I can already hear the objections coming. Even my own first instinct tells me the exact opposite should be true, right? But before we jump to conclusions let's look at this a little closer.
Upon closer inspection, the point of incentive compensation is really behavior modification. How do you fundamentally change the way that people act and behave? This is where things begin to get interesting. If the point of incentive compensation is to drive behaviors then behavioral psychology tells us that the motivators will vary for different people. If we apply this to sales, it tells us that what works for our junior reps may not be effective for motivating the experienced lone wolf. Therefore, we need to be able to use different levers to align sales activities with organizational objectives.
Let's take a look at some of the ways to motivate behaviors aside from traditional cash-based rewards:
The point here is that incentive compensation is less about calculating commissions and bonuses and more about finding the appropriate motivation to drive behaviors that align with organizational objectives. Automating this process allows you to act more strategically. If you want to break into a new market, what is the motivation for reps to do so when they've already been successful where they are? Are your compensation plans aligned with this new objective?
Too often, sales leaders spend months designing the perfect go-to-market strategy and yet overlook the importance of incentive compensation to make the vision a reality. Without a doubt, incentive compensation is the key to executing your sales strategy.
To take this a step further, behavior modification can and should be leveraged in every aspect of the business. If you want to become a customer experience-driven organization you need to set that as an objective and work backwards to identify the behaviors you would like to motivate from Finance, HR, Service and Sales and reward those behaviors accordingly. Only then will a client-focused attitude permeate every level of the organization.