[STRATEGIES]

Sales Incentive Plan Strategies

Plan 1. Minimize territory size impact

To overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories ($500,000) and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on sales volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes pays the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below can be used, but broken out into small, medium, and large territories with each having a different target incentive opportunity.

Plan 2. Encourage tenure

As in Plan 1,to overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories ($500,000) and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on sales volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes pays the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below can be used, but broken out into small, medium, and large territories with each having a different target incentive opportunity.

Plan 3. Support sales excellence

As in Plan 1, to overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories ($500,000) and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on sales volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes pays the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below can be used, but broken out into small, medium, and large territories with each having a different target incentive opportunity. In this Plan the incentive is uncapped and sales beyond the Stretch Goal is encouraged and paid at the same incentive rate as between the Target and Stretch Goal.

Plan 4. Support achievement expectation

This Plan is like the prior Plan, but encourages achievement of 100% of Target by limiting pay opportunity for those who do not achieve the Target Goal.

Plan 5. Control costs

This Plan, like the prior one, encourages achievement of 100% of Target Goal, but retards the uncapped rewards paid for achievement beyond the Stretch Goal. This protects the organization from paying exceedingly high incentives.

Plan 6. Every sale counts

This Plan rewards all sales by paying a commission on each order. Sales beyond a defined amount are paid a higher commission to encourage aggressive sales.

Plan 7. Encourage team sales

To encourage teamwork, this Plan links Individual Sales to how the Team performs in terms of sales. High incentives can only be earned if both the Individual and Team work together to excel.

Plan 8. Support profitability

In this Plan, incentive opportunity is a function of both the Individual Sales and how the Division does with regard to Profit. Both measures are capped to minimize payments due to unforeseen circumstances. Sales Volume incentives paid quarterly minimize the potential for overpayment by measuring cumulative year-to-date sales and paying quarterly based upon the prorated performance of the annual objective. All sales could be achieved on the first day of the year, or all on the last day of the year and the annual incentive payout would be the same. The Division Profit incentive is paid annually once the final yearly results are known. The performance range for Sales Volume (70% to 115%) is broader than that of Division Profit (90% to 105%) due to the theory of large numbers (easier to make a small number than a large one) and the probabilities of achievement.

Plan 9. Minimize sales discounting

To support profitability where the sales person has considerable influence over the sales pricing, an incentive metric is added to encourage minimal Price Discounting. Some Price Discounting is planned, but the overall average needs to come in as planned. The incentive, paid a percent of base salary supports tenure and past performance. The threshold of Sales Volume is low (60%) to recognize a probability of exceeding of at least 95% and to reward as many sales as possible with incentive pay recognizing that a base salary is being paid.

Plan 10. Improve margins

This Plan rewards all sales and overcomes a major deficiency of a plan with a threshold where the sales person does not know on a daily basis, what the sales results produced in incentive earnings. Also, since the Margin at which sales are made is important, but only in terms of the Sales Volume achieved, the incentive is linked directly to the Sales Volume by a multiplier instead of a dollar or percent of base salary amount. The Margin measure is banded so as not to micro manage the measure, but to show that if at least 100% of the expected Margin is achieved, there is a 20% penalty in terms of Target Incentive opportunity. Margin is highly leveraged to support bottom line performance for the organization.

Plan 11. Optional profit

Like the previous Plan, all sales are rewarded with incentive opportunity. A Company Profit incentive is only paid if it can afford it by achieving at least 100% of its profit plan. If the Company Profits exceed 105%, in this case, the Company can be very generous in paying an additional 50% on Sales Volume incentives earned.

Plan 12. Link volume to profit

To support Regional teamwork and Profitability, this Plan is linked heavily with Individual Sales results. Here it is assumed that the two metrics can be determined on a quarterly basis. Often, this is difficult, but the adage of "what gets measured gets done", is very appropriate today.

Plan 13. Affordability

Unlike Plan 11, there is no additional reward if the Company Profit of 100% to 105% is achieved. The sales incumbent receives what Sales Volume incentive is earned. However, if the Company Profit is less than 100%, it cannot be as generous and a 20% reduction in incentive pay is determined. If the Company Profit is above 105% a 25% bonus is paid on the Sales Volume incentive earned.

