The activity-based selling movement draws a lot of attention to sales activities.
Modern sales leaders determine sales strategies, metrics and even coaching based on their team’s key selling behaviors. But a sales strategy that focuses so heavily on activities begs the question: Should sales reps be compensated for sales activities?
The idea likely seems comical – if not ludicrous – to some sales leaders. But there are compelling arguments on both sides, and they’re worth considering.
The case against compensating sales activities
Taking an activity-based approach doesn’t mean you have to compensate reps for sales activities. It shouldn’t. In fact, many sales leaders firmly believe that reps should be compensated purely on their ability to sell.
Of course, not all sales roles close deals. Sales development reps, for example, hand off leads to the sales team. This is where compensating sales activities can be helpful. You might consider compensating these team members for the number of leads they generate or pipeline they contribute to.
But closing business is the main priority of a sales rep. Yes, reps should perform the right activities. You can’t pay someone a large chunk of their compensation just for doing an activity. We’d all go bankrupt.
That’s why many sales leaders believe that the best strategy is to provide reps the activities they need for success, and then manage and motivate around those behaviors.
The case for compensating sales activities
During a Dreamforce panel earlier this year, Vantage Point Performance partner Jason Jordan explained he’s worked with some leading companies who already compensate reps for activities. He shared an example of a large organization that needed its product sales reps to make more joint sales calls, because their objective was to cross-sell products.
The organization set a quota for the number of joint sales calls they wanted every quarter and then linked it to the compensation plan. Not all compensation was tied to the activity, but at least a portion was.
“When you start measuring something, people pay attention to it,” Jason explained. “When you start linking it to compensation, they pay a lot of attention to it.”
Paycor director of high-velocity sales Janet Jansen also comps her team for activities. Her team’s sellers, managers and even directors have about 20 percent of their compensation tied to activity. The lion’s share of their compensation is still based on revenue.
“But interestingly, our front-line managers are paid on the number of sellers that hit their appointment goal,” Janet explained. “They’re also paid on the number of sellers that are over 100 percent of their revenue goal for the month.”
So, should you compensate sales activities?
The short answer: It depends on your current strategy and initiatives. If your reps perform all your key selling activities and hit or exceed quota, then you may not want to fix a process that isn’t broken.
But if your sales reps aren’t performing a specific activity you need to hit goals (such as Jason’s example of the joint sales calls), then you might consider putting a part of their compensation or a separate bonus toward completing that activity. Even if you tie something small to the activity, the behavior will happen more often.