{"id":12043,"date":"2015-04-21T09:53:38","date_gmt":"2015-04-21T13:53:38","guid":{"rendered":"http:\/\/www.enxmag.com\/twii\/?p=12043"},"modified":"2015-04-21T09:53:38","modified_gmt":"2015-04-21T13:53:38","slug":"compensation-the-rudder-of-your-ship","status":"publish","type":"post","link":"https:\/\/www.enxmag.com\/twii\/managed-services\/2015\/04\/compensation-the-rudder-of-your-ship\/","title":{"rendered":"Compensation \u2013 The Rudder Of Your Ship!"},"content":{"rendered":"

\"compensation\"When I talk about compensation and commissions that drive success, many people assume that I mean, pay out more money, but I assure you, that is not the point.\u00a0 I simply mean, put your money where your plan is!\u00a0 When I look at today\u2019s sales organizations and watch how the day to day execution happens, most sales reps run their own plan, mostly because no one has given them another.\u00a0 In almost every case, sales reps will find the loopholes in your pay plan and will line up every deal to max their payout.<\/p>\n

When I hear dealers speak about wanting to transform a certain percentage of their business to managed services and find out that there has been no real change in their sales compensation plan, it typically doesn\u2019t lead to success.<\/p>\n

The numbers of dealers that try to lead their business without a serious marketing execution plan amazes me.\u00a0 Time and time again this creates the environment where sales reps typically won\u2019t sell enough throughout the year to pay for themselves.\u00a0 Whose fault is this?\u00a0 This failure is a Business Owner, Sr. Management issue. By not having a crystal clear marketing plan, everyone in a sales role is forced to make it up as they go.<\/p>\n

Think about your own company, when newly hired sales reps go through orientation and then are thrown into their territory with little more than a telephone, gas allowance and a \u201cgood luck\u201d plan.\u00a0 A proper compensation plan should be an activity-based compensation for the funnel building stage. This means you specifically define in detail how many phone calls, appointments and presentations they must do to increase and\/or maintain their income.\u00a0 By clearly defining the new rep\u2019s activity they should end up in a position to successfully achieve their quota at the end of this onboarding phase.<\/p>\n

A great compensation plan doesn\u2019t turn mediocre sales reps into great sales reps. Great sales reps WILL recognize a great comp plan and they\u2019ll drive themselves!\u00a0 You get what you pay for and your sales comp plan should pay for what you get!<\/p>\n

One common situation I see surrounding sales compensation is that dealers are possibly too stingy when it comes to transformation and managed services.\u00a0 When this is the case, the sales rep\u2019s response isn\u2019t always an open rebellion; they\u2019ll simply choose the easiest, shortest path to the most amount of money.\u00a0 Sound familiar? This is exactly like your company\u2019s model. \u00a0Managed services take up an enormous amount of time and if they aren\u2019t going to be paid fairly, they simply won\u2019t sell your services.\u00a0 You may think your commissions are fair, but if your reps aren\u2019t selling what you want them to sell, you have to find out why.<\/p>\n

If they believe you\u2019re holding back on the coin, they will boycott and you\u2019ll not make anything either.\u00a0 In this case one of you is wrong and you have to decide whether it\u2019s them or you.\u00a0 If it\u2019s you, go back to the drawing board and fix the compensation so they\u2019re motivated to sell your service deliverables, and if it\u2019s them, you might ask yourself if they\u2019re right for your company.<\/p>\n

So what\u2019s the big picture here?\u00a0 I think it\u2019s easy to see that most dealerships are lacking successful transformation to services, account retention and capturing new clients. So building the right transformation income opportunity for your sales team is very important.<\/p>\n

A few other popular areas where I believe a tweak or two to the sales comp plan would benefit all, would be in preventing leases from being renewed way too early. To discourage the practice of renewing leases prematurely, you should look at a commission adjustment to deter this behavior.\u00a0 Why is this important?\u00a0 If you roll your leases too early just to fill quota, you\u2019re probably going to make little profit on the deal and it\u2019s a good possibility that your maintenance agreement will be adjusted downward as well. \u00a0Today, most leases are sold with a \u201clower cost\u201d benefit and thus keeping your leases in play for as long as possible is usually best.<\/p>\n

