What Your CEO Needs to Know About Sales Compensation

Connecting the Corner Office to the Front Line

 What Your CEO Needs to Know About Sales Compensation

Author: Mark Donnolo
Pub Date: January 2013
Print Edition: $29.95
Print ISBN: 9780814437551
Page Count: 288
Format: Paper or Softback
e-Book ISBN: 9780814432280

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Table of Contents


Acknowledgements xi

Introduction 1

Chapter 1

Your Revenue Roadmap: Driving Your Sales

Strategy with Sales Compensation 7

Aligning to the Strategy 10

The Four Layers of the Revenue Roadmap: Connecting

Your Sales Strategy and Compensation 14

Insight 16

Sales Strategy 17

Customer Coverage 18

Enablement 20

Setting Your C-Level Goals 23

The Sales Compensation Diamond: The Facets of

Evaluating and Designing a Sales Compensation

Program 30

Determine Target Pay 32

Calibrate Pay Mix 33

Create Upside Potential 34

Establish Performance Thresholds 34

Develop Measures and Priorities 34

Define Levels and Timing 35

Design Mechanics 35

Align the Team 36

Set Objectives and Quotas 37

Institute the Governance Process 38

Operate the Program 39

Evaluate the Program 39

5 Questions You Should Ask Your Team About

Sales Strategy 40

Chapter 2

Lapdogs, Dobermans, and Retrievers:

Motivating the Breed that You Need 41

What Breed Do You Need? Aligning Sales Roles to

Revenue Flows 44

The Three Strategies for Revenue Growth 45

Sales Roles and Their Canine Counterparts 47

The Big Picture on Sales Roles 59

The Six Dimensions of Sales Roles 61

5 Questions You Should Ask Your Team About

Sales Roles 64

Chapter 3

The Reverse Robin Hood Principle: Differentiating

Top Performers 66

The Building Blocks of Sales Compensation 69

Base Salary 70

Target Incentive 71

Pay Mix 75

The Reverse Robin Hood Principle: Upside Potential 81

Factors Determining Upside 84

Thresholds 89

Thresholds Aren’t for Everyone 90

To Cap or Not to Cap 92

5 Questions You Should Ask Your Team About

Pay Mix and Upside Potential 95

Chapter 4

Performance Metrics: Measure Twice, Pay Once 96

Performance Measures3 (Cubed) 103

Measures 104

Level 107

Frequency 109

Performance Measure Pitfalls 114

Using Measures Without Clear Line-of-Sight 114

Measuring at the Wrong Level 115

Measuring What Can’t Be Controlled 115

Measuring on a Sliding Percentage Scale 116

Using Conflicting Measures 118

Selling Incentive Plan Real Estate to Marketing 119

Misaligning Bookings and Billings and

Losing Urgency 121

5 Questions You Should Ask Your Team About

Performance Measures 122

Chapter 5

Big Deals: Aligning and Motivating Strategic

Account Sales 124

Defining Strategic Accounts 126

Sales Potential 128

Strategic Value 129

Understanding How the Customer Makes Decisions 131

Centralized Process 131

Preferred Provider Process 133

Decentralized Process 136

Promoting a Solution Sale 138

Motivating Creative Sales Roles 141

Discern Between Creativity as an End and

Creativity as a Means to a Sales Result 142

Consider Fewer Directive Incentives and More

Incentives with Latitude 143

Understand Motivators for Highly Cognitive

Sales Roles 145

Involve Creative Sellers in Creating Their

Own Goals 146

The Sales Crediting Balance 147

Measuring Mega Deals 151

5 Questions You Should Ask Your Team About

Strategic Accounts 157

Chapter 6

A Quota Quandary: Setting Equitable and

Profitable Sales Goals 158

Some Challenges with Quotas 161

The Forensics: Do You Have a Quota Issue or a

Sales Effectiveness Issue? 165

10 Success Factors for Better Quotas 171

See Beyond a Single Number 171

Remember the People 172

Involve the Right Team 172

Don’t Get Lost in the Legacy 173

Get a View from the Bottom-Up 173

Move Beyond History 174

Balance Market Opportunity with Sales Capacity 175

Fit the Methodology to the Account Type 177

Make Your Approach Scalable 177

Don’t Over-, Over-Allocate 178

From History to Opportunity 179

5 Questions You Should Ask Your Team About

Quota Setting 182

Chapter 7

Managing Sales Management: Understanding

Roles and Rewards 183

Sales Managers Aren’t Just Big Salespeople:

What Does It Take? 185

They Understand How to Lead 187

They Strategize the Growth of Their Organization 188

They Are Creative at Planning and Systematically

Solving Customer Problems 189

They Are Effective at Coaching and

Developing Their Teams 190

They Sell in the Right Places 192

What Motivates Managers? 193

Role and Recognition 196

Career Map 198

Investment 199

Rewards 201

Sales Compensation 202

Long-Term Incentives 203

A Few Sales Compensation Ideas for Sales Managers 205

Establish Pay Mix with a Longer View 205

Do a Simple Roll-Up 205

Look at Team Participation 206

Shift Measures Down the Income Statement 207

Get Objective 207

5 Questions You Should Ask Your Team About

Motivating Managers 208

Chapter 8

Making Change: Communicating and

Implementing the Sales Compensation Plan 209

Change Management Key Steps 213

Start Strong 214

Craft the Change Story 216

See the Organization’s View 220

Get the Change Forecast 222

Leverage the Learning Modes 225

Follow the Process 227

5 Questions You Should Ask Your Team About

Making Change 231

Chapter 9

The Role of the C-Level: Getting Involved in the

Right Way 232

C-Level Involvement in the Sales Compensation Process 235

Providing Strategic Direction 236

Getting Involved in the Process 240

Reviewing, Approving, and Supporting

the Program 241

Asking Good Questions 244

5 Questions You Should Ask About Your Executive

Involvement 248

Chapter 10

Your Strategic Sales Compensation Report Card:

Grading Your Plan and Taking Action 250

Grade Your Plan 251

Time for Action 252

Glossary 257

Index 265

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