Sales goals, sales compensation plans and mismatched agendas

From time to time, I have a rash of common concerns from clients, and this time it has revolved around how to motivate the sales team members and pay. Companies are paying their salespeople and not getting the revenue production that they had hoped. The owners and presidents are fed up with highly paid salespeople who cannot or will not close either new business or renew existing clients. There is a disconnect between what the salespeople are paid and what they deliver.
This is an age-old problem.
First, what are your revenue and margin goals for you company? Are the goals clear? Do your salespeople have a clear vision on what needs to be accomplished and the tools to succeed? Simple, am I right?
Next, is there a marriage between your sales goals and reward system (i.e. compensation plan)? Often times I see a disconnect with a salesperson not understanding the need to find new accounts or securing a contract renewal in a timely manner. Is there a timely reward from the company to tie together desired goal accomplishment and pay? I’ll hear, “We pay our people a generous salary and cannot understand why they do not get the contracts!” To which I reply, “And what are the consequences if the salesperson does not get the contract? Or, what happens if they get the contract?”
Typically, the answer is “nothing.”
Or, I hear, “We have a great commission plan for bringing on new contracts, but the salespeople don’t bring home the business.” To which I reply, “Are your salespeople money motivated, or are they living well with the base salary you provide?”
Typically, the answer is “I don’t know.”
Clearly, every company and salesperson is different. As the manager, you need to assess your industry’s compensation best practices (straight salary, salary base plus commission [and in optimum ratios], or commission only). Then, you need to ensure you have the best salesperson with the DNA that will respond to your compensation plan. If you need to have new business, then is the salesperson rewarded amply and often? If you need a contract renewed at a certain time of the year, is your salesperson rewarded for meeting that goal? Is your sales team motivated by money, treats or praise?
It is usually not rocket science to understand the disconnect between revenue goals and reward systems. Your job is to find the one that makes your company and salespeople succeed.