The summarized article, Getting Beyond “Show Me the Money”: An Interview with Andris Zoltners, by Daniel McGinn talks about salesforce compensation and notable changes over the year. Excessive or low incentivization of major products is common, leading to misallocated sales force attempts. Underpayment; overpayment for territories and not talents; and setting goals or quotas too low or too high, leading poor outcomes are notable mistakes. Analytics allows measurement of territorial performance using available data and determining potential impacts on new strategies on performance and revenues.
Notably, changes in compensation structure aim to address emerging needs. Nevertheless, underpayment and overpayment are common, leading to dissatisfaction. Employers should note that various pay plans have inherent weaknesses due to wrong choices on pay plans among employees and overpayment. Additionally, many firms may not actually comprehend the extent of leverage in their incentive plans due to ‘free sales’ (automatic sales from past efforts), leading ‘hidden salary’ (paid incentive for near-automatic sales). Still, too complicated pay plans force different managers to strive for the same sales force attention with different brands, leading to too many complex objectives.
Attitude or quality changes are noted in multigenerational differences: millennials need work-life balance, constant feedback, and technologies; baby boomers focus on retirement; others need financial security. Pay plans need to accommodate these diverse needs. Salaries already cover sales activities, which are difficult to measure and often lead to quantity rather than quality. Hence, pay on activities is challenging, while specific causality (no pay) and measurability (difficult) describe the problem of disintermediation. No single pay structure can work across the world because of the various tax system and cultures. Global incentive-compensation frameworks are advised. There are no changing sales methodologies. Rather, it is the same concept packaged differently, but the focus should be on customer uniqueness.
A bad sales manager can ruin a whole territory. Notably, compensation is part culture, but analytics will gain traction in the big data era, as start-ups leverage such advantages from experts to manage a sales force. Salespersons gather much information from customers, and systems should be created to gather such information. Technologies will lead to changes in sales practices, but not a decline in salespeople. Overall, sales force effectiveness is all about culture, incentives, structuring, sizing, territory design, hiring, and training.