How to Set Up a Successful Software Commission Plan
What is the best software commission plan to drive the right behavior from your sales organization, presales support, channel partners and anyone else involved in the software sales process?
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It is important that both your sales organizational structure and individual ownership/reward must be structured in a way that supports customer relationship building and selling with the right target customers.
Sales process is absolutely necessary to properly manage pipelines, but make sure it does not get in the way of your sales people doing their job, and make sure the software commission plans are rewarding the right behavior.
It is important also to remember that it is not only your sales people who are responsible for the sale. Especially with high-end software or a very technical product, the presales support or consulting staff (depending on your business) can be just as critical and you should consider them as part of your software sales commission plan also.
Developing a solid sales commission plan involves the following key steps:
- What is the desired behavior(s) to be rewarded for each of the employee groups (ie, account execs, technical consultants, etc)?
- What are the possible reward/commission options to encourage that behavior?
- For each reward/commission option, what are the downsides (ie, might it unintentionally encourage other undesirable behavior, and/or distract the employee from other work tasks that may be relatively less commissioned)?
- Does the reward/commission option encourage or discourage teamwork? Which is preferred?
- Assess the different reward/commission options for each employee type & identify the best option
- Pilot the reward/commission plan, and track actual behavior, results & compensation: make sure it is not inadvertently rewarding the wrong behaviors and is providing the right level of compensation as well as results.
Another timesaving tip is to start with a software commission plan template. We regularly use a commission template in our own consulting services and found it to be an excellent starting point to help you quickly structure a strong plan. Built in MS Excel for easy editing, the template helps you establish your compensation model (pay mix, credit timing, quotas, leverage, variables/levels, and shortfalls/windfalls), and calculate your team's compensation plans at the monthly, quarterly, and annual levels. It also includes a commission calculator for easy calculation of commission earned based on actuals. Contact us for more information.
Software-Marketing-Advisor.com also provides consulting services to assist software and IT services firms in putting together a solid software sales commission plan. Please
send an email to info@software-marketing-advisor.com if you would like to know more.