I would also suggest that you tie your lease renewal payout percentage to the rep\u2019s new business attainment quota.\u00a0 So if they satisfy their new business plan for the month their renewal commissions would pay them at 100%.\u00a0 If not, then their renewal commission would be adjusted downward to match their new business results.\u00a0 If their new business attainment were 70%, then they would be paid 70% commissions instead of 100% on that month\u2019s renewals.\u00a0 This keeps them focused on growth and not just living in your portfolio. \u00a0Obviously, exceptions can be made when competition causes the lease-renewing situation.<\/p>\n

Another area of concern and not far from the first situation is when a sales rep lowers the maintenance agreement to add profit to the hardware sale.\u00a0 This is amazingly popular across the country and is a very easy fix.\u00a0 If a lease renewal incurs a drop in either monthly maintenance or click charge, the house has to recoup those moneys and they should be taken out of the deal at the time of sale.\u00a0 Did you ever notice that the majority of lease renewals are quoted to a client with a slightly lower payment than the previous lease? Why is it that no one goes in and says, \u201cYour new MFP or printer has some great new capabilities that I know you\u2019ll use and is only $25.00 a month more than your previous agreement\u201d?\u00a0 It simply doesn\u2019t happen.\u00a0 Written correctly, your sales comp and commission document should protect the dealership from sales reps that lower maintenance (that they don\u2019t get paid on) to hardware (where they do get paid), just to make a deal happen.\u00a0<\/strong><\/p>\n

So if we focus on your need to transform your business to managed services, there are many ways to design your sales compensation plan to drive this objective. Both sides of the house, new business reps and account managers get to contribute to this goal.\u00a0 With the account managers, we simply design a compensation plan that requires a certain percentage of managed services sales secured from the client base.\u00a0 As long as it\u2019s a reasonable requirement, then, like before, their payout on renewals would pay according to their success in the managed services sales quota attainment.<\/p>\n

On the new business side it\u2019s best to have a team completely devoted to securing net new clients.\u00a0 This team has zero distractions and can spend 40 hours per week setting new client appointments.\u00a0 Like a new employee they\u2019ll require 90 days for building a pipeline. Their compensation plan will pay them for activity first and then, more than likely a total contract value compensation plan.\u00a0 This position will require a true hunter personality and is typically going to cost you more in base than the normal hardware sales rep.\u00a0 The good news is, when they start to get traction, 5 or 6 of the right kind of deals will produce significant growth.\u00a0 Most of these jobs pay a monthly residual also based on quota attainment.<\/p>\n

Misaligned sales compensation is like getting on a ship without a rudder\u2014you won\u2019t really know where you\u2019re going and you won\u2019t know when you\u2019ll get there.\u00a0 Put a rudder on your ship and design your sales compensation plans to take you exactly where you want to go!<\/p>\n","protected":false},"excerpt":{"rendered":"

