This week on Outside In, I am re-emphasizing the GTM (Go-to-Market) Series to better acquaint everyone with the type of content that is possible on this forum. In this GTM edition, I am covering a ‘B2B Sales Incentive Plan’ framework that I shared with a PE-backed Portfolio Company – an Industrial Park Company. The company’s main business objective was to sell out ‘Industrial’ Real Estate plots to organizations focused on Automobiles, Engineering, Capital Goods and Metals sector.
Without much ado, let’s dive right in…
Context
XYZ was an Industrial Park Company that was set up as a JV between a Real-Estate Company and the PE Firm. As the Industrial Park neared completion, the next phase in their Business Plan involved the Selling of Pre-defined Plots to Companies, who are looking for Industrial Facilities for their Businesses
Essentially, the company’s Sales team would be meeting other Organizations and looking to establish a strong B2B relationship going forward via a Letter of Intent leading to a Sales Agreement. It would follow the traditional model of funnel-based selling – from a top-of-funnel wide prospect list to a narrow band of interested parties to actual conversions at the end of the funnel. The Sales cycles were long and the company was grappling with framing a suitable Compensation and Incentive Plan for its Sales Team
Naming the Program
Believe it or not, below is the list of actual Names I had considered for the Program:
STAR = SALES TARGET/TRIUMPH ACHIEVEMENT AWARD
TSAR = TRIUMPHANT SALESMAN AWARD & RECOGNITION
REAP = RECOGNITION OF EXCELLENCE AND AWESOME PERFORMANCE
SING = SALES INCENTIVES N GIFTS
PING = PERFORMANCE INCENTIVES N GIFTS
REST = RECOGNITION OF EXCELLENCE/EFFORTS AND SALES TRIUMPH
ROCKET = RECOGNITION OF COMPLETED KPIS AND EXCEPTIONAL TRIUMPHS
I am glad now that we settled on the simplest one – STAR – Sales Triumph Achievement Award. (Just curious though – which one would you have chosen?)
Design Principles of the Sales Incentive Program
Fairness to the Company as well as to the Sales Personnel
Easily Measurable KPIs
Tracking at Pre-defined/Regular Intervals
Objective Assessment of Performance
Transparency in Payouts
Scalability
Aligned to the B2B Sales Funnel Process
Dashboard the Progress
About the STAR Program
The STAR (Sales Triumph Achievement Award) Program was devised to motivate and incentivize the XYZ Sales Personnel for aggressive selling of Pre-defined Plots to Companies and enable a Complete Sell-out of the Industrial Park. The details of the STAR Program are as noted below:
1) Salary Structure of the Sales Manager
The Salary Structure of the Sales Manager will broadly comprise of 2 Components:
a) Fixed Pay – Rs. 600,000 Per Annum i.e. Rs. 50,000 per Month
b) Variable Pay, based on Sales Achievement – Rs. 300,000 Per Annum i.e. Rs. 25,000 per Month
The ‘Variables’ – aligned with the Sales Funnel Status – are:
This Variable Pay will be given out as per the following Sequence:
Sales Target Setting – 1st Week of January, April, July and October.
Appraise Sales Target Achievement – 1st Week of January, April, July and October.
Variable Component Payout – January, April, July and October Salary.
Illustration of an Annual Payout, assuming 100% Sales Achievement & 100% Variable Component Payout for All Quarters:
2) Sales Target Setting – 1st Week of January (Say).
XYZ & Salesman will set up their Quarterly Sales Target for January-March Quarter as below - aligned with the various stages of the Sales Funnel.
Illustration:
3) Appraisal of Sales Target Achievement – 1st Week of April.
XYZ & Salesman will appraise their Quarterly Sales Target Achievement, for the January-March Quarter as below.
Illustration 1: Below-Target Achievement Scenario –
Illustration 2: Above-Target Achievement Scenario –
4) Ongoing Process
Repeat Steps 2 and 3 above for the Next – April to June – Quarter.
5) STAR Program Certification & Reports
Based on STAR Program Results, the Salesman can be given a “XYZ STAR” Certificate of Achievement for Every Quarter or on an Annual Basis or for Every Exceptional Quarters.
The STAR “Salesman” Record Sheet for Every Quarter must be maintained and filed away with XYZ, for future reference and use.
In Conclusion
References and Sources
1) My Own Presentation to XYZ Company and PE-Firm