Why Involving Sales Ops in Compensation and SPIF Programs is Vital
This is the third of three articles on how a strategic sales ops team helps drive elite results. (If you missed it, here’s part one and two.)
One area you want to get right is compensation and incentive programs to keep your team focused and determined to win.
Over my career I’ve had my fair share of comp conversations and rolled out various SPIF programs. I enjoyed these events primarily because I felt confident in what we were providing, but also because it was a good opportunity to see how people responded.
So, what exactly is a SPIF? A Sales Performance Incentive Fund. Typically a short-term event used to drive sales rep activity to sell a particular product/service or achieve a sales goal in a specified time period.
Of course, these can be tricky endeavors and something you shouldn’t ever take lightly. I was fortunate enough to work with my sales operations leader when establishing our compensation strategy. Here’s my definition of their role:
Sales ops responsibility lies in finding the balance between rep motivators and the company’s best interest while maximizing efficiency and administration of these areas.
Keep compensation plans simple and use data to create them
Compensation plans should be simple to understand and appropriate for the stage your organization is in and the complexity of your opportunities.
A lot can depend on what you are trying to accomplish growth-wise and your willingness to sacrifice budget-wise.
For most companies sales commission structures include revenue, gross margin (percentages may differ between setup fees and recurring fees), tiered structures, and lastly multipliers. Other components may include retention and activity-based compensation.
It’s always best to roll out comp plans at the beginning of the year and have reps sign off on having received the details of the plan via DocuSign.Before sending reps their comp plans, consider having sales managers use PowerPoint fo to explain the components and reasoning behind the plan.
Later in the year (November or December), review each current comp plan to see if it was on target or if adjustments should be made the following year. To help make this decision, ask:
What feedback did the sales team provide?
Was sales performance and OTE aligned, and within budget?
Did we have any outliers?
Did any performance issues arise due to the comp plan?
Sales ops should provide a thorough summary of any findings plus their recommendations for the following year. Part of their process should also include a financial model of the comp strategy based on headcount and subsequent growth plans.
Immediacy of making money is at the forefront for many salespeople
When should you pay sales reps commission? Monthly.
This may depend on the size or complexity of your deals, but I believe the key is to help reps associate closing deals with getting paid.
SPIF Programs
Apart from compensation, our sales organization also leaned heavily on SPIFs to drive results. We found that when we used these the right way and when needed (timing of year, big product push) we could get more out of the team and leverage the competitive aspect as well.
Regardless of how big or small the goal, SPIFs are a great driver of sales performance. If used properly, this is one that can really get a team fired up!
Whether adding extra kickers to your comp plan for exceeding goals or planning a multi-day sales incentive trip for high performers, the ops team should determine which incentives and SPIFs will drive the right behaviors and generate the best results.
They should also administer and measure the SPIF while regularly communicating to the team how everyone is performing. Salespeople love to win, and they also want to know how they compare to their peers—this kind of transparency fosters good competition.
Conclusion
The long and the short is that one plan doesn’t fit all and a lot depends on what you are trying to accomplish with your comp and SPIF program strategy. This is why it’s ok to have a hybrid mix of plans as long as they flow to your corporate objectives, as well as influence the best performance from your teams.