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Building a Sales Commission and Compensation Plan with Lisa Seal

This week’s download is a sales compensation plan template. Please MAKE A COPY of it to build out your own comp plan or simply take a few things from it to enhance what you already have in place.

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About This Episode

As business owners, we know that our sales team needs to be incentivized. But they also need to feel confident that their entire job isn’t based on simple sales numbers.

 

Today, we’re joined for a second time by Lisa Seal, the VP of Revenue at BELAY. Lisa has a brilliant mind for sales, and she’s had years of experience with this topic. She’s helped BELAY structure a business compensation plan that is beneficial to both BELAY and its sales team. In this episode, she’s going to share with our listeners her best practices for designing a successful comp plan.

1. Don’t cap your salespeople’s potential earnings.

The more they sell, the more they make, and the more you win as an organization. You never want them to have a reason to sandbag and hold back because they too often exceed a quota. Incentivize! Incentivize! Incentivize! If they are outpacing themselves every month, that can only help everyone.

2. Make sure your comp plan encourages a win-win for everyone.

Good salespeople need to feel like they achieved something – and that’s where a bigger paycheck and better commission will help. The business owner should never feel like a salesperson is a burden, and the salesperson should never feel like it’s impossible to reach expectations.

3. Creating loyalty with a salesperson is a huge advantage.

Salespeople can be a fickle group because they are usually extremely competitive. So if they have a tangible target they can achieve fairly regularly, they will become extremely loyal and a partner to you in your business. Keep your salespeople happy and incentivized and you’ll keep your business growing.

 

How is your current compensation plan designed?
Where is your current plan working, and where could it be improved?
What’s the danger of having salespeople who only work on a base salary without commission?
What are some of the incentives you offer your salespeople – or talk about some that you’ve experienced yourself that work. 

Creating loyalty with your sales team is probably one of the biggest advantages you can have.

Lisa Seal

Ask yourself if the incentives that you have in place are encouraging the behaviors that you actually want.

Lisa Seal

If you create tangible opportunities that your team can achieve fairly, they will become a partner in your business that you can't do without.

Lisa Seal

Having a sales team with integrity is key.

Lisa Seal

(02:22) Lisa Seal answers the question, “If you could live anywhere when you retire, where would it be?”

(04:06) What should a company have in place before designing the compensation structure for their team?

(06:33) What are some of the common mistakes leaders make when designing their compensation plans?

(07:18) Never cap a salesperson’s potential earnings. 

(08:30) What are some healthy incentives that will work in a comp plan?

(10:45) You need to lean on a sales manager who can identify the right fits for the team.
(13:00) Should you ever make a compensation plan for just one person, or should it always be for the entire team?

(14:28) What advice would you give a leader who has no comp plan for their team – where should they even start?

(16:30) If there’s a salesperson that’s accepting a base salary without a commission, then they aren’t a salesperson. 

(18:14) Creating loyalty with a salesperson is a huge advantage. 

(19:48) Lisa talks about how BELAY started focusing on total revenue versus just the number of contracts. 

(24:14) This week’s download: Go check out our sales compensation plan template. Use it to build your first comp plan or take a few things from it to add to your current one.

Lisa Seal:

You know, if you set it up correctly, and they’re paying for themselves by the sales that they bring in, then why cap them? The more they sell, the more they make, the more you win as an organization.

Speaker 2:

Welcome to One Next Step, the most practical business podcast in the world, helping you get more done, grow your business, and lead your team with confidence with tips and tools you didn’t get in business school. Here are your hosts, Tricia Sciortino and Lisa Zeeveld.

Lisa Zeeveld:

Welcome to One Next Step, the practical business podcast that helps you run your business so you stop running you. I’m L.Z., and today we’re going to talk about a topic that every business leader connected to sales is interested in, and that is compensation plans. Our good friend, my good friend, Lisa Seal, the Vice President of Revenue here at Belay is joining us for a second time, because, y’all, you know she killed it. She absolutely killed it, and I am so excited that she agreed to come back one more time. She is brilliant in sales and so many other areas of our business. She’s had years of experience with this very topic.