Plan 14. Target account emphasis

Often there Target Accounts within sales territories that require special emphasis, either because there are additional penetration and profit opportunities, or due to competitor activity. This Plan establishes a quota to be achieved from the defined Target Accounts, but also recognizes that all sales volume from these accounts should provide incentive opportunity. Therefore, all sales from Target Accounts result in an incentive payout as the threshold in zero.

Plan 15. Seek new accounts

New Accounts are tough to come by in today's markets so this incentive plan provides for double counting from them. First, each New Account (defined by management) receives a 2% of base salary bonus, and all resulting sales count toward the Sales Volume quota. To arrive at a payout bonus rate, a number of New Accounts to be acquired must be set. Usually, that is derived from a macro number from the marketing department. If the marketing plan forecasts 40 new accounts and the organization has 10 sales people focusing their efforts on that activity, the overall expectation would be four new accounts per person.

Plan 16. Local national account support

A National Account requires attention at the corporate level by a National Account Executive and at the field level, by a sales person who does not write orders directly. To focus support at the field level this plan allocates 15% of the incentive opportunity, not a significant amount, to encourage that support.

Plan 17. Select product emphasis

Push Products are products that the Organization wants special sales emphasis due to their profit margin, market position, or production efforts. In this Plan all Push Products are counted double. First as standalone with all Push Product Volume earning an incentive as the threshold is zero. Secondly, the Push Product volume counts toward the assigned total Sales Volume quota.

Plan 18. Drive new products

It is difficult to assign a specific sales volume quota on New Products as there is no sales history, only a marketing plan. Often, New Products are difficult to sell as the potential buyer may not be aware of all the benefits and features, especially if asking a higher price. A simple solution is to tell the sales people that all sales of these product count double toward their quota. Here, the Plan is uncapped and all sales over 100% earn the same incentive rate. The incentive is defined as a percentage of their base salary and is an added feature to the plan if the sales people have been receiving small base salary increases. Under that condition, a 32%, 64% or 96% incentive appears very attractive.

Plan 19. Sell complete line

When it is important to manage individual sales time to devote attention to a complete product line to support production capacity, rather than just total volume, a product mix incentive achieves that objective. Quotas are assigned to multiple product groups. Achievement of each assigned product quota is recognized with incentive compensation. The incentive is a go-no go incentive, which means that the Product Mix incentive is only recognized when 100% of the assigned quota is achieved. Quotas for five products is a recognized as a maximum number. Assignments above that number loose value as sales focus is more difficult. All product sales volume is also included toward achievement of the Sales Volume Incentive. Achievement of the last two of five assigned quotas is often difficult and the incentive plan recognizes and pays a higher amount for these two. Usually, there is no priority in the product line quotas, but some times one important line is double weighted and counts as achievement of two Product Mix quotas.

Plan 20. Prioritize sales time

To ensure that Product Mix quotas are not ignored and sales attention devoted to just Sales Volume, the two incentive measures are linked. Both must be maximized to earn the highest potential incentive. Although discrete boxes of incentive opportunity are shown, the actual incentive payout is a continuum for actual Sales Volume achievement and the payout is calculated by interpolation. So as not to overpay, the incentive is limited to the prorated amount of Target Incentive during the year. Payment above that is paid at year end.

Plan 21. Attention to building business

Ignoring total sales volume to focus on achievement of Product Mix quotas and incentives is considered in this program. The actual Product Mix incentive earned and paid is a function of both the number achieved and the Sales Volume total sales. With a low Sales Volume achievement the value of the Product Mix incentive is lower than when a high Sales Volume incentive is earned.

Plan 22. Support building business

Sales organizations that use percent of base salary as a means of defining incentive opportunity is valuable in today's market place where base salary increases have been limited. In a this plan each Special Objective achieved pays a 3.3% of annual base salary in incentive. A leveraged sales incentive plan pays at a higher incentive rate above Target plan than below Target plan. Here, leverage exists for the Sales Volume measure (3/4% of base salary for each percent of Sales Volume below 100% of goal, and 1.2% of base salary above 100% of the Sales Volume goal). There is no leverage of achievement of each Special Objective, nor is there an order of which one should be first achieved. Usually, for rate setting purposes it is assumed that the average rate of achievement is three out of five.

