Financial Services Case Study

From Complexity to Clarity: Redesigning Sales Plans for Maximum Impact

Introduction

Complex Plans, Misaligned Behaviors

Incentivizing and directing seller behavior is essential for driving growth. However, complex sales compensation plans create confusion and deter focus from achieving strategic goals.

Our financial services client faced misalignment between seller behavior and compensation metrics due to complex plans, metric proliferation and a lack of governance.

The client allowed too much local decision-making without proper governance, resulting in measure proliferation to the point that some comp plans offered 10+ measures or over/under-weighting on metrics that didn’t matter or did matter. This led to little to no behavior change because the comp plan was viewed as overly complex and misaligned to what reps actually do. The client valued Alexander Group’s expertise in simplifying plans to truly impact rep behavior.

Additionally, this company faced quota-setting challenges that resulted in the sellers with the largest quotas having lackluster performance while reps with longer tenure exceeded their goals. While the client attempted to achieve a fair share distribution across all territories, in practice, sellers with smaller quota sizes (typically in smaller territories) tended to outperform peers with larger quotas. Additionally, over time, territories did not scale or change appropriately, with sellers gaming the process to become successful.

Overall, the client desired a better understanding of how to update and adjust quotas over time and provide both achievable and stretch goals for sellers. Sellers viewed the compensation plan as overly complex and misaligned to the activities sellers performed.

The client sought Alexander Group’s help to strike a balance that would appropriately incentivize all reps and simplify their compensation plan to truly impact desired seller behaviors. They chose us because of our expertise in sales compensation benchmarking, quota setting and our informed perspective on optimizing incentive plan frameworks.

Approach

Digging to Find the Root Cause Issues

Complex compensation issues require a thorough assessment of the current state to identify if the company’s challenges were endemic to the industry sector or unique to the firm. Alexander Group started by assessing the current sales compensation plan against center and market best practices, conducting interviews and performing historical pay analysis and plan design. Our comprehensive interview process included 15 people, with cross-functional representation and a focus on sales leadership.

Our assessment revealed that among the complex metrics, some were uninfluenceable or lacked proper data tracking, both of which are not in line with market best practices. We collaborated with the client to eliminate these problematic measures and revert to metrics that were influenceable by the representatives, data-rich and ultimately aligned with the firm’s values.

Next, we redesigned existing sales compensation plans to align with center and market practices. The design process included workshops with key stakeholders to ideate, pressure, test and refine future state sales compensation plans and programs.

Once agreed upon, the company implemented the new sales compensation plans, including proper messaging and change management, including executive updates and organizational-wide planning and communications.

Specific changes to the plans included:

Streamlining measures to reflect sales priorities for each specific role properly.

Recalibrating weights and mechanics to support new business growth and drive desired selling behaviors.

Re-evaluating the company’s quota-setting methodology to level the playing field and incorporate factors that influence sellers to reach their targets.

Key Findings

Willingness to Learn and Implement

The company was relatively new to sales compensation plan basics but was willing to learn and apply industry-leading approaches. The project allowed significant time to educate stakeholders on core concepts, pay philosophies and guiding principles. The client valued the perspective Alexander Group brought to the project and the value-add of updated sales compensation plans.

In addition to the educational aspect, the project fostered a collaborative environment where stakeholders from various departments could voice their concerns and suggestions. This inclusive approach not only ensured that the final compensation plans were well-rounded and effective but also boosted morale and buy-in from the entire team.

The client appreciated the transparency and open communication throughout the process, which led to a smoother implementation and a more cohesive organizational culture. The newfound alignment between sales strategies and compensation plans resulted in a noticeable uptick in sales performance and employee satisfaction, proving the value of a well-executed plan redesign.

Recommendations & Outcomes

Clear Plans Support Seller Actions

Specific recommendations and action plans included:

Educating the client’s leadership on sales compensation philosophies, guiding principles and core concepts.

Sharing center of excellence and market best practices.

Synthesizing multiple POVs into key options to drive best-fitting recommendations that align with client context and commercial maturity.

Simplifying plan structure from 10+ measures per plan to 3-4 core measures.

Removing measures that did not reflect seller influence.

Adding measures and mechanics highlighting individual contributions while maintaining a team mentality.

Providing more upside for top performers.

These recommendations and early sales compensation education were instrumental to the project’s success. The client’s leadership appreciated our high-quality implementation materials and live support during their annual kickoff, which allowed the company to address seller questions.

Expertise in Sales Compensation

Growth requires alignment between strategic objectives and sales compensation plans. With the right incentives, it will be easier for sellers to achieve prescribed goals. For expertise in designing media and entertainment plans that drive growth, Alexander Group has the industry experience and knowledge leaders turn to for assistance.

About Alexander Group

Alexander Group understands your revenue growth challenges. Since 1985, we’ve served more than 3,000 companies across the globe. This experience gives us not only a highly sophisticated set of best practices to grow revenue—we also have a rich repository of unique industry data that informs all our recommendations. Aligning product, marketing, operations and finance efforts behind a successful sales organization takes insight and hard work. We help the world’s leading organizations build the right revenue vision, transform their organizations and deliver results.