Lisa Zeeveld:

She’s going to talk to us about how she’s helped Belay structure a compensation plan that’s beneficial to both Belay and our sales staff. Y’all, I’m going to let you in on a little secret. Our sales staff loves it, and they’re killing it, and they make a ton of money, so everybody’s winning, right? That’s what we want. Lisa is amazing at designing a plan and then making sure that the plan gets carried out in the most efficient way. Let’s get started with Lisa Seal.

Lisa Zeeveld:

Lisa, welcome, welcome, welcome.

Lisa Seal:

Thank you for having me again. You said one more time. Is this it?

Lisa Zeeveld:

No.

Lisa Seal:

I don’t get to come back?

Lisa Zeeveld:

No, no.

Lisa Seal:

Okay. Just making sure.

Lisa Zeeveld:

I’m going to keep having you come back again and again, because you’re so talented in many other areas of business, and sales is just one of them, so definitely, if you keep wanting to join us, if you’re okay joining us, we’ll keep on having you back.

Lisa Seal:

Absolutely. Absolutely honored. Thank you.

Lisa Zeeveld:

Good. Well, I want to start us off with a little, fun question, get all of our listeners primed up, let them hear our chatter, our fun personalities, so, and this is going to be a good one. I can’t wait, because I think I know what your answer’s going to be. If you could live anywhere when you retire, where would it be?

Lisa Seal:

That’s a good one. I’m going to have to go with Mexico. Chips and guac for life.

Lisa Zeeveld:

You surprised me. What?

Lisa Seal:

And margaritas. Yeah, if I could live anywhere, and it didn’t matter, that would be where. Yeah.

Lisa Zeeveld:

Is there a particular place in Mexico?

Lisa Seal:

I love the Yucatan Peninsula because of the Caribbean Sea. It’s so pretty. Beautiful, blue water. It’s unlike any other part of Mexico that I’ve been in. I mean, margaritas, chips, and guac, I mean, you got to.

Lisa Zeeveld:

That’s true. That’s true. That’s true. Well, I’m going to let our listeners in on a little secret, in that you gave a awesome, motivating presentation, professional development to our Belay team, and really talked about the plan for you and your husband, so I said I thought I knew what that would be, but your real-life retirement plan is a beautiful cabin in the north of Michigan. So, I felt really smart, like I knew you were going to say that, and then you surprised me.

Lisa Seal:

Yeah, so, when you throw it out there like anywhere, dream big, I mean, sure, it’d be awesome to retire on a beach. Reality is, is yes, I want to retire in a beautiful cabin in the middle of northern Michigan with my husband, and yes, that is the realistic dream, but getting crazy, it’s like, yeah, a beach in Mexico, sure, why not.

Lisa Zeeveld:

Mexico, yeah. I love that. I’m sure that the children and grandbabies would be more than happy to come to Mexico, too.

Lisa Seal:

That’s right. They’ll visit me there. They’ll visit anywhere, right?

Lisa Zeeveld:

Anywhere.

Lisa Seal:

Hopefully.

Lisa Zeeveld:

Yes. Yes. Well, again, thank you for joining us. Compensation plans, especially around sales teams, is such a hot topic. We have great playbooks and great resources to use. We look at base compensation for employees across the board, and a lot of those really fancy tools, we’ll also talk about bonuses, but sales compensation plans to really re-enforce the behaviors that you want to see as an organization are hard to nail down, because you really do want everyone to win. I love the fact that you really do put our team members first, but it never makes it feel like Belay is going to lose out, that our organization is going to lose out, so what should a company have in place first before designing their compensation structure for their team?

Lisa Seal:

Yeah. That’s a good question. I think the most important thing for them to have in place first is an understanding of the value of a sale or a win, whatever that is. What is its value? Whether you have to put that in monthly numbers or an annual number, what is the number, what is the value of that?

