Anthology of 54 Currently Successful Sales Incentive Plans

8/2/2019 Anthology of 54 Currently Successful Sales Incentive Plans

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Available Anthologies:

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Anthology of 54

Currently Successful

Sales Incentive Plans

For Sales Representatives

To Achieve Your Goals

In Today's Markets

From 30 years sales compensation consulting experience

by:

Gary A. Schroeder

Schroeder Associates

5363 Whispering Pine Circle

St. Cloud, FL 34771

[email protected]

727.415.7924

www.SalesForceCompensation.com


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GARY A. SCHROEDER

Gary Schroeder is a prominent sales compensation consultant

with 30 years of experience dealing with most US industries. He

has been an instructor for WorldatWork and has taught adult

education programs for Michigan State U, the American

Management Association, and SHRM. He has an MBA from

North Texas State University and a Bachelor in Electrical

Engineering degree from University of Florida. Prior to starting

Schroeder Associates in 1982, specializing in sales

compensation, he held positions of Sales Compensation

Consultant with Hay Associates, VP Marketing and Sales for a

new venture firm, and Product Manager with Texas Instruments.

Fleet/Boston

Comcast Customer Service

Comcast Cable AdvertisingSwiss Bank

Safecard

First National Bank

Liberty Insurance

Blue Cross/Blue Shield

Belden Wire and Cable

TSS (Division of IBM)

Kodak Imaging Business

Hadco

Norelco

KeeblerKraft

Isotoner Gloves

Abex

Harris Specialty Chemicals

Bil Mar

Amity Leather

Weil-McLain

Philips Lighting Company

Safeguard

PYA/MonarchCampbell Soup

Philips

CP

Perrigo

Tommy Armour GolfPhilips Consumer Electronics

Center for Professional Dev.

Sears

Wilson Sporting Goods

Agfa

Follett Software

D&B Software

Harris Electronics

Motorola Platform Software

Motorola Cellular Telephone

Philips Advance TransformerBayer Pharmaceuticals

Bayer Consumer Products

Haarmann and Reimer

Technicon

Bayer Diagnostics

Squibb Pharmaceuticals

Bayer Dental Products

Abbott Labs

Wyeth-Ayerst

CastrolHDL

Bucyrus Erie

Qwest Customer Service

Alcatel Cable

TelecommunicationsBerkTek

Celwave

Cablewave

Sara Lee

Pierce Foods

Armour-Swift-Eckrich-Foodbrands

Uniforms-to-You

Philips Broadband Systems

Philips Components

Lexington Furniture

Pall AerospaceDollar Rent A Car

Guilford Mills

ICI

Philips Medical Electronics

McDonnell Douglas

Champion

PAR

Syngenta

Schawk

Dow CorningBP

HCR Manor Care

Sales Compensation Clients Have Included



St. Cloud, FL 34771

727.415.7924

[email protected]


Copyright Gary A. Schroeder

October 26, 2011


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How to Use This Anthology Book

There are 54 Incentive Plans in this book divided into 11 design models. By starting at the model for Plan 1

and continuing on you will derive the most benefit. Definitions and criteria build throughout the book.

Each incentive Plan contains:

1. A synopsis of the Plan2. Measures and goals the incentive plan will focus on3. Relative Weights of each sales incentive measure4. Goal sales performance ranges for each measure5. Incentive payout opportunities for each measure and goal6. Total Incentive opportunities7. Administrative Guidelines for the Plan8. Example payout with formulas

Should you have questions with regard to a Plan please email me at:

[email protected].

Definitions

Sales compensation has multiple design features which will be referenced, or expanded, in this book.

