If you've been wondering about the best way to motivate your sales force, you are not alone. Deciding on the right incentives for your employees is a tricky business. There are two key elements involved in motivating a quality work force. Basically, there is the compensation question that consists of three parts: base pay, financial incentives, and indirect or long term monetary benefits (i.e. medical insurance, stock options and 410k plans etc.) Motivation may also be fostered with non-monetary rewards that can have a powerful impact on employees. These types of rewards recognize employee achievements and provide them with direction in furthering their professional goals.
   In using compensation as a performance motivator, you need to be clear about your goals and your long term vision of the types of accounts you want your employees to solicit and sell. Your base compensation should be competitive with industry standard, and your incentive program should be geared towards rewarding behavior that you have deemed to be optimal.
   So, before you decide on a particular type of incentive plan, you need to understand what you want your employees to achieve and focus on rewarding behavior that motivates them in this direction. The list of behaviors that you should consider in developing an incentive plan is obviously unique to your own business. Compensation plans that involve indirect long term financial rewards are geared towards encouraging employee retention and satisfy a completely different need than strategies which encourage specific behaviors and reward performance levels with direct financial benefits.
   At its most simplistic level, a direct incentive plan based on gross account revenue rewards gross sales. But what if your profit margins are different for sales of different products? To encourage your salespeople to maximize net profit, you need to develop a plan that rewards sales of different products differently. If you have a customer turnover problem, you could develop a financial incentive for an increase in customer retention and thereby motivate your salespeople to provide better support. Other types of sales behaviors to consider could involve the types of customers you want to develop and the new sectors you want to enter. If you want to encourage your salespeople to develop relationships in sectors outside their comfort level, develop an incentive that encourages them to do so and reward the development of certain types of accounts differently than other types of accounts.
   Another critical issue you should consider is who will share in financial incentives. Do your salespeople work in teams with significant upper level direction and cooperation from administrative staff or do they operate independently? Should your administrative staff share in company profits by having an incentive plan of their own based on their particular department's performance? Alternatively, since every employee has a function, should goals be set for employees outside the sales force so they too can be rewarded for their own achievements? Goals can include anything from cutting expenses to developing promotional opportunities, and even encouraging more efficient administrative processing. Simply put, any activity that can be measured may be the subject of a "goal-sharing" program with designated rewards.
   The timing of an incentive payout is very important. The conventional annual bonus, although a factor in employee retention, has a minimal impact on employee behavior simply because it is not an ever-present factor in the salesperson's decision-making process. At the other end of the spectrum is the "spot award" which recognizes a significant accomplishment immediately and acts not only as a financial benefit, but provides the employee with immediate recognition of a specific achievement. More likely than not, in developing your own plan, you'll set up a quarterly or monthly bonus payout based on day-to-day sales figures, with an opportunity for a spot bonus in the event something extraordinary is achieved. To maximize the impact of the reward, you should also always pay it separately from the base commission.
   If you want to affect employee retention, try implementing a stock option plan or a 401(k) plan and take a long look at your work environment to make sure it's the type of place in which your employees can thrive.
   Do not overlook the effect non-monetary rewards such as employee recognition programs can have on employee motivation. Numerous surveys have found that employees want feedback and recognition. Positive recognition in front of colleagues with a tangible gift can have an impact that will not be forgotten. Some companies consider employee recognition so important that they have developed programs managed by an outside vendor where employees can choose their own gifts once they achieve certain point levels.
   Finally, no matter what type of incentive program you choose, remember that it will not be successful unless it is communicated to the people you are trying to motivate. Make sure that you disseminate information about the plan and reinforce it often. Set up informal meetings to answer questions and remind your employees of the incentives available to them. If you implement regular progress reports, employees will constantly be reminded of the plan's existence and know what they need to do to achieve the next level.
   Once you've set the plan up don't be shy about it and make sure everyone knows and understands it!