Minimizing Sales Staff and Re-evaluating Comp Plans

As the credit crisis holds, many start-ups are going to start looking to make sure that they hold onto cash as long as they can.

That may include the decision to eliminate and/or outsource a portion of your sales staff.  And, this can often be a very wise business decision.  Of course, the cartoon to the right takes it to the extreme, but as start-ups and other companies decide to eliminate sales staff, the challenge becomes on how do you continue (and accelerate) your trajectory in sales with less sales staff and potentially less resources (minimized travel budget, etc).

The key, as I’ve blogged on before is designing the right compensation package.  You can get amazing things from salespeople, if you give them a path to make a lot of money and it is OK to expect BIG things from them to get that money.  The compensation package should be reasonable and achievable, but should also be challenging.

It is certainly time now for ALL companies and especially start-ups to re-evaluate the staffing levels, the compensation packages, and start expecting more from their sales team – and rewarding them appropriately for achieving large goals.  The best compensation plans have lots of milestones along the way that reward performance, and also have a sense of competition in them.  And… this is critical… they must NOT be unrealistic.  If no-one is making any money on the sales team, then you actually will see sales decrease.

A compensation plan should never be designed in a way that ensures the company does not pay anything out.  It should be designed to motivate and drive sales.  And you should make sure that when you design your plan, you are not designing it in such a way that you are focused on how not to pay out commissions – but that you are focused on how to motivate people to sell what you want.  And when those salespeople do so, rejoice.

I’ve started to work with several start-ups on their sales strategy and on designing compensation packages for the 2009 reality, so I know it is not easy to design one that motivates people correctly – especially if you haven’t created one before.  However, I think that there are also a lot of opportunities for getting a lot of performance out of hard-working sales staff when it is done correctly.

Outside monthly prizes, contests, and other SPIFs, I’d be interested in hearing about clever compensation ideas that companies have used to motivate sales people.  Anyone have anything interesting that they have used?

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