Plan 23. Encourage planning

This plan is similar to the preceding plan, however the incentive is defined in terms of dollars rather than percent of base salary. The advantage of incentives in terms of dollars instead of base salary is that tenure is discounted absolute sales results increased. Low base salary paid sales incumbents can earn the same incentive dollars as a sale incumbent with a high base salary. Often, this is important where demoted sales people who have retained relatively high base salaries exist within the sales organization. In this Plan, compared to the previous one, there is a leveraged (increased) incentive opportunity for achievement of Special Objectives 4 and 5. Achievement of the first three are incented at $4,000/3 = $1,333 each and the remaining two are incented at $4,000/2 = $2,000 each.

Plan 24. Balance sales activities

Unlike the preceding Plan, this one is leveraged at a higher rate to recognize an increased difficulty, and a higher competitively paid marketplace for successful sales talent. Also, the Special Objective's incentive opportunity is linked to actual Sales Volume performance. They have less value if the Sales Volume Target is not achieved, than if the Sales Volume Target is exceeded.

Plan 25. High pay to super stars

To ensure that Special Objectives are not ignored and sales attention devoted to just Sales Volume, the two incentive measures are linked. Both must be maximized to earn the highest potential incentive. Although discrete boxes of incentive opportunity are shown, the actual incentive payout is a continuum for actual Sales Volume achievement and the payout is calculated by interpolation. So as not to overpay, the incentive is limited to the prorated amount of Target Incentive during the year. Payment above that is paid at year end.

Plan 26. Support profitable margins

In this Plan, Accounts is described as Target Account Volume and weighted as worth 25% of the total incentive. Target accounts are those that management requires special emphasis to support increased penetration, long term plans, competitive pressure, or profitability opportunity. Each sales is deemed valuable and worthy of incentive pay as the Minimum is 0% of Goal. Division Profit is emphasized by allocating 25% of the incentive to its goal. The Minimum Goal is high (90%) as a result of historical performance analysis. The same analysis determined that an appropriate Stretch Goal would be 105%. Each incentive metric is independent of the others.

Plan 27. Control costs of building new business

The Plan defines Accounts as the volume expected from both Existing and New Accounts. A history exists for Existing Account Volume and a Target Goal (quota) is set. Given no historical sales volume from New Accounts, all volume resulting from these defined accounts are paid a commission on each sales dollar with no cap. The New Account Volume does not count toward the Existing Account Volume goals. Profit is defined in terms of discounting to book price. A Target Goal of 8% discount is set based upon history and in support of the overall profit plan. Discounting above 8% is discouraged and the incentive, as a percentage of annual base salary, is reduced on a continuum. At a 20% average price discount no incentive is paid. Discounting less than the target of 8% is encouraged with an increasing incentive up to 3% or less.

Plan 28. Account profit targeting

This Plan combines Account definition in terms of Profit (Margin). Sales territory three categories of accounts are classified to focus attention on acceptable sales price margins. The sales incumbent has some influence on the price, product mix, or administrative cost that impacts margin. This Plan does not place a high incentive risk (relative incentive weight) on the measures, but it does sensitize the sales incumbent to the category of accounts and the margin derived from them. There is an incentive continuum on total Sales Volume, but not on the Account Margin. Account Margin Goals are defined as not acceptable, acceptable, and outstanding. Total margins will not be fully understood until year end while Sales Volume can be measured and rewarded more frequently.

Plan 29. High pay for complete job

A simple way to support New Account Sales is to simply place a premium on the sales. In this case New Account Sales count double toward achievement of the total Sales Volume goal. To ensure Profit Margin did not erode while growing sales it is linked to the total incentive opportunity. If Sales Volume increases at the expense of Profit Margin, the incentive opportunity declines and if the Profit Margin is over stimulated at the expense of Sales Volume the incentive opportunity also declines. This simple program is quickly understood by both Management and Sales. It is proactive, rather than reactive. New Account Sales are stimulated, but the total sales effort must be managed. The high potential incentive opportunity of three times the Target incentive opportunity excites all.

