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Josh Melick – Common Mistakes Made When Setting Up Sales Comp Plans

One of the best ways in which you can motivate your sales teams to deliver stronger results is to structure a well thought out sales comp plan. Whilst many companies are doing this, business expert Josh Melick believes that too many companies get it wrong when they set up the plan. Jos has written a piece on his blog recently which breaks down what a good plan looks like, and which touches on the areas of the plan which too many sales-based companies are getting wrong. Let’s take look at what Josh says are the key mistakes to avoid.

New Staff Considerations

Josh believes that there has to be considerations made for new staff who are still in training. What this should look like is a larger basic, with tower thresholds for commission. It is unfair to put these employees on the same plan as well established employees, at least during the first 3 months. All good sales comp plans therefore should factor in new staff who are training.

Implementing the Sales Comp Plan

Another very valid point which Josh makes as he discusses those companies getting it wrong, is that too many have a great plan with poor execution. The idea of any sales comp plan is to motivate your staff to sell more, so that they can earn more. This plan falls down however when it comes to commissions actually being paid. The mistake which Josh highlights is that if you have a plan, make sure that you are actually paying your team as and when you say that you will. Your staff will only be motivated if they are actually able to get their hands on the money they are making, at a time that they have been told they will receive it.

Confusing Targets

There are a lot of companies who are too vague with their targets when they offer positions to staff, something else which Josh warns against. Most companies go for a 50/50 split for OTE, which is a base of $75k and then a further $75k if the member of the team hits targets. Some companies will then place unrealistic targets or changing targets which restrict the person from ever getting close to their OTE which they have been promised.

Accelerate Earnings

Josh suggest that accelerators should be in place for those members of your team who are selling hard, and it is mistake if companies don’t do this. A 10% offering is nice and of course the more you make the more that you earn. It would offer a better incentive to the employee however if they thought that they could earn 20% of all sales over a certain amount. In creating these different levels companies can count on harder working staff who sell more.

The piece is rounded off perfectly in saying that the whole point of a comp plan is to incentivize team members, but a poorly thought out plan actually does the opposite of this.

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