Lisa Seal:

Then, weigh that against the potential payout for a salesperson. They need to have that number to start with. Then, of course, having your understanding of the industry standard that they live within. Every industry is a little different in its commission payouts, and what’s the standard rate in making sure that their pricing and that their sale value is going to be able to handle the standard commission payout.

Lisa Seal:

Then, the third part of that is the length of the sales cycle. You need to know how long it takes from the first point of contact with that salesperson to actually achieve the win or to see the value of that sale. That would be the other part of that. Overall, the reason you want to know that is the cost of the salesperson should be covered by what they’re selling, right?

Lisa Zeeveld:

Right.

Lisa Seal:

So, when it’s done right, they pay for themselves. That is the ultimate goal.

Lisa Zeeveld:

Yeah, I love that. Yeah, because the worst thing that you want to do is bring on a new team member, or create a compensation plan that they can’t actually survive on, or that requires them to compromise the values of your organization or their personal values, because they’re just trying to make the sale, yeah.

Lisa Seal:

Right. That’s right. That’s right. Yeah.

Lisa Zeeveld:

Yeah. So, what are some of the common mistakes leaders make when designing the plan?

Lisa Seal:

First and foremost, I’d say not giving direction to the salesperson. They may have a plan, but they don’t go as far as actually the execution of the plan. So, they need to make the salesperson have that target so they can be effective, and so they can actually achieve it, or come close to achieving it, because if you send somebody out there without that direction, or that target, or an achievable number, you’re going to lose momentum very quickly, and you’re never going to see the value of what that salesperson could effectively bring your organization.

Lisa Seal:

That would be one of the biggest ones that I can see. Then, the other one I see quite often is capping the salesperson’s potential earnings. You know, If you set it up correctly, and they’re paying for themselves by the sales that they bring in, then why cap them? The more they sell, the more they make, the more you win as an organization. That would be probably the biggest one.

Lisa Zeeveld:

Yeah. I mean, here at Belay, I think that we accomplish that with even some accelerators, right?

Lisa Seal:

We do.

Lisa Zeeveld:

So, you’re even, I mean, I feel like it’s a double motivation to not go to that what people would see is maybe just their quota, but to exceed their quota.

Lisa Seal:

That’s right. Absolutely. Yeah, you never want them to, and we talk about this a lot, is you never want them to have a reason to, what we say, sandbag. If you stop the incentives, they’re just going to hold wins for the next month or the next quarter because you’ve capped them.

Lisa Zeeveld:

Yeah. I feel like that happens in a lot of maybe automotive industries or sales folks that do that.

Lisa Seal:

Yeah. Yes.

Lisa Zeeveld:

I mean, I just let the cat out of the bag about one incentive that we do here at Belay, that accelerator, but let’s talk more about other additional incentives and what business owners should consider before even putting them into place.

Lisa Seal:

Yeah, so, before you put it into place, the word that comes to mind there is integrity. The reason I say that is because salespeople are uber competitive. You mentioned this earlier. They’re super competitive, and they’re super driven to win, so having a salesperson or a team with integrity is key, because you can dangle the carrot, and you want to make sure that the way they get to that carrot is actually in line with the visions of value of your values of your organization, so that is key.

Lisa Seal:

Once you’re certain of that, ask yourself if the incentives that you have in place are encouraging the behaviors that you actually want. Like I said, does that monthly quota encourage sandbagging, or are you setting it up to where it doesn’t matter whether they bring it in in June versus July, they still get to see the accomplishment, and it’s not hurting anybody by them not reaching it in one month versus the next? That would be a big one.

Lisa Seal:

Then, the accelerators that you put in place, are they realistic? Because if they’re not, again, you’re just going to see that motivation and that momentum that the salesperson potentially has just dwindle away, because if they don’t feel like they can reach a goal, they’re just going to stop trying. So, making sure that those incentives are actually achievable, not all the time, but that they’re there to be reached.

