Best Practices for Connecting Strategy to Sales Compensation

Mark Donnolo is the Founder and CEO of SalesGlobe, a leading sales effectiveness consulting and innovation firm focused on designing and implementing strategies for revenue growth.

He has decades of hands-on experience helping leaders rethink their sales challenges with a focus on data-driven, creative problem-solving to reach new performance levels.

In a conversation with Justin Lane, Mark discusses connecting strategy to sales compensation, streamlining the process, and incentivizing salespeople to influence sales within their control.

Listen to this episode of The Sales Compensation Show to learn:

• How to connect strategy to sales compensation
• The ROI of improving your sales compensation design
• How to use sales compensation data to problem solve

Three key takeaways:

#1: Connect strategy to sales compensation

At its core, the sales compensation plan is a communications tool.

The plan aims to send a message that motivates and excites the sales organization while driving an intended behavior. That message should be around the overall goals, objectives, and strategy of the business.

Sales compensation connects that strategy to the salesperson, so the part of the strategy they can control, they are inspired to execute.

"Strategy and sales compensation should connect, from the frontline to the corner office." - Mark Donnolo, SalesGlobe

‍

Mark uses a tool he calls, “C-Level Goals” to connect strategy to sales compensation. It explores five questions:

1. What matters from a customer perspective?
2. What matters from a product perspective?
3. What matters from a coverage perspective?
4. What matters from a talent perspective?
5. What matters from a financial perspective?

If you can answer those five questions clearly, and then ask yourself, how does this affect the salesperson and what they can control, the connection between strategy and sales compensation becomes more apparent.

Listen to Mark outline this theory at 11:32 in the podcast.

#2: Sales compensation is part of a bigger model than ROI

When considering the ROI of improving your sales compensation plan, any organization should first define the expected return.

Generally, sales leaders expect a return more significant than the cost of strategizing and executing an incentive plan. But it’s more complicated than that. Sales compensation is part of a bigger model than ROI.

Think about it…

You’ve got a sales strategy layer, a sales coverage layer, and a sales enablement layer where sales compensation sits. Your comp plan works in unison with so many other pieces in the sales organization and can’t drive a return on investment alone because so many other factors are at play.

Take this into consideration before dismissing any plans to improve your comp process.

#3: Using sales compensation data to problem solve

Sales compensation is evolving, and how analysts think about comp is much different than they were years ago. But Mark suggests it has not developed enough:

“My frustration is that when I go to conferences, talk to clients, or hear consultants speak, I hear the same things I heard ten years ago. Where are the new ideas? When we talk about a body of knowledge, I think we need to say these are the accepted best practices, but as a community, we need to consider how we use this in our thinking to become better problem solvers.”

ICM and SPM systems have changed a lot, and we’ve been able to automate many design and admin tasks.

But the one thing that can’t be automated is our ability to solve problems creatively. That is one of the most important reasons why we as a sales comp community need to become better problem solvers using the tools and the body of knowledge we’ve developed over the years.

The next iteration of sales compensation uses data to problem solve rather than simply following best practices.

The Sales Compensation Show is brought to you by Forma.ai, the world’s first Sales Comp Ops solution. Find us by searching sales compensation on Spotify, Apple Podcasts, Google Podcasts, and YouTube.

Are you interested in learning more? Have a conversation with one of our sales comp experts here.