Sales Incentives Gone Wild: Are Reps Gaming Your Comp Plan?
How does a sales rep hit 150 percent of earnings while only achieving 70 percent of overall quota attainment?
Easy. He chases the spiffs, contests and bonuses.
It’s called gaming the comp plan, and you can’t really blame the rep.
Erik Charles, principal incentives strategist at Xactly, says this nightmare scenario actually happened at a company that went crazy with its sales incentives.
Charles revealed best practices to help you manage your sales compensation plan effectively during his presentation at the 2013 Inside Sales Virtual Summit. You can view his full presentation in the video below.
Never use more than 3 measures
No matter how many measures you put in your comp plan, your sales reps are only going to focus on a few, Charles says. If you use too many, it leads to distraction.
Some companies use lots of measures, including:
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New account quota
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Upsell quota
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Training quota
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Services quota
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Revenue quota
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Margin quota
Here’s the deal: Three is the magic number. When you go beyond three, you start seeing performance drop. This means that across all of the measures, fewer and fewer people are hitting 100 percent or more.
That’s because they’re distracted. You’re pulling them in multiple directions. You’re not telling them what really matters.
If you have more than three measures, you have a bad comp plan, Charles says, and it’s time to fix it.
When you’re designing your sales incentives, you must consider whether you are really incenting the right behaviors. Follow the best practices in Charles’ presentation to improve your sales team’s performance.
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Image credit: JD Hancock