Lisa Zeeveld:

Yeah. Yeah, yeah. Absolutely. I’m going to go a little rogue here, but it just has me thinking about even the role of a sales manager in that, too, and how important it must be for them to really understand the characteristics of a good salesperson. Like I said, it’s watching, really, are they a good culture fit? Do they have integrity? Getting to know them as a person so that way you can maybe feed them more leads.

Lisa Zeeveld:

You don’t want it to get too easy, perhaps, if they’re on an inbound sales team. If they’re outbound, are they actually talking to the right folks? I would imagine you have to really lean. As our vice president, you have to really lean into your sales manager to help accomplish all this and really execute on the compensation plans that are created.

Lisa Seal:

Yeah, absolutely, and especially when they’re hiring. You want to make sure that when they’re hiring a salesperson, like you said, that they are a good culture fit. Here at Belay, we make sure that the salesperson being the front line person is bringing in the type of client that we actually can serve well. We don’t want to set anybody up for failure, and so they are the filter that we use to make sure that when a client does come through the door, we can serve them well, they’re bought into our model, and we can actually see success from this, rather than just signing anyone and everyone who we may not actually be able to do a really good service with.

Tricia Sciortino:

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Lisa Zeeveld:

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Lisa Zeeveld:

I would imagine that unless you are a brand-new organization, you’re going to have people on your team with different amount of tenure, different amounts of experience, different sales styles. As I’m thinking about creating a compensation plan, should we ever just create one for individuals, or should we really create a compensation plan that fits the entire team?

Lisa Seal:

I believe you have to fit it for the entire team. So, I, personally, I back into that number. I like to take the goal of the organization’s revenue goal, and what part of net new sales is responsible, what percentage of that revenue goal is the sales team responsible for? Then, backing into that down to monthly and number of salespeople.

Lisa Seal:

Your team is responsible for a number. How many people are a part of that team is really based on the volume that you have of leads, whether that’s outbound leads or inbound leads to determine how many people that is or that ends up being for to actually create the team. That being said, any new salespeople are going to be on guarantees and an onboarding that makes sense to get them up to speed to have the same quota as everybody else.

Lisa Seal:

That’s where your accelerators come into play. I said not everybody’s going to hit the accelerators, so you might have a quota set that not everybody reaches, and that’s okay. That gives you an opportunity to raise up those that are not and celebrate those that are meeting and exceeding it.

Lisa Zeeveld:

That makes sense. For a business leader or owner that’s listening right now, and really without any intentional strategic comp plan for their team, what sort of advice would you give them?

Lisa Seal:

That does not have a comp plan yet for their team?

Lisa Zeeveld:

Yeah, so say, maybe it’s real simple. Maybe they’ve got somebody, I mean, I actually know a couple of friends who have folks who are selling for them, and they’re just on a salary, like flat salary, no real compensation plan that pushes them to maybe drive more sales. Where do they start there?

Lisa Seal:

Like I said in the beginning, you have to make sure it’s a win-win. The business certainly has to win. That’s the whole point of having a salesperson, but the salesperson has to feel they’ve achieved something, and salespeople typically are very coin-operated. So, the easiest way to have them feel that is a bigger paycheck, a bigger commission.

Lisa Seal:

So, making sure that overall it is a win-win, it should never feel like a burden, like I said, to the business owner that they’ve hired a salesperson. The salesperson should never feel like it’s impossible to reach the expectations. Hiring a for a sales position, it really should be easy as it relates to your budget. It should be a simple, pays for itself, I don’t have to actually overly budget for this. Obviously, I have to just make sure that the sale value more than equals the cost of the salesperson. Then, from the salesperson perspective, like I said, being successful and meeting quotas feeds their competitive nature that needs to be fed.

Lisa Zeeveld:

Sure, so, maybe if they’ve gone the route of just having somebody on a base salary, and they haven’t had really any sort of bonus or true compensation plan that they win when they sell more, I mean, it could be that that person, once you create, and I feel like we’ve gone through this a couple of iterations, they actually might not be the right person for you.

