Is your sales incentive program truly transparent? Ultimately it boils down to the following two key metrics:
- How much time do your reps spend in “shadow accounting” (reviewing their commissions / crediting) every week?
- How many inquiries regarding sales commissions do you receive (and how many adjustments do you need to make)?
If it’s more time and effort than you’d like, it probably means that your sales incentive program is not as transparent as you thought. By making your sales commission program truly transparent, you can re-focus your sales team on the right priorities. You may even be able to create a zen-like sales environment where there are no distractions, and the focus is 100% on sales goals and rewards. But exactly how do you make your incentive program truly transparent?
No Preferential Treatment
If some of your reps believe that others could be receiving preferential treatment, they will start spending time on office politics – at the minimum, to remain aware of what’s going on. Most sales environments are reasonable enough to avoid blatant favoritism. However, those organizations routinely fail to:
- Disclose all incentive plans (ex: for various roles)
- Announce all changes made to incentive plans
It may seem counter-intuitive to share all this information (“Why should BDMs know about SDR incentives?“). However, keeping this information confidential can lead reps to believe this isn’t a fair playing field. After all, if an incentive plan must be kept confidential, it could mean that it protects some dark secret. You’re better off making your entire incentive program transparent by sharing it.
The Right To Make Changes
Unplanned events (such as a competitor going out of business) could force you to increase quotas or reduce incentives real-time. To retain sufficient sales commission agility, you need to remind the team that your incentive program is not a “game” with some rigid pre-defined rules, but that it exists to reward true sales performance.
Being transparent about the Raison D’être for your incentive plan is key. It will help your team understand why you sometimes need to make changes. Later, should you need to increase quotas, you could explain that “Our main competitor has gone out of business. As we discussed, our sales incentives exist to reward true sales performance. This is why we had to raise quotas. It would be unfair to the company not to increase them.“.
Transparent Decision-Making and Calculations
Most organizations are transparent about the structure of their incentive program. Fewer are transparent about the underlying decision-making process – or the actual delivery of payouts. A good example is a sales team who understands every aspect of their incentive program but has no idea how quotas were set.
In order to make your sales commission program fully transparent, you must also explain the process used to set quotas and rewards. Were quotas set by Finance, by Sales, or by investors? Were commission percentages agreed upon based on an expected ROI, some fixed costs, or something else? And you need the same level of transparency to explain the delivery of payout – i.e. explain who can override rewards, who approves commissions, who owns effecting payouts, etc.
Here at sales cookie, we were shocked to learn how many of our customers wanted their reps to see commissions earned by their colleagues on their own personal incentive dashboards. The request was frequent enough to warrant a code change to enable this as a new feature.
Of course, we had assumed that managers and admins should able to review other employee’s rewards. However, being obsessed with data security, we wanted to play it safe. It turns out that we missed a key feature. So, here is the last ingredient needed to ensure a fully transparent incentive program: configure your incentive dashboards to allow team members to view their teammate’s commission statements.
We hope this blog post will help you transform your incentive program from a transparent one into a fully transparent one. Feel free to visit our website to learn more about other ways to make your sales commissions more transparent!