Use benchmarking and sales analysis to assess your sales compensation plans. A comprehensive view often times yields issues beyond the sales incentive component. Learn how to apply 16 tests and develop new sales incentive ideas. A presentation by Sales Benchmark Index.

1. Sales Compensation Analysis How Does Benchmarking Help Me?

2. The Situation $520M Technology company faces: Exodus of top sales talent Difficulty in recruiting top sales people Sales Leader wants to: Confirm if compensation is in line with industry Modify compensation plan to attract/reward top performers

4. Top recommendation was to buy their software

5. Analysis restricted to field sales people

7. Analysis concludes:

8. Defined base and incentive pay in-line with peers (this is not the issue)

9. Separate comp plans required for higher tenured sales people and role type

11. Test Results (Excerpts)

12. Turnover Does the Compensation Plan attract and retain the best salespeople? Acme Acme The plan supports high retention of strong performers and adequate turnover of non-performers

13. Pay Level – Test 1 of 5 External and internal benchmarking: Is the current Plan competitive? Acme Acme The plan is competitive and attractive compared to the benchmark, but below world class levels

14. Pay level – Test 2 of 5 Total Income at plan is slightly less than Benchmark Actual Paid Income per Rep for FY10: $212,751 vs $185,249 plan Acme

15. Pay level – Test 3 of 5 Actual Total Comp for DSM and SET is in line with Benchmark amounts Acme Acme

16. Pay level – Test 4 of 5 Sales Management Total Comp is 13% below the Benchmark amount Acme Acme Channel Mgr Total Comp is closest to World Class levels of all roles analyzed

17. Pay level – Test 5 of 5 DSM Quota Attainment is 24% below the benchmark Acme Acme Overall Sales Quota Attainment is 4% below the benchmark

18. Traction & Engagement Are enough salespeople motivated by and participating in the current Plan? Engagement Rate: Measures % of Sales Force participating in variable compensation. Excitement Index: Measures rate difference between standard commission and the highest level payout rate. Excitement Index Range <10% Low 20 – 50% Med >70% High All Reps participated in the plan and several achieved the highest level pay rates.

19. Distribution Is the payout variation between top producers and non-producers appropriate? SE Distribution weighted toward low end DSM Distribution weighted toward high end SET Distribution weighted toward high end Multiples inline with Best Practice

20. Recommendations

22. Determine an appropriate accelerator rate that is greater than 1% for each 1% of attainment over goal

24. Segment Rep assignments between existing and target accounts

25. Establish desired mix of revenue from each type of account

27. Perform analysis of territory potential

28. Set attainable Quotas that are based on territory potential, workload, pipeline, market penetration, etc.

30. Define the criteria to distinguish tenured reps from new reps – years of experience, years in territory, etc

31. Modify comp plan, quotas and incentive variable pay to challenge and motivate tenured reps