Some design features include:

1. Total Target Casha. Policy amount to pay a sales jobb. Comprised of base salary and variable incentive opportunity

2. Base Salary Range for a sales joba. Minimum (80% of Midpoint)b. Midpoint (target for a fully competent incumbent)c. Maximum (often 120% of Midpoint)

3. Incentive Opportunity Range and percent of sales incumbents who should achieve each levela. Minimum: start incentive pay goal (95% of sales incumbents)b. Target: incentive pay for 100% of goal achievement (66% of sales incumbents)c. Stretch: incentive pay for outstanding sale performance (10% - 15% of sales incumbentsd. Upside: incentive pay above Stretch if incentive measure is uncapped (


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Sales Incentive Plan Strategies

1. Minimize territory size impact

2. Encourage tenure

3. Support sales excellence

4. Support achievement expectation

5. Control costs

6. Every sale counts

7. Encourage team sales

8. Support profitability

9. Minimize sales discounting

10. Improve margins

11. Optional profit

12. Link volume to profit

13. Affordability

14. Target account emphasis

15. Seek new accounts

16. Local national account support

17. Select product emphasis

18. Drive new products

19. Sell complete line

20. Prioritize sales time

21. Attention to building business

22. Support building business

23. Encourage planning

24. Balance sales activities

25. High pay to super stars

26. Support profitable margins

27. Control costs of building new business

28. Account profit targeting

29. High pay for complete job

30. Include teamwork and national account support

31. Profitable market penetration

32. Optimize profitable sales

33. Overcome weak new product goal quality

34. Encourage profitable follow-on sales

35. Control costs efficiently

36. Optimize sales time

37. Professionalize sales activity

38. Control and delegate expenditure of sales time

39. Encourage proactive sales effort

40. Field management control support

41. Support efficient and effective growth

42. Detail profit growth and business building

43. Support complex sales activity

44. Balance existing and new business

45. Optimize profitable sales time

46. Affordability control of a focused sales effort

47. Support total marketing program

48. Support profitable region growth

49. Balance multiple sales objectives and profit

50. Multiple sales goals including targeted profit

51. Complex measures to support total sales job

52. Control affordability of high opportunity

53. Seasoned large sales job rewards

54. Control and reward prioritized sales efforts



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727.415.7924

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October 26, 2011


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AppendixPage

7

8

9

1011

12

13

14

15

16

17

18

19

20

2122 Sales Focus On Individual Revenue and Accounts (Model)

23 Plan 14 - Sales Volume, Target Account Volume, Quotas, Dollar Incentive, Capped

24 Plan 15 - Sales Volume, Quota, New Accounts, % of Base Salary Incentive, Capped/Uncapped

25 Plan 16 - Sales Volume, National Account Volume, Quotas, Dollar Incentive, Capped

26 Sales Focus On Individual Revenue and Products (Model)

27 Plan 17 - Sales Volume, Push Products, Quotas, Dollar Incentive, Capped

28 Plan 18 - Sales Volume, New Products, Quota, % of Base Salary Incentive, Uncapped

29 Plan 19 - Sales Volume, Product Mix, Quotas, Dollar Incentive, Capped

30 Plan 20 - Sales Volume and Product Mix Linked, Quotas, Dollar Incentive, Capped

31 Plan 21 - Sales Volume and Product Mix Linked, Quotas, Dollar Incentive, Capped

32 Sales Focus On Individual Revenue and Special Objectives (Model)

33 Plan 22 - Sales Volume, Special Objectives, Quotas, Dollar Incentive, Capped

34 Plan 23 - Sales Volume, Special Objectives, Quotas, Dollar Incentive, Capped

35 Plan 24 - Sales Volume, Special Objectives, Quotas, Dollar Incentive, Uncapped Regressive

36 Plan 25 - Sales Volume and Special Objectives Linked, Quotas, Dollar Incentive, Capped

Plan 5 - Sales Volume, Quota, Target Bonus, Dollar Incentive, Uncapped Regressive

Sales Focus On Individual Revenue (Model)

Plan 1 - Sales Volume, Quota, Dollar Incentive, Capped

Plan 2 - Sales Volume, Quota, % of Base Salary Incentive, Capped

Plan 3 - Sales Volume, Quota, Dollar Incentive, UncappedPlan 4 - Sales Volume, Quota, Target Bonus, Dollar Incentive, Uncapped

Sales Focus On Individual Revenue and Profit (Model)

Plan 11 - Sales Volume, Company Profit, Quotas, Dollar Incentive, Capped

Plan 12 - Sales Volume and Region Profit Linked, Quotas, Dollar Incentive, Capped

