. Instead, design for the job role…look at impact on individuals after the ideal program is complete, then adjust the plan to mitigate for those impacted +/- 20 percent.
Kyle Uebelhor is a principal focusing on the manufacturing and distribution practices at the Alexander Group.