What is the biggest issue facing sales compensation professionals today? An article on sales and marketing consultancy ZS says that the basis for paying the sales force was one of the top issues faced by managers. Should the payment peg move away from revenue towards profit, was the problem.
The article says the first question to ask is whether shifting the basis for deciding salaries to profitability is a priority for an organisation. Some companies are not (yet) focused on margins but on growing as quickly as possible or growing at all costs. Strategic goals like these are likely at odds with switching the salary metric to profit (from revenue or sales). However, companies whose objectives include increasing their average selling price or improving the overall profitability of their product mix should consider shifting the compensation metric to profit, it explains.
If paying on profit or margins is indeed a strategic goal, it still doesn’t mean it is a metric that should be in the employee’s sales incentive plan as one needs to ensure that salespeople control profit. The primary way salespeople control profitability of their territories is by: controlling the price, controlling costs and impacting the product mix. What can organisations do to change the metrics? Read the full article here.