This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
This product (Sales Compensation Plan Design) is a 24-slide PPT PowerPoint presentation slide deck (PPTX), which you can download immediately upon purchase.
"In most companies, Sales is the only revenue-generating function. Everything else is a cost center."
The importance of Sales is thus indisputable. For such an important function, it becomes equally as important to design an appropriate Sales Compensation Plan.
Sales Compensation is often simplified to a discussion between fixed-salary vs. commission-based systems. However, a to design an effective Sales Compensation Plan requires a much more holistic and nuanced understanding of the dynamics of Sales Compensation.
In this presentation, we discuss the 5 key pillars to designing an effective Sales Compensation Plan:
1. Complexity and Architecture of Sale
2. Necessary Sales Activities
3. Competitive Compensation
4. Base Salary and Incentive Compensation Ratio
5. Breakdown of Incentive Compensation
A successful Sales Compensation Plan results in a win-win situation for everyone—the salesperson, the organization, and other parties involved.
This presentation also talks about the Sales Compensation Cycle. A robust Sales Compensation Plan properly considers and balances the proper motivation, appropriate evaluation, and fair compensation.
This deck also includes slide templates you can use in your own business presentations.
The Sales Compensation Plan Design PPT provides a comprehensive framework for understanding and implementing effective sales compensation strategies. It delves into the intricacies of the Sales Compensation Cycle, highlighting the interplay between motivation, evaluation, and compensation. This cycle is crucial for driving both effort and results, ensuring that sales teams are motivated and fairly compensated for their contributions.
The document also emphasizes the importance of competitive compensation, detailing how to structure base salary and incentive components to attract and retain top talent. It addresses key considerations such as transaction-specific assets and the impact of sales cycle length on compensation plans. This presentation is an essential tool for any organization looking to optimize its sales compensation strategy and drive superior sales performance.
This PPT slide outlines the Sales Compensation Cycle, emphasizing its 5 process steps, with a focus on the initial step: the Sales Compensation Plan. This plan is broken down into 2 main components: Type and Quantity.
Type refers to the structure of compensation, distinguishing between base salary and incentive pay, such as bonuses. This differentiation is crucial for understanding how compensation can drive sales performance. Quantity encompasses both the total compensation and the specific compensation tied to individual sales tasks. Evaluating these components against industry standards is vital for ensuring competitiveness and effectiveness within the sales organization.
The slide also highlights the interconnectedness of various elements within the compensation framework, including evaluation and motivation. It suggests that there are both intentional and unintentional links among these elements, which can influence overall sales effectiveness.
Key decisions in designing the Sales Compensation Plan should focus on what efforts the organization wants its salespeople to prioritize and the specific behaviors that should be encouraged. This approach ensures that the compensation structure aligns with desired outcomes, fostering a motivated sales force that is clear on expectations.
Overall, the slide serves as a foundational guide for organizations looking to refine their sales compensation strategies. It emphasizes the importance of a tailored approach, recognizing that there is no one-size-fits-all solution. Understanding these components can lead to more effective compensation strategies that drive sales performance and align with organizational goals.
This PPT slide focuses on the essential sales activities that contribute to successful sales outcomes. It emphasizes the importance of networking, relationship building, and acquiring vital knowledge as foundational elements of the sales process. The text suggests that while certain sales activities may seem extravagant, they are often necessary for closing deals. Examples provided include engaging with clients, potential clients, and partners through activities like "wining and dining," attending industry trade shows, and giving corporate gifts.
The slide also distinguishes between controllable and uncontrollable factors that impact sales. Controllable factors are those that salespeople can influence, while uncontrollable factors include external elements like macroeconomic conditions and unforeseen changes in client circumstances. This differentiation is crucial for developing a compensation plan that aligns with sales activities.
Key considerations outlined in the slide highlight the need for a compensation plan that does not penalize salespeople for engaging in necessary activities. It stresses the importance of balancing incentives for both short-term and long-term accounts, recognizing that longer-term accounts may require more effort, but often yield higher margins. The plan should encourage salespeople to focus on factors they can control, ensuring they are not discouraged by elements beyond their influence.
Overall, the slide serves as a guide for understanding the critical activities that drive sales success and the framework for designing a compensation plan that supports these activities effectively.
This PPT slide outlines a structured approach to designing an effective Sales Compensation Plan, emphasizing 5 critical pillars. Each pillar serves as a foundational element in the overall compensation strategy, ensuring alignment with organizational goals and market demands.