Plan 30. Include teamwork and national account support

In sales territories where teamwork and National Accounts must be supported at the District level, this incentive program is supportive. It encourages not only Individual Sales Volume, but also provides reasons to visit National Accounts in the territory and determine, with others, what can be done to achieve, or exceed the District Profit goal. Often District Profit goal achievement requires first line management working closely with the sales incumbents to determine the appropriate focus efforts (teamwork) required. Goal performance ranges vary as a function of the ranges appropriate to keep the sales people "in the game".

Plan 31. Profitable market penetration

In this Plan, Products is described as Push Product Volume and weighted as worth 25% of the total incentive. Push Products are those that management requires special emphasis to support increased penetration, long term plans, competitive pressure, production capacity, or profitability opportunity. Each Push Product sale is deemed valuable and worthy of incentive pay as the Minimum is 0% of Goal. Division Profit is emphasized by allocating 25% of the incentive to its goal. The Minimum Goal is high (90%) as a result of historical performance analysis. The same analysis determined that an appropriate Stretch Goal would be 105%. Each incentive metric is independent of the others. All are capped in terms of incentive opportunity so if one measure has been maxed out there is an encouragement to focus on those that have not rather than continuing to focus on that particular one.

Plan 32. Optimize profitable sales

The Plan defines Products as the volume expected from a selected mix of products that require special emphasis. A quota is set on each product and the incentive is earned once the volume is achieved on each. Often, as in this case, five product quotas are set with no particular hierarchy. The Product Mix Volume counts toward the Sales Volume goal. The Product Mix volume quota can be in sales dollars, gross profit dollars, units (cases, agreements, pounds) or other measure that complements how the Sales Volume is measured. Profit is defined in terms of discounting to book price. A Target Goal of 8% discount is set based upon history and in support of the overall profit plan. Discounting above 8% is discouraged and the incentive, as a percentage of annual base salary, is reduced on a continuum. At a 20% average price discount do incentive is paid. Discounting less than the target of 8% is encouraged with an increasing incentive. The incentive payout is in terms of percent of the incumbents base salary which has been determined, for design purposes, from the base salary midpoint.

Plan 33. Overcome weak new product goal quality

The Plan defines Products as the volume expected from New Products It is difficult to assign a specific sales volume quota on New Products as there is no sales history, only a marketing plan. Often, New Products are difficult to sell as the potential buyer may not be aware of all the benefits and features, especially if asking a higher price. Given no historical New Product sales volume, all volume is paid a commission on each sales dollar with no cap. The commission rate is determined from an assumed sales volume number that marketing has built into their plan. The New Product Volume does count toward reaching the Sales Volume goal. Region Profit is emphasized by allocating 25% of the incentive to its goal. The Minimum Goal is high (90%) as a result of historical performance analysis. The same analysis determined that an appropriate Stretch Goal would be 105%. Each incentive metric is independent of the others. Sales Volume and Region Profit are capped in terms of incentive opportunity.

Plan 34. Encourage profitable follow-on sales

This Plan challenges the sales incumbent to sell Service Contracts in addition to total Sales Volume, while maintaining a Profit Margin acceptable to the organization. The threshold for Service Contracts is low (50% of Goal) to stimulate sales, while the relative weight is modest (15%). Service Contracts can be measured in terms of number achieved, or in premium dollars. The Plan indicates that there is influence on the sales price at the sales incumbent level.

Plan 35. Control costs efficiently

In the Plan an emphasis is placed upon sales of a single category of product ("Y"). A simple way to support sales of Product "Y" category is to place a premium on the sales. In this case "Y" Products Sales count triple toward achievement of the total Sales Volume goal. To ensure the Profit Margin does not erode while growing sales, it is linked to the total incentive opportunity. If Sales Volume increases at the expense of Profit Margin, the incentive opportunity declines and if the Profit Margin is over stimulated at the expense of Sales Volume the incentive opportunity also declines. This simple program is quickly understood by both Management and Sales. It is proactive, rather than reactive. Product "Y" sales are stimulated, but the total sales effort must be managed. The high potential incentive opportunity ($60,000) is two times the Target incentive opportunity of $30,000.