Lisa Seal:

Absolutely. I have to say, if there’s a salesperson accepting a base salary without a commission, they’re not a salesperson. They’re just checking boxes of doing a job. They’re just doing the bare minimum. You really should always see growth with a good salesperson in what they’re bringing in. How can you measure that if they’re only making a base pay that doesn’t incentivize them to do more?

Lisa Seal:

It’s that incentive that is super important. One of the other things that you just made me think of, and one of the common mistakes, is not paying a full commission because they haven’t reached quota. So, they’re always getting dropped down. If you’re at 80% of quota, then you only make 80% of your commission.

Lisa Seal:

Again, it’s that negative feeling for the salesperson that it hurts motivation. So, you have to make sure that you’re motivating them to achieve what you’re actually expecting. Again, it’s are you incentivizing the behaviors that you actually need out of this person?

Lisa Zeeveld:

Yeah, yeah. I would imagine that, for somebody who’s maybe not used to this, really understanding how much this role costs their business, like you said from the beginning, they have to pay for themselves, so you really have to understand the metrics of your business, the lifetime customer value, all of those things that may seem a little bit foreign to those who are listening right now, but it’s just understanding the metrics of your business so much better so you can hire people, retain people, especially in the economy right now, retain people who are excited to work for your business and just want to sell their little tails off.

Lisa Seal:

Yes, yes. Creating a loyalty with a salesperson is probably one of the biggest advantages you can have in your particular industry. Salespeople by trade, and I would say by reputation, can be very fickle. It’s because they are chasing that dollar. So, if you’re giving them the opportunity to always have a tangible target that they can actually achieve fairly regularly, you are going to build loyalty with that person, and they will only do more for your business, and help grow that business, and they will become a partner in your business that you can’t do without, versus that churn and burn mentality, where you’re just not building that loyalty, and your customers will feel that.

Lisa Zeeveld:

Yeah. I know our founder used to say that his hope was that our sales team made the most money out of everybody else, out of all of our team members. I think we as a leadership team really embody that, that we want them to do really well, and so we created a plan that they could win. As you said, I mean, there is little to no turnover on that team, which is sometimes a little disheartening for other team members who want to join, so we don’t ever have anybody leave, but we do add new positions. So, when new positions come up, people just jump at it, and I think that speaks volumes to what you’ve created on that team.

Lisa Seal:

Thank you.

Lisa Zeeveld:

So, kudos to you or really creating something that’s super valuable. I’m going to go a little rogue here, but I think that one of the things that comes to mind is something that we changed, I want to say this year, mid last year. I think there’s probably some businesses out there that might appreciate this, is that at some point, we really focused on the number of sales, number of new contracts. I think that’s really easy for folks to think of number.

Lisa Zeeveld:

Then, we switched and said, “Nope, let’s not let it be about numbers, but let’s let it be about revenue.” We really did that across the entire company. So, I just want to touch on that for a second, because I think it’s really easy for people to think, numbers make sense. I need five new contracts. Let’s focus on that, but tell us maybe a little bit more about your thought process behind that and how it was received.

Lisa Seal:

Yeah, yeah. It was a couple years ago, I really decided that it was time to focus, like you said, on the revenue, so the value of the sale, and make that part of the quota for the sales team, rather than, you have to sell 10 contracts this month, because the value of that contract matters. So, a salesperson can feel like they’ve met quota or exceeded quota, but the value of those sales were less than the person that sold half of the number of contracts.

Lisa Seal:

So, changing the focus to the value of the sale, one, got them to buy in more, and two, also made them aware of the value of the contract they were sending out to the client to make sure it was in line with the client’s needs. If your quota’s 10, and you’re at 8, and it’s the 30th of the month, and you can sell two really tiny, little contracts to get yourself at quota, well, I mean, yes, you did it, but how good do you feel about that? Versus, you have a dollar number that you’re chasing, you have a value of a contract that you’re following, are you meeting it, feels a heck of a lot better. So, the motivation of the team increased significantly, and it also made them understand our business a little bit more.

