{"id":1868,"date":"2019-01-03T11:11:58","date_gmt":"2019-01-03T16:11:58","guid":{"rendered":"http:\/\/199.250.223.35\/~craftbrewery\/?p=1868"},"modified":"2022-04-19T18:12:37","modified_gmt":"2022-04-19T22:12:37","slug":"10-commandments-of-sales-compensation","status":"publish","type":"post","link":"https:\/\/craftbreweryfinance.com\/oldversion\/10-commandments-of-sales-compensation\/","title":{"rendered":"10 Commandments of Sales Compensation"},"content":{"rendered":"

Payroll and benefits are among the largest expense items on the income statement<\/strong>. After cost of goods sold, compensation is likely the single biggest outlay of cash in your brewery.<\/span><\/p>\n

In this article, we’ll look at the 10 Commandments of Compensation for your sales team. The top\u00a010 things you must do to get the most from your payroll dollar investment.<\/strong><\/span><\/p>\n

The 10 Commandments of Compensation:<\/span><\/p>\n

    \n
  1. Remember the First Rule of compensation<\/span><\/li>\n
  2. Key questions to ask before building the comp plan<\/span><\/li>\n
  3. Avoid these common mistakes<\/span><\/li>\n
  4. Be intentional with your model<\/span><\/li>\n
  5. Use Incentives, but use them wisely<\/span><\/li>\n
  6. Make the sales person keep score<\/span><\/li>\n
  7. Align the comp plan with your company goals first<\/span><\/li>\n
  8. Don\u2019t forget coaching, managing and leading<\/span><\/li>\n
  9. Communicate and educate about how the plan works<\/span><\/li>\n
  10. Communicate and educate…again<\/span><\/li>\n<\/ol>\n

    #1 The First Rule of Compensation<\/strong><\/span><\/p>\n

    People want a market rate compensation plus an opportunity to make more.<\/span><\/p>\n

    They want safety and security now, and the chance to earn additional if they go above and beyond.<\/span><\/p>\n

    If you don\u2019t take anything else away from this newsletter please remember these points.<\/strong>\u00a0In my experience sitting with hundreds of sales people over the years I have found these statements to hold true.<\/span><\/p>\n

    We may think of the sales person as the sales animal. The animal may say: \u201cPay me commission from dollar one, turn me loose and watch what I can do.\u201d<\/span><\/p>\n

    It sounds great, but in my experience people want a market rate, plus an opportunity to make more.<\/span><\/p>\n

    Mostly, people want to know that they can pay their bills. The mortgage, the cable bill, their kids\u2019 tuition. We sometimes forget that the sales animals \u2013 the sales people \u2013 are people too.<\/span><\/p>\n

    #2 Key Questions to Ask Before Building Your Comp Plan
    \n<\/span><\/strong><\/p>\n

    When you put together your compensation plan, remember to ask the basic questions you learned in third grade English class:\u00a0Who, What, Where, Why, When & How<\/strong><\/span><\/p>\n

    Who<\/strong>…Who is the comp plan for? Route Sales, team leaders, sales manager, or all of the above?<\/span><\/p>\n

    Are you changing just the route sales person? How does that affect the team leader or manager? Should you update their comp plan to stay in line with the route sales? Alignment is a big key.<\/span><\/p>\n

    What\u00a0<\/strong>do you want to accomplish or achieve with your comp plan? What does a successful comp plan look like?<\/span><\/p>\n

    This is a fundamental question<\/strong>\u00a0that is often answered with \u2013 \u201cI just want them to sell more.\u201d That\u2019s fair, but make sure that is really what \u2018success\u2019 looks like.<\/span><\/p>\n

    Where<\/strong>\u2026all territories, markets, teams? If you cover multiple states, markets or territories, will the comp plan change include everyone, or just a portion?<\/span><\/p>\n

    I’ve built plans rolled them out, and then realized we forgot about a whole team that was in a smaller territory. Sounds ridiculous, but asking this basic question will help to avoid silly oversights like this.<\/span><\/p>\n

    Why<\/strong>… Why are you changing the comp plan? Maybe the current plan is too complicated, or isn’t motivating the sales team. Maybe sales are soft, and you need to do something to shake things up.<\/span><\/p>\n

    Clearly answer the question\u00a0Why<\/em>. This will help when you communicate the changes to your team. Moreover, it clarifies the\u00a0Why\u00a0<\/em>for your ownership and management team \u2013 everyone should be talking about the same message when explaining a compensation plan.<\/span><\/p>\n

    When + How..<\/strong>.When and How come down to having a plan and enough time to execute it. Many times I have rolled out a comp plan too soon. Communication was bad, execution was bad. Epic fail.<\/span><\/p>\n

    Ask When + How in your planning process so you build in enough time and have a good game plan to roll it out.<\/span><\/p>\n

