Conduct Your Q1 Sales Compensation Performance Assessment

March 28, 2012 at 7:00 AM

CEOs and Sales Leaders, Q1 ends on Friday for ~73% of corporate America. How did your team do in meeting their sales compensation goals? Are you afraid to look?

If you are anything like me when I open my monthly credit card bill, you might find yourself peeking through your fingers when you open your sales results.Q1 Sales Compensation Assessment   Image resized 600

If this is the case, what now?

A Resource for You:

Start by downloading this simple tool called Q1 Sales Compensation Assessment Dashboard. It’s designed to review the performance on a per rep, per team or per manager basis for Q1. The idea is to get a visual representation of quota performance to goal and cost of revenue to goal. For me, I always find it helpful if I’m looking at “The Big Picture” versus a bunch of numbers. Just populate the green cells with your info and it will do the rest.

Sales Compensation Assessment Q1 Dashboard

Ok, you might be asking. What next?

High, Medium, Low:

Now that you have the results, it’s time to assess them. In other words, how should you prioritize where to focus your time so you don’t have a repeat performance in Q2? I’m a fan of using high, medium, and low as a way to qualitatively look at the data.

  • Low – Low refers to the prioritization this rep or team should have. Any rep who is <10% off target (or exceeding) should fall into this category, with one exception. The Q1 result is a lagging indicator. Inspect their pipeline for Q2-4 to make sure Q1 wasn’t a 1-hit wonder (see Dexys Midnight Runners).
  • Medium – This area will require focus from your front line sales managers. These are people who fall into the 10-25% quota to target category. They swung and missed in Q1 and are teetering on the edge for the rest of the year. Again, focus on leading indicators like pipeline, activities, new opportunities, etc. A recovery by this group will go a long way to hitting the annual goal.
  • High – This group requires immediate attention. The house is on fire and you are running out of water. They have missed quota by more than 25%. Morale is dropping rapidly and there appears to be no relief in sight. Put your sales managers on this immediately. They should be on their hip constantly coaching, observing and giving feedback. These reps need help getting deals across the line. Don’t abandon them (or their pipeline) now! You might revisit Matt Sharrers’ excellent post on this earlier this week.

3 Pitfalls to Avoid:

  1. More Money – Don’t throw money at the problem. We see so many companies try to repair the damage of missed quotas with SPIFs, extra incentives and contests. They are misdiagnosing the problem as a compensation issue. The root cause is often something else. Look at the quantity and quality of leads coming into the funnel, inspect sales process compliance or conduct a talent assessment to determine if you have trouble areas contributing to poor performance.
  2. Blame the Reps – Very often, sales reps are labeled as “bad eggs” because their performance declines. I’ve seen companies where a rep is a shining star one quarter only to be branded a ‘C’ player the next for missing quota. It is nearly impossible for someone to go from ‘A’ to ‘C’ player status overnight. Stop deflecting and start investigating what’s changed. Sometimes, taking a rep to lunch for a ‘health check’ will reveal a number of new insights on how you can help that person succeed again.
  3. Ignore your Sales Managers – In the same vein of #2, the reps are the engine that produces the results. However, your sales managers are the linchpins to ensuring success happens. Your best managers are in the field over 60% of the time. Conduct a time management assessment of your sales managers. If they aren’t coaching, observing and giving feedback, make the change immediately.

Q1 didn’t end up like you’d hoped? Diagnose the issue by conducting a sales compensation performance assessment, prioritize your actions high, medium, low and take action by addressing the root cause of the problem.

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Ryan Tognazzini

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Topics: Compensation Planning, Quota Setting, Sales Compensation Planning, Sales Compensation

Posted by Ryan Tognazzini

Ryan Tognazzini
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