Plan 13 - Sales Volume, Company Profit Control, Quotas, Dollar Incentive, Capped

Plan 6 - Sales Volume, Commission Incentive, Uncapped

Plan 7 - Sales Volume Linked To Team Sales, Quotas, Dollar Incentive, Capped

Plan 8 - Sales Volume, Division Profit, Quotas, Dollar Incentive, Capped

Plan 9 - Sales Volume, Price Discount, Quotas, % of Base Salary Incentive, Capped

Plan 10 - Sales Volume, Margin, Quotas, Dollar Incentive, Capped



St. Cloud, FL 34771

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October 26, 2011 5


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Appendix ContinuedPage

37 Sales Focus On Individual Revenue, Profit and Accounts (Model)

38 Plan 26 - Sales Volume, Target Accounts Volume, Division Profit, Quotas, Dollar Incentive, Capped

39 Plan 27 -

40 Plan 28 - Sales Volume, "A" Account Margin, "B and C" Account Margin, Quotas, Dollar Incentive, Capped

41 Plan 29 - Sales Volume and Profit Margin Linked, Quotas, New Account Sales Volume, Dollar Incentive, Capped

42 Plan 30 - Sales Volume, National Account Volume, District Profit, Quotas, Dollar Incentive, Capped

43 Sales Focus On Individual Revenue, Profit and Products (Model)

44 Plan 31 - Sales Volume, Push Product Volume, Division Profit, Quotas, Dollar Incentive, Capped

45 Plan 32 - Sales Volume, Product Mix, Price Discount, Quotas, % of Base Salary Incentive, Capped

46 Plan 33 - Sales Volume, Region Profit, Quotas, New Product commission, Dollar Incentive, Capped

47 Plan 34 - Sales Volume, Service Contracts, Profit Margin, Quotas, Dollar Incentive, Capped

48 Plan 35 - Sales Volume and Profit Margin Linked, Quotas, "Y" Product Sales Volume, Dollar Incentive, Capped

49 Sales Focus On Individual Revenue, Profit and Special Objectives (Model)

50 Plan 36 - Sales Volume, Special Objectives, Office Profit, Quotas, Dollar Incentive, Capped

51 Plan 37 - Sales Volume, Special Objectives, Price Discount, Quotas, % of Base Salary Incentive, Capped

52 Plan 38 - Sales Volume, Special Objectives, Region Profit, Quotas, Dollar Incentive, Capped

53 Plan 39 - Sales Volume and Profit Margin Linked, Quotas, Special Objectives, Dollar Incentive, Capped

54 Sales Focus On Individual Revenue, Profit, Accounts, and Special Objectives (Model)55 Plan 40 - Sales Volume, Target Accounts, Special Objectives, Division Profit, Quotas, Dollar Incentive, Capped

56 Plan 41 -

57 Plan 42 - Sales Volume, "A" Account Margin, "B and C" Account Margin, Special Objectives, Quotas, Dollar Incentive

58 Plan 43 - Sales Volume, National Account Volume, District Profit, Special Objectives, Quotas, Dollar Incentive

59 Plan 44 -

60 Sales Focus On Individual Revenue, Profit, Products, and Special Objectives (Model)

61 Plan 45 - Sales Volume, Push Products, Special Objectives, Company Profit, Quotas, Dollar Incentive, Capped

62 Plan 46 - Sales Volume, Push Products, Special Objectives, Company Profit, Quotas, Dollar Incentive, Capped

63 Plan 47 - Sales Volume, Product Mix, Special Objectives, Price Discount, Quotas, % of Base Salary Incentive, Capped

64 Plan 48 -

65 Plan 49 - Sales Volume, Special Objectives, Service Contracts, Profit Margin, Quotas, Dollar Incentive, Capped

66 Plan 50 - Sales Volume Linked to Profit Margin, Special Objectives, Service Contracts, Quotas, Dollar Incentive, Capped

