What is a Compensation Plan?
A compensation plan is a set of elements governing the compensation payments to a salesperson (Figure 7 - 1) . Compensation plans let you:
- Provide incentives to salespeople to achieve specific and measurable sales goals, including yearly and periodic sales targets, as well as sales targets for individual revenue classes.
- Vary compensation rates based on level of quota, achievement towards quota, revenue, unit, or qualitative achievement.
- Vary quotas or compensation rates based on revenue classes.
- Stage compensation payment over the life of a sale.
- Give quota and compensation incentives uplifts by revenue class.
- Customize plans for individual salespeople.
- Assign multiple quotas to a plan, and multiple plans to a salesperson for different sales periods.
Each compensation plan includes one or more plan elements. For a typical plan element, you define a quota, compensation rates, and revenue classes. For each revenue class, you control:
- When during the life of the sales cycle the compensation is awarded.
- Quota and compensation-based incentives.