Plan 36. Optimize sales time

The Plan primarily focuses on Sale Volume (80% relative weight), but some small focus is encouraged with 10% allocated to achievement of Special Objectives, and 10% to Office Profit. Although five Special Objectives are assigned, three are deemed acceptable for to earn the Target incentive of $3,000 ($1,500 for achievement of two and $3,000 for three). The Stretch incentive for Special Objectives is for achievement of all five. A wide range of Sales Volume (40% to 130% of Goal ensures an early participation in incentive earnings. Office Profit is both a team incentive to remind all that by supporting each other, and an individual one to support effective sales activity, that an additional incentive can be earned (up to $6,000).

Plan 37. Professionalize sales activity

The Plan includes five Special Objectives to be achieved during the year in no particular sequence. Achievement of two or more results in an incentive earning, with a achievement of three paying the Target incentive of 12.5% of base salary. Profit is defined in terms of discounting to book price. A Target Goal of 8% discount is set based upon history and in support of the overall profit plan. Discounting above 8% is discouraged and the incentive, as a percentage of annual base salary, is reduced on a continuum basis. At a 20% average price discount no incentive is paid. Discounting less than the target of 8% is encouraged with an increasing incentive up to 3% or less.

Plan 38. Control and delegate expenditure of sales time

The Plan has a maximum incentive payout of $60,000 in this case with 60% resulting from achieving a Stretch goal of 125% of Sales Volume Goal, 20% by achieving five Special Objectives, and 20% for achievement of 105% or more of Region Profit. The Sales Volume Goal and Special Objectives Goal are both designed for individual performance and the Region Profit Goal is designed for team performance. Each Special Objective, communicated prior to, or at the beginning of the annual incentive period, carries an incentive opportunity of $2,400 and is to be paid at the conclusion of the quarter in which it was achieved. Some Special Objectives may be double weighted or result from subjective evaluation by management. All opportunities, relative weighting, and goal performance ranges are assumptions only for graphic presentation and should be tailored to each organization.

Plan 39. Encourage proactive sales effort

Shopping an SIP has always been a first step in determining where the easy money can be made. In this plan the company had three primary goals to achieve: Revenue, Gross Profit Margin (GPM), and Special Objectives. It did not want to sacrifice GPM at the expense of generating higher Revenue, nor did it want to increase GPM at the at the expense of lower Revenue. Additionally, it saw no point in rewarding achievement of Special Objectives disproportionately if the GPM and Revenue achievements were not there. Therefore, this plan linked all three. To maximize incentive pay all three metrics need to be addressed proactively, rather than reactively by the sales person.

Plan 40. Field management control support

The Plan balances Sales Volume (50% relative weight) with three other measures, Target Account Volume, Special Objectives, and Division Profit, to support multiple management objectives. To ensure that Target Account Volume (often jointly defined and agreed upon between the sales incumbent and sales management) is pursued all sales are rewarded (0% minimum). That is balanced with Special Objectives (each has a relative weight of 20%) achievement effort. A reminder of the importance of the total effort to ensure Division Profit a small (10% relative weight) incentive is included. Incentive relative weights are not used as the amount is so small only minor, or no, effort is devoted to the opportunity. To facilitate cash flow and time management, 70% of the incentive opportunity (Sales Volume and Target Account Volume) is paid frequently (quarterly). The remaining incentives are paid at year to recognize and take into account the realistic measurement accuracy. Some Special Objectives assigned at the start of the sales year may require modification, or replacement, taking into account marketplace dynamics.

Plan 41. Support efficient and effective growth

The Plan balances maintenance of Existing Accounts with sales activity directed toward development of New Accounts. In today's marketplace both are key to survival and a close eye on Price Discounting is appropriate. Special Objectives ensure focus on managed sales time. Fully 25% of the incentive opportunity is based upon successful achievement of them. All together the incentive measures are equally balanced. Differing sales strengths of the sales incumbents require close supervisor management to support a ensure a broad achievement across all measures.

