How Much Are Your Sales Commission Plans Costing You?
by Shirah Smail
Nov 16, 2024
One of the most important questions that company leaders ask is “How much are these comp plans going to cost us?” That is where plan modeling or costing comes in.
This is the time of year when companies are creating sales compensation plans for next year. They usually invest time in determining the best mechanics (e.g. thresholds, accelerators, caps, etc.). They also spend an extensive amount of time determining quotas, which is good. However, one of the most crucial items to get correct, and that is typically not done well, is plan costing. The most effective way to determine the cost of a sales compensation program is through a cost model.
Recoverable Draw vs. Non-Recoverable Draw
If you have ever been in a sales role, or played a part in a sales compensation program – then you most likely have heard the term “draw”. There are two main types of draws, recoverable and non-recoverable. There are two types because they accomplish different objectives and are processed differently. Depending on your objective, you can utilize draws to enhance your sales compensation pro...
Changing Sales Compensation Plans Quarterly, Does It Work?
If you have ever designed sales compensation plans, the suggestion to build an incentive plan and then change it quarterly may have been proposed. Perhaps leadership needs this flexibility because of the many unknowns in planning. Maybe the company is going through restructuring, where the sales organization and goals are shifting – yet the sales team needs a pay plan so that they can be re...
When To Use An MBO Bonus Plan
Before we go into when to use an MBO bonus plan, lets define what an MBO is. “MBO” stands for management by objective, it is a type of sales incentive that is tied to specific objectives, goals or milestones. Some companies also refer to it as a KSO plan, or key sales objective plan. Both mean the same – MBO & KSO, a sales compensation plan based on predefined objectives.
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