When I talk about compensation and commissions that drive success, many people assume that I mean, pay out more money, but I assure you, that is not the point.\u00a0 I simply mean, put your money where your plan is!\u00a0 When I look at today\u2019s sales organizations and watch how the day to day execution happens, most sales reps run their own plan, mostly because no one has given them another.\u00a0 In almost every case, sales reps will find the loopholes in your pay plan and will line up every deal to max their payout. When I hear dealers speak about wanting to transform a certain percentage of their business to managed services and find out that there has been no real change in their sales compensation plan, it typically doesn\u2019t lead to success. The numbers of dealers that try to lead their business without a serious marketing execution plan amazes me.\u00a0 Time and time again this creates the environment where sales reps typically won\u2019t sell enough throughout the year to pay for themselves.\u00a0 Whose fault is this?\u00a0 This failure is a Business Owner, Sr. Management issue. By not having a crystal clear marketing plan, everyone in a sales role is forced to make it up as they go. Think about your own company, when newly hired sales reps go through orientation and then are thrown into their territory with little more than a telephone, gas allowance and a \u201cgood luck\u201d plan.\u00a0 A proper compensation plan should be an activity-based compensation for the funnel building stage. This means you specifically define in detail how many phone calls, appointments and presentations they must do to increase and\/or maintain their income.\u00a0 By clearly defining the new rep\u2019s activity they should end up in a position to successfully achieve their quota at the end of this onboarding phase. A great compensation plan doesn\u2019t turn mediocre sales reps into great sales reps. Great sales reps WILL recognize a great comp plan and they\u2019ll drive themselves!\u00a0 You get what you pay for and your sales comp plan should pay for what you get! One common situation I see surrounding sales compensation is that dealers are possibly too stingy when it comes to transformation and managed services.\u00a0 When this is the case, the sales rep\u2019s response isn\u2019t always an open rebellion; they\u2019ll simply choose the easiest, shortest path to the most amount of money.\u00a0 Sound familiar? This is exactly like your company\u2019s model. \u00a0Managed services take up an enormous amount of time and if they aren\u2019t going to be paid fairly, they simply won\u2019t sell your services.\u00a0 You may think your commissions are fair, but if your reps aren\u2019t selling what you want them to sell, you have to find out why. If they believe you\u2019re holding back on the coin, they will boycott and you\u2019ll not make anything either.\u00a0 In this case one of you is wrong and you have to decide whether it\u2019s them or you.\u00a0 If it\u2019s you, go back to the drawing board and fix the compensation so they\u2019re motivated to sell your service deliverables, and if it\u2019s them, you might ask yourself if they\u2019re right for your company. So what\u2019s the big picture here?\u00a0 I think it\u2019s easy to see that most dealerships are lacking successful transformation to services, account retention and capturing new clients. So building the right transformation income opportunity for your sales team is very important. A few other popular areas where I believe a tweak or two to the sales comp plan would benefit all, would be in preventing leases from being renewed way too early. To discourage the practice of renewing leases prematurely, you should look at a commission adjustment to deter this behavior.\u00a0 Why is this important?\u00a0 If you roll your leases too early just to fill quota, you\u2019re probably going to make little profit on the deal and it\u2019s a good possibility that your maintenance agreement will be adjusted downward as well. \u00a0Today, most leases are sold with a \u201clower cost\u201d benefit and thus keeping your leases in play for as long as possible is usually best. I would also suggest that you tie your lease renewal payout percentage to the rep\u2019s new business attainment quota.\u00a0 So if they satisfy their new business plan for the month their renewal commissions would pay them at 100%.\u00a0 If not, then their renewal commission would be adjusted downward to match their new business results.\u00a0 If their new business attainment were 70%, then they would be paid 70% commissions instead of 100% on that month\u2019s renewals.\u00a0 This keeps them focused on growth and not just living in your portfolio. \u00a0Obviously, exceptions can be made when competition causes the lease-renewing situation. Another area of concern and not far from the first situation is when a sales rep lowers the maintenance agreement to add profit to the hardware sale.\u00a0 This is amazingly popular across the country and is a very easy fix.\u00a0 If a lease renewal incurs a drop in either monthly maintenance or click charge, the house has to recoup those moneys and they should be taken out of the deal at the time of sale.\u00a0 Did you ever notice that the majority of lease renewals are quoted to a client with a slightly lower payment than the previous lease? Why is it that no one goes in and says, \u201cYour new MFP or printer has some great new capabilities that I know you\u2019ll use and is only $25.00 a month more than your previous agreement\u201d?\u00a0 It simply doesn\u2019t happen.\u00a0 Written correctly, your sales comp and commission document should protect the dealership from sales reps that lower maintenance (that they don\u2019t get paid on) to hardware (where they do get paid), just to make a deal happen.\u00a0 So if we focus on your need to transform your business to managed services, there are many ways to design your sales compensation plan to drive this objective. Both sides of the house, new business reps and account managers get to contribute to […]<\/p>\n","protected":false},"author":59,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[237],"tags":[1800,2193,2411],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/12043"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=12043"}],"version-history":[{"count":1,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/12043\/revisions"}],"predecessor-version":[{"id":12045,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/12043\/revisions\/12045"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=12043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=12043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=12043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}