Lisa Zeeveld:

Yeah. I love that. It just dawned on me, and I was like, you know what? That was too good not to talk about.

Lisa Seal:

Thank you.

Lisa Zeeveld:

Thank you for obliging and giving us a little bit more information. I have another favor. This has been so good. I know that we’re at time, because we want to be the most practical business podcast in the world, and keep it nice, and short, and succinct, but I do have another question for you. Would you mind hanging around for just one more?

Lisa Seal:

Of course. I’d be happy to.

Lisa Zeeveld:

Awesome, awesome, awesome. Well, thank you so much. Hey, guys, listeners, I am going to be asking Lisa about designing successful comp plans. Now, you’re not going to want to miss this, so please subscribe to our email list, and we will send you a link to our bonus content, or you may visit onenextsteppodcast.com, where you can find the link to all of our show notes, including this one.

Lisa Zeeveld:

Wow, thank you, Lisa, so much for joining us today. She was phenomenal, and I am thrilled that she was able to give you guys some insight on how Belay creates a phenomenal compensation plan for our sales team and even our account management team. For me, one of the big takeaways, and I said this at the end of the interview, was how she changed it from a quantity of sales, so how many units were being sold, to really revenue-focused.

Lisa Zeeveld:

You guys, I cannot emphasize it enough. When we made this change in Belay, it really changed the mindset of our entire team across the board. Not only was our sales team not focused on a number, a unit that they had to sell, but also, again, our account managers started to talk about our business in revenue numbers, and it trickled down all the way across to our talent acquisitions team, our human resources team.

Lisa Zeeveld:

Now, as an organization, we’re all on the same page, and that is, how much can we grow this business? How many lives can we change? Best yet, what we talked about today is how to compensate a team so that they are lock in step with you, so you can all do this together, you keep them a long time, they become great ambassadors for your organization, so, Lisa, I know it was fantastic.

Lisa Zeeveld:

I hope, listeners, that you guys enjoyed it, and that you are taking something away from this. I have even more takeaways for you. You know we love to give you downloads. You’re not going to want to miss this one, so that you can take your one next step. Is it the sales compensation plan template.

Lisa Zeeveld:

Now, you’ll be able to use this to build your first compensation plan. Perhaps you’ve got a salesperson, like I talked about, I got friends who have salespeople just solely on a strict salary. We don’t want to do that. We want to incentivize them to sell more, so you can use this plan to create something for the first time, or better yet, if you already have a compensation plan for your sales team, this resource is going to help you maybe add a few things to it. That’s always a win-win.

Lisa Zeeveld:

In order to get this fantastic resource, you’re going to want to text the phrase one next step to 31996 or visit onenextsteppodcast.com, and you will get access to this fantastic resource to keep you moving forward. Thank you guys so much for joining us. Until next time, lead wisely and lead well. Start by making today count.

Lisa Zeeveld:

Next week, we’ll be joined by Bryan Kelly, a strategic advisor, investor, and founder of Stroke of Genius. His incredible system helps business leaders identify and retain the most relevant content and business books for them. He’ll be sharing us how you can do the same thing. Guys, you don’t want to miss it. Check out this brief clip of our chat with Bryan.

Bryan Kelly:

A mentor of mine once told me, “We write to remember, but we remember because we write,” so it’s very important to be diligent about taking notes while reading. The brain science basically says that when we write, it stimulates our memory, first and foremost. It activates all different parts of our brain that we don’t use when we read.

Speaker 2:

Thanks for listening to One Next Step. Be sure to subscribe on Apple Podcasts or follow us on Spotify. Then, join us next time for more practical business tips and tools to help you get more done, grow your business, and lead your team with confidence. For more episodes, show notes, and helpful resources, visit onenextsteppodcast.com.

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