How to Comp Sales TeamsĀ  in a Crisis

When a macro occasion like COVID-19, or a significant financial downturn occurs, we need to adapt to a new reality.

There are many unknowns about how this will play out– so attempt to change the strategy in fairly small increments– months or a quarter … If you try to re-cast the entire year, theres a strong possibility you are going to need to do it once again as more info becomes known.

Much as we like to believe we can exersize an iron grip on our own fate and the destiny of the sales individuals in our team, some things are beyond our control.

Part of that truth in sales is settlement– its the clearest signal we can perhaps give to our groups to show what the business believes is necessary and what we want them to do. If the macro environment changes so that the comp strategy no longer shows our concerns, or becomes unattainable due to circumstances beyond our control, we need to adjust it.

Thats where a lot of us are right now.

Heres a structure Ive utilized before to try and organise compensation under pressure:

Start with your information– honestly– and I mean truthfully– evaluate where you are right now.
Then assess the impact of the crisis on your particular service, by area, by industry, by sector.
Note what you can do to mitigate the impact– what do you stop doing? What do you double down on? What do you begin doing?
Identify business spaces after the effect of your mitigation methods.
Focus comp modifications on closing those spaces.

For instance, it might lead you to a structure that appears like this:

Information shows that I require 3x pipe on new company (NB), and 1.5 x pipe on add-on organisation. I am going into the crisis with overall pipeline coverage of about 75% of what I would need in regular circumstances.
Evaluation in my company is that the crisis will postpone new business by roughly 90 days, however will have a lesser impact on my add-on business in business segments which can or will endure. Most of my service is in USA and Europe; our strongest sections have remained in transportation and leisure, however we have seeded company in new sections like hi-tech and security which we were intending on broadening into.
Mitigation might look like this:

Stop brief term demand generation for net brand-new business in transport and leisure
Double down on short-term need generation for hi-tech and security– it might end up taking a longer offer cycle to close, however will be essential in 6-9 months time
Double down on listening and contacting to all your clients– you desire to keep the ones you already have in troubled markets, and look for expansion in those markets less affected.
Develop specific package offerings to bridge consumers through this duration– this might include 12 for the rate of 10 month contracts; or contract suspensions; or payment terms you d usually prefer not to take– whatever these are, do not succumb to the well do this advertisement hoc as needed– put some structure in place so, that in trying to be flexible, you dont really put additional sand in the equipments.

Business impact even after mitigation may be severe: pipeline coverage will likely fall to 50% of what is needed to hit near term numbers due to a mix of longer deal cycles and less offers in pipe most likely to close.
You make a comp adjustment to drive the behaviour you need, which might include:

Next quarter targets lowered by 50%.
Spiffs on target industry deals.
Spiff on pipeline development (I usually hate paying on pipeline, however there are ways you can accommodate this … say by increasing commission on offers developed in this quarter which close in the year …).
MBOs around retention/renewal– in a crisis, your existing customers are undoubtedly the ones who keep you in business.

Data reveals that I need 3x pipe on new business (NB), and 1.5 x pipeline on add-on organisation. NB closes in 180 days; add-on closes in 90. I am going into the crisis with total pipeline coverage of about 75% of what I would need in regular situations. The most crucial thing is to identify that a compensation change is required– burying your head in the sand while your soldiers question how you got so out of touch is not the method to go. Worth speed over internal shenanigans which involve folks who are not at the pointy end of revenue attempting to boil the ocean, and develop fully scoped danger free strategies– they dont exist in a crisis!

AuthorLindsey ArmstrongBoard of Directors|XANT.

The most crucial thing is to identify that a comp adjustment is needed– burying your head in the sand while your troops question how you got so out of touch is not the way to go. Value speed over internal shenanigans which include folks who are not at the pointy end of earnings attempting to boil the ocean, and produce totally scoped risk complimentary strategies– they do not exist in a crisis! Just bite-sized increments of forward momentum, which you can build on, to retain the spirit and sociability which is so vital in any successful sales group

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