67 Sales Focus On Individual Revenue, Profit, Products, Accounts, and Special Objectives (Model)

68 Plan 51 -

69 Plan 52 -

70 Plan 53 -

71 Plan 54 -

Sales Volume, New Account Volume, Price Discount, Quotas and Commission, % of Base Salary

Incentive, Uncapped

Sales Volume, Push Products, Special Objectives, Company Profit, Quotas, Dollar Incentive,

Capped, New Accounts Commission Uncapped

Sales Volume, High Profit Products, Special Objectives, National Accounts, Company Profit,

Quotas, Dollar Incentive, Capped

Sales Volume, Product Mix, Special Objectives, Target Accounts, Price Discount, Quotas, % of Base

Salary Incentive, Capped

Sales Volume, Special Objectives, Region Profit, Quotas, Dollar Incentive, Capped, New ProductCommission Uncapped

Sales Volume, Push Products, Special Objectives, Region Profit, Quotas, Dollar Incentive, Capped,

New Accounts Commission Uncapped

Existing Account Sales Volume, Special Objectives, Price Discount, Quotas, % of Base Salary

Incentive, New Account Sales Volume Commission, Uncapped

Existing Account Volume Linked to Margin, New Account Volume Linked to Special Objectives,

Quotas, Dollar Incentive



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October 26, 2011


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ASSUME:

Base Salary Midpoint: $40,000

Incentive Target: $10,000

Target Total Cash: $50,000

Incentive Model

MeasureRelative

Weight

Goal Minimum Target Stretch Upside

Payout Minimum Target Stretch Upside

Minimum Target Stretch Upside

*If Sales Performance Below Target Goal

*If Sales Performance Above Target Goal

*If Sales Performance Above Stretch Goal and Uncapped

Target Payout + (Performance achievement - Target

Goal)/(Stretch Goal - Target Goal) x (Stretch Payout -

Target Payout)

Stretch Payout + (Performance achievement - StretchGoal)/(Upside Goal - Stretch Goal) x Upside Payout -

Stretch Payout)

Sales Focus On Individual Revenue

Sales Performance Range

Sales

Volume100%

Total Incentive Payout Range:

Payout Rates:

(Performance achievement - Minimum Goal)/(Target

Goal - Minimum Goal) x Target Payout

Goal setting design guidelines for probability of achievement are as follows: Minimum = 95% or higher, Target =

66%, and Stretch = 10% to 15%. There is no probability for Upside in uncapped plans. It is simply a figure to

confirm the incentive pay rate above the Stretch goal. The Upside rate can be the same, lower, or higher than

between Target and Stretch goals.

Schroeder Associates5363 Whispering Pine Circle

St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 7


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ASSUME:




Plan 1.

MeasureRelative

Weight

Goal 80% 100% 120% >120%

Payout $0 $10,000 $20,000 $20,000

$0 $10,000 $20,000 $20,000

Minimum Target Stretch Capped

Plan 1. Administrative Notes:

1. Payout quarterly against prorated , cumulative, sales performance.

2. No additional payout for sales above 120%

3. Base Salary only paid for sales performance below 80% of Target Goal.

4. Interpolate to determine payout. At 95%, payout = $7,500.

(95%-80%)/(100%-80%)x$10,000=$7,500

5. At 110%, payout =$15,000.

$10,000 + (110%-100%)/(120%-100%)x($20,000-$10,000)=$15,000.

Base Salary: $38,000

Sales Volume Achievement: $12,500 105% Of Goal $10,000 + (105% -100%)/(120%-100%)x( $20,000 - $10,000) = $12,500

Total Base Salary + Incentive Payout: $50,500 $12,500

Performance



Stretch Incentive is x2 Target

Incentive and Capped. Goal

range is 80% to 120%


Sales

Volume100%

To overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories ($500,000)

and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on sales

volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes pays

the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below can

be used, but broken out into small, medium, and large territories with each having a different target incentive

opportunity.

Payout Example Formula


St. Cloud, FL 34771

407.957.1976

[email protected]



October 26, 2011 8


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ASSUME:




Plan 2.

