- Use sales compensation splits when sellers’ individual contributions are identifiable and measurable
- Team quotas are appropriate when selling is a true team effort and sellers’ contributions are largely indistinguishable
- Let account coverage models and buyer purchasing behaviors dictate compensation policy
Today’s B2B sales coverage models often include specialists, headquarters and branch location sellers, and other situations that result in having more than one seller involved in winning a deal. For example, a local rep might be selling to the decisionmaker, but the headquarters rep clears the way with purchasing and legal. Shared compensation credit (team credit) and split quota practices and policies are used to drive collaboration between these multiple sellers who collectively work on a single deal or sell to a single account.
Use split policies when there are two or more sellers involved in a sale and when each one seller’s contribution to closing it can be clearly delineated and measured. Split the credit among sellers until the sum of the splits totals 100 percent. In the split policy, define the default split amount or amounts if there are some sales opportunities that should be divided differently. For example, for a global opportunity with a global account manager and regional rep contributing to a sale split use a default split credit amount of 50/50. Leave room in the policy for reps and global account managers to request to deviate from the default split amounts when their contributions to the sale are deemed inconsistent with the default amount set (e.g. if contribution was actually 60/40 and the policy states 50/50, then allow the reps to agree to the 60/40 amount). If reps are unable to agree on a fair amount, then ensure that an escalation procedure is in place so their sales leaders can intervene and decide on a new split percentage if needed. If the sales leaders cannot agree, then the next and final escalation point is the compensation review board.
An alternative to splitting compensation credit is to apply 100 percent credit to each seller involved in the deal – but only if their quotas were set in anticipation of multi-crediting. This alternative is called “team quotas.” Team quotas are appropriate in instances where multiple individuals are required to be involved in a sale and when their separate contributions cannot be easily identified and quantified. In these cases, selling is truly a team effort, as the sales outcome is a result of their combined efforts. Team quota and team selling eliminate contention among team members, who generally combine their efforts to support a common goal. If quotas are appropriately uplifted to account for multiple sellers, then commission expense issues only arise when an entire team achieves high levels of acceleration. Accurate quota setting and having a large deal policy in place is therefore paramount. Team quotas can also be an issue when certain team members are obviously not contributing value. Deal with those cases as a performance issue, and resist the temptation to eliminate the team model if it has been delivering desired results.
The human component needs to be carefully considered throughout this process – sales reps are rightly sensitive about their compensation and expect to be individually recognized even when team quotas are in place. That means the performance review process still must recognize individual contributions. With splits, if sales is spending more time arguing about credit then it spends selling, there is a sales productivity issue. Consider simplifying the policy. Ensure that split amounts are equitable, and recognize the effort exerted by each participating seller. And finally, a very few bad apples out there will find ways to use split and team quota policies to enrich themselves in ways not intended by the compensation plan. You’ve seen it before: A national team sales rep calls the local team sales rep and asks to be put on an opportunity he or she had nothing to do with, because the rep needs that one deal to get them over the line for the quarter. It happens. Don’t scrap an entire program or punish all reps over the bad behavior of one.
Designing and changing compensation plans inside companies is difficult for sales and sales operations leaders. At SiriusDecisions, we’ve found that the best approach is to anticipate the objections and needs of the compensation plan stakeholders (i.e. the CEO, CFO, CSO/CRO, legal, HR). Download this research brief for more information on selling compensation plans to key stakeholders.