The first pillar, "Complexity and Architecture of Sale," prompts organizations to assess the intricacies involved in their sales processes. This involves understanding how various elements interact and affect sales outcomes. The second pillar, "Necessary Sales Activities," focuses on identifying the specific actions sales personnel must undertake to achieve success. This clarity helps in defining performance expectations.
The third pillar, "Competitive Compensation," encourages organizations to evaluate their compensation packages against industry standards. This assessment ensures that the compensation offered is attractive enough to retain and motivate top talent. The fourth pillar, "Base Salary and Incentive Compensation Ratio," addresses the balance between fixed and variable pay. This ratio is crucial for aligning incentives with desired performance outcomes.
Lastly, the fifth pillar, "Breakdown of Incentive Compensation," delves into the specifics of how incentive structures should be crafted. This includes determining the types of incentives that will drive desired behaviors and outcomes among sales teams.
The slide concludes by emphasizing that all these pillars must be examined within the context of the Sales Compensation Cycle. This holistic view ensures that the compensation plan is not only effective, but also adaptable to changing market conditions and organizational needs. By focusing on these 5 areas, organizations can create a robust compensation framework that drives performance and aligns with strategic objectives.
This PPT slide presents a structured overview of sales compensation design, focusing on the balance between base salary and incentive compensation. It emphasizes the necessity of determining the appropriate ratio of these 2 components to optimize sales performance. The overview indicates that understanding this breakdown is critical, particularly in relation to bonuses and commissions.
In the details section, it highlights that salesforces may either receive a straight salary or rely entirely on incentive compensation. However, a hybrid approach, combining both salary and incentives, is more prevalent—approximately two-thirds of organizations adopt this model. The mention of an industry standard model suggests a benchmark that companies can reference when designing their compensation structures.
Key considerations are outlined, addressing factors influencing base salary levels. These include challenges in measuring a salesperson's performance, the complexity of sales, and the length of the sales cycle. The importance of non-selling activities, such as after-sale services, and market demand volatility are also noted as significant factors.
When it comes to incentive compensation, the slide points out critical elements like the division of sales credit among teams and the metrics used for compensation coordination. The timeframe for payouts is mentioned, indicating that it typically occurs within 30 days post-sale completion.
Finally, the slide underscores the necessity of considering IT system limitations, which must be capable of supporting the administration of the compensation plan. This comprehensive approach ensures that organizations can effectively motivate their sales teams while aligning compensation with overall business objectives.
This PPT slide outlines critical performance measures that should inform the design of a sales compensation plan. It emphasizes that these metrics must align with the organization's strategic objectives, moving beyond just overall sales figures.
Five specific performance measures are highlighted. First, the Product Mix is crucial for organizations selling various items, as it helps assess how well different products meet customer needs. Next, Pricing is noted as a vital metric, especially in scenarios where negotiation plays a significant role. This allows sales personnel some flexibility in managing customer expectations and pricing exceptions.
The third measure, Bad Debt-Returned Goods, addresses the financial implications of sales, particularly in terms of profitability. This metric is essential for understanding the costs associated with unsold or returned products. The Type of Sale is the fourth measure, which can influence cash flow and revenue streams. It distinguishes between different sales models, such as ownership versus rental, which can significantly affect the business's financial health.
Finally, Training is identified as a key performance measure. It can contribute to gross profits and represents an ongoing investment in the sales team's capabilities. The slide concludes with a cautionary note about the selection of these metrics, stressing the importance of realistic expectations regarding data availability and reliability from IT systems. This is crucial for ensuring that the metrics used are not only relevant, but also actionable in driving performance.
This framework is developed by a team of former McKinsey and Big 4 consultants. The presentation follows the headline-body-bumper slide format used by global consulting firms.
For $10.00 more, you can download this document plus 2 more FlevyPro documents. That's just $13 each.
ABOUT FLEVYPRO
This document is part of the FlevyPro Library, a curated knowledge base of documents for our FlevyPro subscribers.
FlevyPro is a subscription service for on-demand business frameworks and analysis tools. FlevyPro subscribers receive access to an exclusive library of curated business documents—business framework primers, presentation templates, Lean Six Sigma tools, and more—among other exclusive benefits.
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
Read Customer Testimonials
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."
– David Coloma, Consulting Area Manager at Cynertia Consulting
Save with Bundles
This document is available as part of the following discounted bundle(s):
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S, Balanced Scorecard, Disruptive Innovation, BCG Curve, and many more.
Click main image to view in full screen.
