SAMPLE PROJECT PLAN

Objectives

1. Assess the effectiveness of the current sales compensation plan.
2. Identify strengths and weaknesses to inform future improvements.
3. Reconstruct the plan to maximize sales performance and align with organizational goals, leveraging funnel data for incentive alignment.

1. Gather Data

• Current Compensation Structure: Collect detailed information on the existing compensation plan, including base salary, commissions, bonuses, and any non-monetary benefits. 
• Sales Performance Metrics: Review key performance indicators (KPIs) such as sales volume, conversion rates, and customer retention.  Group and individual performance against company expectations.
• Market Benchmarking: Research industry standards and competitor compensation plans to evaluate market competitiveness.
• Questions to Be Answered:
  • Does your funnel call out definitive, objective and measurable stages that mimic the progression of the sales process and synchs that with the capabilities of the sales org?
  • Are your sales teams clear about the stages of a sale, how to move a prospect from one stage to the next, and the value of doing so?
  • What analysis is conducted around funnel velocity metrics to expose areas for improvement for individuals, teams and the sales and CS org?
  • From each stage to the next, are you aware of what objectively measured activity truly drives the sales process?
  • How are individuals, and designated teams doing to move prospects through the funnel and how is improvement opportunities assessed?

2. Stakeholder Interviews

• Sales Team Feedback: Conduct interviews or surveys with sales representatives to gather insights on motivation, fairness, and perceived effectiveness of the plan.
• Management Input: Interview sales managers and executives to understand strategic alignment and desired outcomes.
• Questions to Be Answered:
  • What behavior is primarily incented through the existing plan?
  • What secondary behaviors are created?

3. Performance Analysis

• Data Analysis: Analyze sales performance data to identify trends and correlations with compensation structures. Look for patterns in high and low performers.
• Segmentation: Break down performance by team, territory, or product line to identify specific areas of strength or concern.
• Questions to be Answered:
  • Have you reviewed data availability to assure that critical steps necessary to progress a prospect to closing are tracked?
  • Do you know what the value of each stage is to your company? 
  • What is the % chance of closing for prospects in any stage
  • Can you quantify the value of a closed account for both immediate and and LTV? 

4. SWOT Analysis

• Strengths: Identify aspects of the plan that drive performance (e.g., high commission rates for top sellers).
• Weaknesses: Recognize limitations (e.g., complexity, perceived unfairness).
• Opportunities: Explore new incentives or structures that could enhance motivation.
• Threats: Assess external factors such as economic conditions or industry changes that might impact compensation effectiveness.

1. Define Objectives

• Align the compensation plan with broader business goals (e.g., revenue growth, market expansion, customer satisfaction, enterprise value).

2. Identify Key Drivers

• Determine which behaviors and outcomes the plan should incentivize (e.g., culture facilitation, new customer acquisition, upselling, team collaboration, stage management and velocity).

3. Design Compensation Structure

• Base Salary vs. Variable Pay: Decide on an appropriate balance, leveraging market data, that motivates without creating excessive risk.
• Incentive Pay : Set competitive and fair commission structures based on performance tiers.
• Develop KPIs:  Non revenue producing KPIs, achievement of which is a % of total variable target, drive specific behavior that accelerates future conversions.
• Bonus Programs: Develop performance-based bonuses that reward achieving or exceeding targets.

4. Incorporate Non-Monetary Incentives

• Consider adding recognition programs, career development opportunities, or work-life balance initiatives to enhance overall motivation.

5. Pilot Testing

• Model the new plan and test against past behavior. 
• Implement the new plan on a small scale to evaluate its effectiveness before full rollout.
• Gather feedback and make adjustments as needed.

6. Documentation, Training and Communication

• Fully document the plan in an easy to follow format, and gain signatures from all parties.
• Train sales personnel on the new compensation plan, ensuring clarity on how it works and its benefits.
• Communicate the rationale behind changes to ensure buy-in and understanding.

7. Launch, Monitor and Adjust

• Formally launch the plan.
• Establish a system for continuous monitoring of performance metrics and employee feedback.
• Schedule regular reviews (e.g., quarterly or bi-annually) to assess the plan’s effectiveness and make adjustments as needed.

By systematically evaluating the current sales compensation plan, identifying its strengths and weaknesses, and implementing a thoughtful reconstruction process, organizations can create a compensation strategy that maximizes performance and aligns with their overall objectives. Regular review and adaptation will ensure continued effectiveness in a changing market landscape.