Plan 42. Detail profit growth and business building

The Plan recognizes special emphasis to maintain and or increase Profit Margin by Account category. Here it is important to maintain margins by providing an acceptable Goal band for the categories. Accounts "B" and "C" recognize margin pressure with a lower acceptable Goal band. Each Special Objective pays an incentive which allows the sale incumbent to shop for the easiest first. Top sales people with set a goal of achieving all while the fully competent sales incumbents tend to focus on achieving 3 out of the 5 assigned, viewing all five as "too tough an assignment". The majority of the incentive, however, is Sales Volume achievement, weighted at 70% of the opportunity.

Plan 43. Support complex sales activity

The Plan supports multiple sales emphasis including achieving individual Sales Volume, supporting local National Account Volume, supporting District Profit thru teamwork, and achieving personal Special Objectives. Sales Volume and District Profit account for 70% of the incentive opportunity and is suited to a Senior Sales Incumbent. The National Account Volume incentive rate is 20%. Enough to gain attention, but not so high as to act as a demotivator if the National Account Volume suffers in the current market. The Special Objectives relative weight of 10% is just sufficient to gain some attention, and is primarily a modest recognition feature of the Plan.

Plan 44. Balance existing and new business

Profit Margin is best supported with existing accounts where there is sales history. The Plan links Existing Account Profit Margin and Existing Account Sales Volume to support a managed sales effort at existing accounts. New Accounts and Special Objectives are linked to convey and support a sales marketing effort. Key to the Plan is the significant incentive opportunity for a well managed and executed sales effort during the year. The Target incentive is $30,000, while the capped Stretch incentive opportunity is $120,000. In effective goal setting 10% to 15% of the sales incumbents should achieve the Stretch incentive if the Sales Organization, overall, achieves its planed objectives for the year. If not, the goals set for the sales incumbents will be recognized as too high and act as a demotivator (they will be viewed as unrealistic). A high Stretch opportunity is often incorporated to ensure being competitive in a high pay market for proven sales performers.

Plan 45. Optimize profitable sales time

The Plan focuses on Push Products and Special Objectives to support Sales Volume and Company Profit. The Push Products can be define as those critical to the Company's success, or where production capacity or competitive pressure require special attention by the sales incumbents. They may be a small increment of the Sales Volume overall total which requires a breakout to encourage sales support. The Plan offers half of the incentive Target in measures other than just focusing on Sales Volume. Push Product sales are supported with incentive opportunity from the first sale which will draw attention. Special Objectives are significant with 20% of the incentive opportunity. The Company Profit incentive (10% of total) is not high, but sensitizes the sales incumbents to affordability of the Plan.

Plan 46. Affordability control of a focused sales effort

The Plan is tempered by Company Profit which is critical in today's economy. At Target (Company Profit between 100% and 105%) the Company can afford to pay the Targeted incentive of $30,000 and the measure has no relative weight to the Plan. At a Company Profit above 105% the Company can afford to be more generous and pay an extra $6,000 (1.2 x $30,000 = $36,000). However, if the Company does not achieve its Profit goal, $6,000 less is paid at Target performance (0.8 x $30,000). To ensure room for a reduced incentive with no take a ways from previous paid incentives, the administrative guideline, as with other Plans, is to pay up to the prorated Target incentive during the year and any excess above plan at year end. As in the previous Plan, Push Products are rewarded from the first unit of sales (dollars, cases, tons, contracts, etc.) which encourages sales attention during the year. The prorated Target incentive on that measure would be 25% of $6,000 in the first quarter, 50% of $6,000 less prior payments in the second quarter, 75% of $6,000 less prior payments in the third quarter, and all above at the conclusion of the year.

Plan 47. Support total marketing program

The Plan supports a healthy mix of products sold during the year (Product Mix) and all products sold within price guidelines (Price Discount). Five Special Objectives set at the beginning of the year support sales and marketing's objectives within the assigned territory. The Plan rewards incentive accomplishments in percentages of base salary. In a marketplace where significant base salary increases (if any) are not provided, an incentive that offers percentages like this one (50% of base salary at Target and up to 100% at Stretch goal) are well received.

Plan 48. Support profitable region growth

The Plan encourages achievement of the Sales Volume goal with its relative weight of 80% (Sales Volume measure at 60% plus New Product sales volume at 20%). New Products are highlighted by paying a commission on all sales and by adding the resulting sales volume to the Sales Volume goal. Special Objectives are also commission like in that $1,200 is paid for each achieved in no special order. If a Special Objective happens to be double weighted (total assigned of four instead of five) the incentive payout for achievement of it would be $2,400. Region Profit supports attention at field sales meetings and the efforts expected from all.

