You will be able to spot plan features that encourage the wrong selling.
A company launches a new pay plan with a generous bonus for new clients. Six months later, new client numbers are up and the plan looks like a success. Then someone notices that renewals have fallen, three long-standing accounts have moved to a competitor, and the support team is drowning in clients who signed up for something that did not suit them. Nobody designed the plan to cause any of that. It paid for one thing, and people did that thing.
Lesson 7.2, The parts of a sales pay plan, ended with a question: what would a rep do if they did exactly what the plan pays for, and nothing else? This lesson goes through the answers that cause the most trouble, so you can spot them in your own plan before the team does.
If variable pay comes only from new business, existing clients earn a rep nothing. Account reviews, renewal conversations, help with a problem after signing: all of it is unpaid work that takes time away from paid work.
Most reps will still do some of it, out of professionalism or because they like their clients. But under pressure at the end of a month, the client who needs a call about a renewal will lose out to the prospect who might sign this week. Over time, renewals slip, existing clients feel neglected, and some of them leave. That loss rarely shows up in the sales numbers, because nobody was paid to keep those clients in the first place.
If keeping clients matters to your business, the plan should reflect it. Options include paying something on renewals, making renewals part of quota, or giving account management to a separate role with its own pay. Which one fits depends on how your team is organised. What matters is that someone is paid to care.
A booking is a signed order. If the plan pays the full variable on signature, and nothing is recovered when a client cancels soon afterwards, it rewards getting the signature, not getting a client who stays.
The effect is predictable. Deals get closed before the buyer is ready. Problems are left unconfirmed, because confirming them takes time and might reveal the product is not a good fit. Some reps will offer terms or promises they know are a stretch, because the cancellation, if it comes, costs them nothing.
The fix is the clawback from lesson 7.2, with clear written rules, or paying part of the variable later, once the client has stayed for an agreed period. Either way, the rep shares in the result of a bad sale as well as a good one.
Wei Ming saw a small version of this when he checked last year's cancellations. Of the clients who had left in their first three months, more than half had been signed in the last week of a month. That is his team's own figure, from a small number of deals, so he treated it as a question to investigate, not a conclusion. But it was enough to make him add a clawback to his draft plan.
Some plans try to reward everything at once: different rates for six products, a bonus for new logos, a multiplier for multi-year deals, a deduction for discounts above a threshold, a team kicker if the region hits target. Each part makes sense when someone designs it. Together, they make a plan nobody can hold in their head.
When a plan is that complicated, reps spend time calculating their pay instead of selling. They also stop trusting it. If a rep cannot work out what they will earn, they assume the plan is designed to pay them less, and they argue with every statement. Worse, the behaviours each part was meant to encourage disappear, because nobody can tell which action earns what.
A good test: can a rep explain the plan to a friend in two minutes, and work out their own pay for a month in five? If not, cut parts until they can. Three or four parts is usually enough to reward what matters most.
In some industries, pay is not only a business decision. Financial advice is the clearest example in Singapore. MAS has a balanced scorecard framework for financial advisory representatives, under which their variable pay can be affected by how well they meet non-sales measures, such as the quality of their advice, and not only by what they sell. If you lead a team of representatives, your firm's pay plan must work within that framework, and your own design choices sit inside your firm's policy.
Selling financial advice in Singapore, lesson 5.1, Why pay depends on more than sales, covers this in detail. Read the current MAS documents on the MAS website and your firm's own policy before changing anything.
Other industries have their own rules on how sales staff are paid or how products may be sold, and employment law applies to every plan. Whatever your industry, have HR or your compliance team review a new plan before it reaches the team. That is also part of lesson 7.4.
When you review any pay plan, go through it part by part and ask two questions. What behaviour does this part reward? What behaviour does it make less attractive? Then compare the answers with your sales process from module 4 and the culture you want, which module 9 covers.
The most useful side effects to look for are the ones that would never appear in a sales report: client neglect, mis-sold products, deals pulled forward or pushed back to suit a pay period, and reps avoiding work that matters but pays nothing.
In the activity below you will review a sample pay plan and list two behaviours it might encourage that you do not want. For each one, name the part of the plan that causes it.
Review a sample pay plan and list two behaviours it might encourage that you do not want.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).