    #3 Avoid These Comp Plan Mistakes<\/strong><\/span><\/p>\n

    The three big mistakes I have seen with compensation plans are:<\/span><\/p>\n

      \n
    1. Pay that confuses<\/span><\/li>\n
    2. Pay that infuriates<\/span><\/li>\n
    3. Pay that surprises<\/span><\/li>\n<\/ol>\n

      Pay that Confuses<\/strong>…Confusion costs money. If your sales team doesn\u2019t understand the compensation plan \u2013 if they are confused \u2013 it will cost you (and them) money.<\/span><\/p>\n

      Keep your compensation plan as simple as possible to avoid pay that confuses.<\/span><\/p>\n

      Pay that Infuriates<\/strong>…Avoid a compensation plan that pisses off your sales force. I\u2019ve done this a few times. Didn\u2019t intend to do this, but because I missed a few key steps it happened.<\/span><\/p>\n

      Design the compensation plan, share it with key sales people in advance. Get their input, and iron out any irritation before presenting the plan to the masses.<\/span><\/p>\n

      Pay that Surprises<\/strong>\u2026Don\u2019t play hide and seek with the compensation reward. If there\u2019s a bonus or incentive at stake, tell the sales person what it is and how to win it.<\/span><\/p>\n

      I\u2019ve worked with managers that liked to play hide and seek. They thought that the element of surprise would motivate people. Perhaps they thought this was like hitting a pi\u00f1ata and the sales person would be more excited because they didn\u2019t know what would fall out.<\/span><\/p>\n

      In my experience, this just doesn\u2019t work.The comp plan isn\u2019t like a 6-year old\u2019s birthday party, it\u2019s more like a paycheck. Tell the salesperson what the reward is and how to win it. Don’t play hide and seek with someone’s pay.<\/span><\/p>\n

      #4 Be Intentional with Comp Planning<\/strong><\/span><\/p>\n

      Be intentional with your compensation model and decide if you are paying to follow a process, create an outcome or both.<\/span><\/p>\n

      Paying for a process means\u00a0paying people to do things in a certain way<\/strong>, to follow the script or checklist.\u00a0Process\u00a0<\/em>means taking specific action The action should lead to a result or\u00a0outcome\u00a0<\/em>in time, but first you’re only focused on paying to follow a specific process.<\/span><\/p>\n

      For example, many breweries have a formal Sales Process:<\/span><\/p>\n

        \n
      1. Greet the customer<\/span><\/li>\n
      2. Thank you for your business<\/span><\/li>\n
      3. Introduce new items\u2026<\/span><\/li>\n
      4. …and so on<\/span><\/li>\n<\/ol>\n

        Designing a comp plan to pay for\u00a0process\u00a0<\/em>might involve an incentive to reward the sales person for following the sales process. The process should be followed in it\u2019s entirety, every single time, every single sales call<\/span><\/p>\n

        Paying people to follow a process is paying them to DO certain things in a certain way. Paying for an\u00a0outcome\u00a0<\/em>means paying people to achieve a result.<\/span><\/p>\n

        The desired result may be to Increase sales, get new placements or displays. For example, open up 10 new draft accounts, get additional facings at targeted off-premise accounts and so on.<\/span><\/p>\n

        Paying for an outcome, or to achieve results puts the responsibility on the sales person to figure out exactly how to do it. You give them the outcome you want, they figure out the best process to get it done.<\/span><\/p>\n

        A blend of paying for process and outcome may achieve the best results.<\/span><\/p>\n

        Set up a Pay for Performance to do things a certain way – for example, to follow the Sales Process. Set up a Commission structure to pay for achieving the outcome – for example, exceeding the sales goal<\/span><\/p>\n

        Bottom line: be intentional with your plan and determine whether you want to pay for following a process or achieving an outcome or some blend of the two.<\/span><\/p>\n

        Wrap Up + Action Items<\/strong><\/span><\/p>\n

        In a future article, we’ll hit the rest of the 10 Commandments. For now, review the ideas presented here and see if there’s anything you can apply in your beer business.<\/span><\/p>\n

        Payroll and benefits are a huge expense for your brewery. The 10 Commandments of Comp can help you get the best return on this investment.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

        Payroll and benefits are among the largest expense items on the income statement. After cost of goods sold, compensation is likely the single biggest outlay of cash in your brewery. In this article, we’ll look at the 10 Commandments of Compensation for your sales team. The top\u00a010 things you must do to get the most […]<\/p>\n","protected":false},"author":1,"featured_media":9188,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pgc_meta":"","_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[83],"tags":[],"class_list":["post-1868","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hr-and-personnel"],"_links":{"self":[{"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/posts\/1868"}],"collection":[{"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/comments?post=1868"}],"version-history":[{"count":0,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/posts\/1868\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/media\/9188"}],"wp:attachment":[{"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/media?parent=1868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/categories?post=1868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/craftbreweryfinance.com\/oldversion\/wp-json\/wp\/v2\/tags?post=1868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}