What Makes for a Good Sales Manager Compensation?

There is quite a famous incident about leadership that Dr APJ Abdul Kalam, former President of India and an acclaimed scientist had narrated. The incident was about how his manager took up the entire responsibility of a launch failure on himself and pushed this team member forward when it was time to enjoy success.

Sales managers as leaders are no angels but they do spend most of their energies in keeping the team motivated and engaged. Sales Manager compensation should also then reflect such efforts and keep them motivated so they can in turn push their teams harder.

Motivating a team is a subject matter that managers particularly sales managers excel at.

Shouldn’t you as a sales leader then be worried about keeping up their motivation levels?

A study done at Ohio University shows that almost 23% of their time is spent interacting with prospective customers. It goes to show how sales managers also impact direct selling apart from all the administrative activities they are responsible for.

While sales managers are expected to find motivation within to keep them egging their team on, there are ways in which sales leaders can keep their sales managers in the right spirits throughout the year. Sales leaders have to find the right balance between keeping their sales managers motivated and offering them attractive compensation.

In the sections that follow let’s explore briefly how to design sales manager compensation.

Designing a competitive Sales Manager Compensation Plan

Compensation in sales is mostly about incentivizing sales quota. Sales reps have this baked into their compensation and they take home as much as they sell, that is a known fact.

For most roles in sales, sales leaders have to strike the right balance of base salary and variable incentives depending on the impact each role has on the sales cycle. The focus is to push reps to close deals faster. The same cannot be said of compensation for a sales manager. It is natural to think that a sales manager's compensation should then be dependent on the cumulative sales made by the team.

The fact though is that sales managers are less involved directly in selling activities and are more into administrative functions, functions directed at keeping the team motivated, keeping the team together and fully engaged.

The incentives therefore cannot be tied to selling alone and should be a good balance between selling and administrative/managerial responsibilities.

The Ideal pay mix for a sales manager is one that is less aggressive than the sales folks, assuring at least a 70-75% base pay.

How compensation can impact Sales Managers

The right question might well be to ask, how demotivating sales compensation can be for sales managers when they see some of their own sales reps earning better than them.

Yes, it is true that in a few cases sales managers end up earning less than their top-performing sales reps. Bearing 100% responsibility for the sales team's performance and getting little or no glory for the efforts can be thoroughly demotivating. This should be a cue to sales leaders to redesign pay mixes for sales managers that help them stay motivated.

Sales leaders should also take into account the multiple hats that sales managers have to do in order to keep the team chugging on. Sales managers are called on to be mentors and coaches, sometimes even providing emotional support to their sales folks.

Often sales folks are the most difficult lot to manage, known to be irrational and attention-seeking.

The right pay mix for sales managers should consider responsibilities that include:

Prioritizing sales deals and opportunities.

Sales managers are no mug when it comes to sales. They have been in direct sales positions and know the ins and outs better than any sales rep on the team.

They have had enough experience in the field to guide any struggling sales rep with prioritizing deals and opportunities. Their efforts in shoring up the performance of laggards in the team should be tracked and appreciated by way of appropriate compensation.

Sales training

Sales managers can be excellent trainers and coaches. With their experience, they can add valuable insights and help new sales folks to shorten their learning curve.

Constant monitoring of team performance

Overall team performance should be considered in relation to other similar teams. A team's performance more often than not reflects the strategies and tactics employed by the sales manager.

Helping with deals in the pipeline

Sales managers can step in and speak to prospects to push deals in the pipeline. Sometimes a spirited conversation can convert a prospect in the pipeline.

CRM data management

CRM data can be a pain and a major roadblock in following up with a prospective customer if the quality of such data is not top-notch. A sales manager has to monitor the quality of such data and engage the right team to improve and maintain the quality of this

Hitting sales quota as a team

If a sales team is consistently hitting sales quota, much of the credit should be with the sales manager. It is than the sales manager's skill that keeps the motivation levels high, keeps the team engaged and sales rep turnover to a minimum.

Conclusion

For building a suitable sales compensation plan for your sales managers, you will need a robust sales compensation management system that can consider the various factors that impact a sales cycle.

Kennect offers two independent solutions that seamlessly work together to help you overcome any challenges in sales performance and compensation.

The Incentive Compensation Management tool helps them achieve more, by keeping your sales team updated on their incentive earnings in real-time, with no delays, no fuss. The Sales Performance Management solution helps your sales team with real-time sales insights and intuitive dashboards keeping them on the right path.

Request a demo today and get ready to delight your sales teams.

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