Sales compensation is an incentive aimed at motivating sales representatives to perform to their full potential in order to achieve the business’s goals and objectives. As such, if a company designs an effective system and process to implement such incentives, they are more likely to hit their targets successfully. However, poor designs and plans will frustrate the sales professionals rather than getting them to sell more for the company. Therefore, proper management of the sales compensation process not only motivate your sales organization, but it will also ensure that these professionals will increase their performance, both as individuals and as teams. The best compensation plan will make sure that it rewards those who exceed or meet sales targets, and still provide basic salary for every sales representative. In addition, the business can introduce multiple bonuses to the sales professionals to increase the effectiveness of the system and enhance sales.
In the case of CybrTech Inc., they have a new product, M2, which is a better product compared to their previous M1 software. Moreover, the company planned to replace a certain percentage of their previous product with the new product, and sell additional units to new customers. However, M2 is more complicated and expensive to replace when compared to M1. Therefore, it is crucial to provide detailed information to the client to ensure they understand the importance of the product. Also, M2 has more sophisticated features, which are not easily understood by consumers in the short time available for the sales profession. It is, therefore, critical for the business to establish a new design for compensating sales representatives to make sure that they achieve their sales target (Noble, 2008). Since they have conducted a survey on the reasons behind poor sales, such information should serve as the basis for creating a new system, which will be more efficient.
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To achieve the sales target; first, CybrTech Inc. should increase the commission rate for compensating sales representatives who sell beyond their quota. Essentially, high performing salespeople are profitable as it drives profits for the business. While the basic salary should remain constant, this company should seek to compensate more the best performers. On the other hand, for underperformers, the company should introduce accelerators. Here, the commission gets higher after exceeding quota, to help drive performance. Alternatively, CybrTech Inc. might consider a tiered approach where the first-tier is set at an attainable percentage; the second-tier shall be fixed at a higher point, while the third-tier accelerator shall be set at the highest attainable rate depending on the sales target of the company (Seley, A., & Holloway, 2009). This will attract top talent sales professionals who will be dedicated to not only makes sales but reach the highest targets to earn more money.
It is also evident that the new product is more complex, thereby requiring more time to explain to a customer. As such, the business should increase flexibility in terms of time allocated for a single client. To ensure the success of the product in the market, the company should introduce higher compensations to sales representatives who manage to sell the product to their customers with M1 software. This will increase the replacement target of the business, set at 15% of those already in the market. Additionally, to deal with new clients, CybrTech Inc. can incorporate training programs where they educate a larger number of potential customers rather than explaining to every individual, which is time-consuming. For this program, sales professionals will be compensated depending on the success of their training, an aspect that will be reflected in the number of sales the product makes to new customers (Noble, 2008). As a result, the company will achieve its set targets with increased revenue and profits.
References
Noble, C. H. (January 01, 2008). The Influence of Job Security on Field Sales Manager Satisfaction: Exploring Frontline Tensions. Journal of Personal Selling and Sales Management, 28, 3, 247-262.
Seley, A., & Holloway, B. (2009). Sales 2.0: Improve business results using innovative sales practices and technology . Hoboken, N.J: Wiley.