Plan 49. Balance multiple sales objectives and profit

The Plan supports development of existing accounts primarily. It encourages selling Service Contracts and maintaining, or improving Profit Margin on Sales Volume. Each measure provides a continuum of incentive opportunity between each of the Sales Performance Goal Ranges. For instance on Sales Volume a Sales Performance of 90% of Goal would payout half way between the 80% and 100% incentive opportunity, or $9,000 in this example. Service Contracts Sales Performance of 75% would payout half way between the 50% and 100% incentive opportunity, or $1,500 in this example. This continuum of payout methodology is true of all the Plans except where a specific Goal bandwidth like (100% to 105%) shown in Plan 46. The example shown below develops this payout concept further.

Plan 50. Multiple sales goals including targeted profit

The Plan is identical to the previous one, however this one links Profit Margin and Sales Volume to ensure that both measures are considered in the sales process at the same time. The incentive payout methodology is the same and there is a continuum between each measure as shown in the example below.

Plan 51. Complex measures to support total sales job

The Plan captures all of the incentive Measure structures previously incorporated in Plans with less than five Measures. The minimum Relative Weight assigned to a Measure is 10% to ensure some degree of focus by the sales incumbent. All incentive opportunities are capped excluding New Accounts. More New Accounts is welcome assuming the definition is clear and relevant. The Minimum Goal is zero for Push Products and New Accounts. Each sales accomplishment for these earn an incentive. Special Objectives must achieve more than one to earn an incentive with the second one achieved being worth $2,000. The Sales Volume Minimum Goal to start earning an incentive because in this case, design considerations have shown that even in unstaffed sales territories, sales volume in excess of 70% of Goal has been achieved. The Stretch Goal is capped for Sales Volume as management wants emphasis on all five Measures and less than 10% of the sales incumbents have historically achieved higher sales amounts. The Region Profit Minimum Goal of 90% indicates management's position on the profit expected and is capped at 105% to reflect not wanting to over pay for unforeseen (windfall) circumstances.

Plan 52. Control affordability of high opportunity

The Plan is the same as the preceding Plan with the exception that all measures directly influenced by the sale incumbent, Sales Volume, Push Products, Special Objectives, and New Accounts, are assigned a total incentive Relative Weight of 100%. The profit measure, Company Profit, has no Relative Weight at Target Goal of (100% to 105%) as the Company can afford the $40,000 Target incentive. However, as shown in previous Plans, should the Company not achieve its profit plan it will only commit to a Target Incentive of $32,000 ($40,000 x 0.8), and a Stretch Incentive of $64,000 ($80,000 x 0.8). The Company will, however, enrich the Target incentive if the Company Profit exceeds 105% of Goal to $48,000 ($40,000 x 1.2) and the Stretch incentive to $96,000 ($80,000 x 1.2).

Plan 53. Seasoned large sales job rewards

The Plan is similar to the preceding Plan in that the incentive opportunities are impacted by the profitability of the Company. The other difference is that, for the first time, a subjective Goal Measure is incorporated for National Accounts. In this case a determination was made that the most appropriate evaluation of Sales Performance is by management and not by a numeric determination. To prevent overpayment of incentive on the National Accounts Measure, the Relative Weight was limited to 10%.

Plan 54. Control and reward prioritized sales efforts

The Plan incentive is in terms of percent of base salary earned. The key accountabilities of the sales incumbent are incented with the five incentive Measures and evenly balanced to ensure attention to all. The Plan is for a highly seasoned sales incumbent who can address and focus on multiple sales expectations which is very important in being successful in the existing marketplace. It is not a place or Plan for beginners. A careful, proactive sales effort will be required to maximize incentive compensation with the Plan. A joint effort between the sales incumbent and management in establishing the four Measures outside of Sales Volume, will yield the best overall accomplishment of the Goals set. Buy in is significant for both.

"Sales Force effectiveness programs need to reinforce the strategic business objectives of the client."