How do you craft a good compensation program for sales people? How do you make sure you are providing the right incentives without going broke or encouraging the wrong behavior?

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I think that the best sales compensation programs are simple. I have worked in companies where it took days to figure out how much we were suppose to pay the sales reps. If it took that long for corporate to figure it out guess how long it took the sales peope? They were so confused they did not know what to sell. You have to keep it simple and try not to design a program around the exceptions rather use the 80/20 rule.

I think it is important to try to keep the program from constantly changing. Many companies make the mistake of continually reducing territories or compensation incentives when a sales person makes in their mind too much money. I believe a great sales person should be able make more than a CEO in any given year - they should have that potential!

You have to strike the right balance. Many sales people are only paid on commission and I think it encourages the wrong behavior ie. car salesman I think that you have to have the right combination of base and incentive (which should be very high for a salesperson) You also have to make sure that the pay is competitive which you can check on Salary.com™ Job Salaries & Compensation Survey Software

I thought you maybe interested in this article it covered a lot of the items discussed in this thread and more Paying Your Salespeople - 3/1/2004 - Industrial Distribution

Great article SBA thanks.