A sales incentive plan should maximize the impact for individual salespeople and encourage them to excel at their sales role to increase your organization's revenue. This was just one of the key points Darren Tse, WTW, presented at the 2024 AgCareers Agriculture & Food Roundtable.
While incentive plans are effective means to motivate your sales team, many organizations aren’t completely satisfied with their current sales incentive plans because they have a relatively short shelf life and need to be adjusted and aligned to reflect the evolving needs and goals of the business.
According to Darren Tse, Practice Leader for Sales Effectiveness and Rewards at WTW, “We need to think through roles of a sales team and make sure you are paying them for the effort, not the past efforts.”
Darren highlighted that when an organization develops its sales incentive plans, it needs to consider the various measurements it considers when paying its employees an incentive for their sales. When considering the approach or re-evaluating the current incentive plan, two common philosophical approaches drive a completely different sales force experience:
Creating incentive plans that work for your specific teams and their roles is essential; it isn’t one size fits all.
“Incentive design is aligned with different selling roles; different roles may require different incentive plans. Role-driven incentive compensation plans are critical to the overall success of your sales incentive plans.” Darren noted.
A few key items to consider when evaluating your incentive plans for your sales team are:
While not all incentive plans are created equally, some plans motivate and reward performance with an acceptable return on investment.
Darren highlighted that some large organizations are dealing with many sales incentive plans. “The majority of companies have at least six different sales incentive plans; some have over 500. While some companies may be looking at various ways to incentivize their employees, some employers find creating the perfect incentive plan to be quite complex.” He also noted that one of the challenges in creating an incentive plan that works is that “incentives are sometimes tied to the wrong measures.”
With the current competitive employment market and retaining your good employees, evaluating and assessing your incentive program is essential.
“When looking at the competitiveness of sales compensation, the most important element is Actual Total Annual Compensation. It is of limited value for companies to look only at salaries or incentives in isolation,” said Darren. “When someone asks how competitive the compensation is, you should talk about ‘total cash’.”
Darren explained that keeping employee satisfaction high and ensuring they are paid appropriately for their efforts is key. Still, internal benchmarks are another factor to consider. Continually looking at what you are paying in incentives as a percentage of overall revenue can allow the company to consider “dialing up” or “dialing down” their compensation spend based on revenue results.
In today’s evolving business landscape, a strategic, well-structured sales incentive plan is more than just a motivator—it's a vital tool to drive performance, retain top talent, and boost organizational revenue. As Darren Tse emphasized at the 2024 AgCareers Agriculture & Food Roundtable, there’s no one-size-fits-all approach. Instead, organizations must develop incentive programs that reflect their sales teams' unique roles and efforts, align with business objectives, and adapt to ongoing market and workforce changes. By focusing on relevant performance metrics, total compensation, and timely payouts, companies can build incentive plans that not only reward success but also sustain it. Now is the time to evaluate your current strategy and ensure it’s delivering the results your organization—and your sales team—deserve.