How and when to pay on Activity?
This article will outline some of the situations where it makes sense to leverage an activity based incentive plan, some examples of activities to incentive, activities not to incentivize and finally how to communicate/track these plans.
Situations where an activity based plan makes sense:
We want to always remember when we are thinking of creating an incentive plan there are some criteria points that always need to be meet (See: Sales Incentive Golden Rules) such as influence. For roles outside of standard selling such as pre sales, business development and even services there can be activity(s) that make sense to compensate on in addition to their normal salary. An activity based plan can provide some additional motivation for these roles to drive up activity which in turn will lead to greater pipeline coverage, win rate and ultimately greater revenue.
Activities to Incentivize:
Marketing/Business Development opportunity (MQL) / Sales Qualified Lead (SQL) / Sales Accepted Lead
Customer Success: Customer Satisfaction (Net Promotor Score), Product Usage or Density (Number of Products Used)
Management By Objective (MBO): objectives typically set out quarterly by the direct manager that includes very specific activity with clear definitions of success (Example: Schedule a call with at least three contacts from Account X in Q2)
Tasks that are documented in a CRM system that can be validated to see if criteria points have been achieved
Activities to stay away from on your Incentive Plan:
Activity or tasks that can be completed without little oversight or validation
Activity or tasks that should be apart of the employee’s base salary
Pipeline Management
Any activity that could possibly incentivize behavior with a client that would be negative for the relationship (See: Sales Incentive Go To Market Alignment)
Communication:
All activity based plans should be communicated prior to the effective period and no later than 15 days into the period
Activity definitions and criteria should be provided in writing when the plan is communicated
All activity based plans should be first reviewed by the manager and finally electronically signed by the employee to ensure understanding and acceptance (See: Plan Distribution)
Tracking:
Tasks in a CRM system should have a report saved and this report should be monitored monthly to ensure accuracy
Product Usage or Customer Satisfaction (Net Promoter Score) source information should be determined in preparation before the effective period begins
MBOs should be documented in writing on a quarterly basis or use a Incentive Sales Management system to track Manager input
This should help provide direction with implementing an activity based incentive plan. As with all businesses there are nuance situations and exceptions that should consistently be reviewed to ensure ultimate alignment with the business’s goals.