Sales Team Compensation
This is another post in my occasional series about Sales, after my recent session at the Momentum Summit in Cambridge. The first post summarized the session, and the second post talked a bit about sales compensation plans.
One of the most important things you can do in setting up your sales compensation system is to figure out how to get your people to work as a team. Again, most of my experience is in the area of high-tech business-to-business sales. Some of these ideas won't apply, or won't apply in the same way, in other sectors or business models.
If you sell your product through resellers or partners, you need to consider them part of your team, at least in terms of compensation. Whatever discounts or commissions they get will motivate them to work in a certain way, and your own people should have parallel motivations. One of the surest ways to fail is to motivate your own people to compete against your channel partners. Your company has many inherent advantages vs. your resellers. But, if you determine you need resellers, you have to be willing to make some sacrifices in order to make those resellers successful.
Why would you need resellers? Maybe you need more 'feet on the street' than you can afford the direct cost for. Or, maybe your product is best sold as part of a total solution with other products. Maybe you need to take advantage of customer relationships that your channel partners have that you don't have.
If you have resellers in your sales model, you should really commit to them to the exclusion of your own direct sales efforts, at least for the same type of accounts. Your own people may target larger accounts, accounts in different market segments, or some other segment, but make that distinction clear up front. What's more effective oftentimes is to have your staff support your resellers' efforts by prodding, answering questions, providing leads, assisting in closing, etc.
Similarly, it works best if your own people are set up to collaborate in some way. At Digital Lumens, we have sales teams that consist of an inside sales person, a field sales person, and an application engineer. They work on the same accounts and are compensated as a team. Deals can be closed by the inside or outside person. The application engineer can do sales presentations in a pinch. By collaborating, they can cover more ground, cover for each other, and divide up the work. Our field people are the most senior, and they tend to lead their teams. We use salesforce.com to keep everyone on the same page and to capture information about all the sales activity.
The basic rules of our compensation plan is: 1) there is no motivation to favor direct sales over reseller sales, 2) everyone on the team is compensated for all the sales activity in their territory, and 3) if we end up with some sort of complicated commission split situations for sales that cross territories, etc., I use the wisdom of Solomon to figure out what to do.