COMPENSATING SALES PROFESSIONALS 5
Cybrtech’scompensation strategy for outside and inside sales people has to beas motivational as possible if M2 has to increase its sales. This isdue to the fact that customers have already indicated that M2 isquite complicated to use, and the result is that they are likely tostick to M1. Thus, Cybrtech’s management has to find a solution(s)to the problem by first identifying the right target market, thenfollow that up with a motivating compensation strategy that will makesales professionals to communicate effectively about the desirablefeatures of M2 that make it superior to M1(Fay,Knight,& Thompson, 2001). Cybrtech needs to adopt a compensationplan that has incentives that encourage its sales professionals toget new accounts and upsell new and existing customers for M2. Thesolution to this conundrum is to strike the right balance between thebase pay of the sales professionals and commissions. After creating abalance between the base pay and the commission Cybrtech also needsto ensure that the commissions are based on a work model that salespersons follow through defined performance parameters. The parametersmust be measurable so that the company can evaluate the performanceof sales persons before effecting compensation. Differences in theselling process and the differences in the traits of a successfulsales person in each process must define the supporting compensationsystem. The sales compensation plan that Cybrtech has been using forM1 is very specific and directive in design (a basic salary of$28,000, and 5% of total sales for outside sale persons and a fixed$48,000 for inside sales persons).A change in approach will introducea variety of design elements for each type of processes involved.Cybrtech’s management should transform the roles of its salesprofessionals to fit into the following especially for purposes ofincreasing M2 sales (Ford,Honeycutt, & Simintiras, 2003).
Alignthe compensation plan with the transactionary roles of salespersons: Now that M2 is already out in the market Cybrtech will have toreplace its transactional compensation design it has been using overthe years to the consultative compensation design for both inside andoutside sale professionals. Cybrtech should not completely abandonits traditional transactional compensation methods for itssalespersons because to generate profits from the sales and the salesprocess for the software product involves repetitive illustrations ofhow the software works. The commissions will continue to be salesdriven and paid monthly except that the company can use internet andcomputer aids to provide details and respond to orders rather thandirectly use sale persons to quote prices. Once customers see thefeatures of M2 software they can seek further clarifications fromsalespersons through an online platform and physical outlets.
Makethe reward system feature or benefit oriented: Afterensuring that the compensation plan is aligned with thetransactionary roles of salespersons, the next step is to make itreward tenure and deep knowledge of the M2. A salesperson s abilityto influence more purchases of the software depends on theirknowledge of the product. Hence, salespersons with strong territorytenure and relevant skills in establishing strong customerrelationships earn higher commissions than those with less of suchqualities. To meet this strategy Cybrtech must change its salesstrategy from being based on the sales volume alone, but also thelevel of customer relations that a salesperson is able to establish.After making the compensation plan sufficiently feature oriented, thenext step is to streamline the plan to towards being moreconsultative.
Enhancethe compensation plan to be consultative: Thisis the most advanced level where Cybrtech’s management creates aparallel relationship between its compensation plan and the long-termbusiness objectives in regard to capturing more sales for M2. Linkingfinancial objectives with the marketing objectives is the surest wayto achieve this stage in the compensation plan. Marketing objectivesshould, therefore, reflect the market objectives and the productobjectives of the company. Considering that financial objectives arelong-term, the time horizon of the incentives in the compensationplan should be pushed out to quarterly, semi-annually, then annually. Sales goals, on the other hand, should be more free form with moreconsiderations on the specific needs of customer segments. Thus,compensation for sales professionals at this level will be drive by amultiplicity of measures such as profits, sales volumes, and customersatisfaction during the sales service and use of the product. AfterCybrtech has aligned its compensation plan to the consultativeaspects of that its sales professionals should fulfill in regard toM2, the ultimate step is to make the compensation plan value-added.
Implementa value-added compensation strategy in the overallcompensationplan:Thevalue-added approach is the uppermost of the process where thecompensation for sales professionals is based on the loner-termmilestones such as making M2 the preferred product in the market overits competitors(Oliva, 2006). However, Cybrtech should only implement the value-added stepupon ascertaining that M2 has a global or regional market presence. Value added compensation procedures involve salespersons that havemanagerial skills (national or global account managers).Cybrtech willproceed to pair its top management with its top customers. The topmanagement in this case is not the people on the executive board, butdevelopers of M2 who serve as customer executives. They serve as thekey sales contacts for Cybrtech. The compensation strategy ofcustomer executives is direct and competitive because it reflectstheir contributions to fulfilling the Cybrtech’s strategic businessplan. The driver of pay for customer executive include profit, M2sales volume, and the achievement of specific objectives tied tocustomer’s long-term objectives of using the product. The salariesand commissions for sales executives should be premium because thereare very few sales professionals that possess the competenciesrequired for customer executive roles. If Cybrtech decides to use ateam approach, a portion of the incentives should reflect theresults.
Inconclusion, M2 may have begun on a low note, but the implementing astrong compensation plan can yield desired sales in the long-term.The solutions to a proper sales compensation are a multi-stagedseries of procedures that succeed each other. It is prudent forCybrtech to implement compensation strategies that reflect the growthof M2’s market share through a single compensation plan that coverall the stages. Hence, the main concern of the marketing departmentis that M2 should make to the next step of the compensation planuntil it gets to the ultimate level: the value-added stage where aproduct must have a regional or global presence in the market. Themarketing department must also be aware of other factors that guidethe crafting of a successful sales compensation plan such as:industry trends, availability of talent and skills, the competencyprofile of its sales professionals, team contributions, and thecultural environment and artifacts that could affect M2 working.
Fay,C. H., Knight, D., & Thompson, M. A. (2001). The ExecutiveHandbook on Compensation: Linking Strategic Rewards to BusinessPerformance. Simon and Schuster.
Ford,J. B., Honeycutt, E., & Simintiras, A. (2003). Sales management:A global perspective. Routledge.
Oliva,R. A. (2006). The three key linkages: improving the connectionsbetween marketing and sales. Journal of Business & IndustrialMarketing, 21(6), 395-398.