MeasureRelative

Weight

Goal 80% 100% 120% >120%

Payout 0% 25% 50% 50%

0% 25% 50% 50%



1. Incentive expressed as a percentage of your annual base salary.

2. Payout monthly against prorated , cumulative, sales performance

less prior payouts.

3. Maximum annual payout is 50% of your annual base salary.



Sales Volume Achievement: $9,450 98% Of Goal (98%-80%)/(100%-80%)x(25%-0%) = 22.5% x $42,000 = $9,450

Total Base Salary + Incentive Payout: $51,450

22.50%

Formula



Incentive and Capped. Goal

range is 80% to 120%


Sales

Volume100%

As in Plan 1,to overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories

($500,000) and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on

sales volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes

pays the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below

can be used, but broken out into small, medium, and large territories with each having a different target incentiveopportunity.

Performance


Payout Example



St. Cloud, FL 34771

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October 26, 2011 9


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ASSUME:




Plan 3.

MeasureRelative

Weight

Goal 80% 100% 120% 130%

Payout $0 $10,000 $30,000 $40,000

$0 $10,000 $30,000 $40,000+

Minimum Target Stretch Uncapped



2. Payout above 120% will be paid at year end.

3. Payout above 120% is $1,000 for each additional percent.



Sales Volume Achievement: $45,000 135% Of Goal $40,000+(135%-130%)/(130%-120%)x($40,000-$30,000) = $45,000


$45,000

Formula


Stretch Incentive is x3

Target Incentive and

Uncapped. Goal range is

80% to 120%


Sales

Volume 100%

As in Plan 1, to overcome a disparity in sales territory sizes that pays a smaller incentive amount to small territories

($500,000) and a high incentive amount for sales achievements in large territories ($1,250,000) when a commission on

sales volume is paid, a quota based system can be implemented. Achievement of 100% of quota for all territory sizes

pays the same target incentive. If there is a very large disparity in territory sizes an incentive plan like the one below

can be used, but broken out into small, medium, and large territories with each having a different target incentive

opportunity. In this Plan the incentive is uncapped and sales beyond the Stretch Goal is encouraged and paid at the

same incentive rate as between the Target and Stretch Goal.

Performance


Payout Example


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 10


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ASSUME:




Plan 4.

MeasureRelative

Weight

Goal 80% 100% 120% 130%

Payout $0 $8,000 $28,000 $38,000

Goal

Payout

100%

$0 $10,000 $30,000 $40,000+Minimum Target Stretch Uncapped



2. Payout leveraged incentive over 100% at year end.


4. Payout above 120% is $1,000 for each additional percent.



Sales Volume Achievement: $23,000 115% Of Goal $8,000+(115%-100%)/(120%-100%)x($28,000-$8,000) = $23,000100% Bonus Achievement: $2,000 100% Of Goal $2,000 From Chart


$23,000

Performance




Incentive and Uncapped. Goal

range is 80% to 120%. Bonus

for 100% quota achievement.


Sales

Volume80%

100%

Bonus20%

100% of Sales Goal achieved.

$2,000

This Plan is like the prior Plan, but encourages achievement of 100% of Target by limiting pay opportunity for those

who do not achieve the Target Goal.




St. Cloud, FL 34771

727.415.7924

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October 26, 2011 11


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ASSUME:

Base Salary Midpoint: $40,000Incentive Target: $10,000


Plan 5.

MeasureRelative

Weight

Goal 80% 100% 120% 130%

Payout $0 $8,000 $28,000 $33,000

Goal

Payout

100%

$0 $10,000 $30,000 $35,000+




2. Payout leveraged incentive over 100% at year end.


4. Payout above 120% is $500 for each additional percent.




100% Bonus Achievement: $2,000 100% Of Goal $2,000 From ChartTotal Base Salary + Incentive Payout: $76,000

$36,500

Performance




Incentive and Uncapped.

Goal range is 80% to 120%.

Bonus for 100% quota

achievement.


Sales

Volume80%

100%

Bonus20%

100% of Sales Goal achieved.

$2,000

This Plan, like the prior one, encourages achievement of 100% of Target Goal, but retards the uncapped rewards paid for

achievement beyond the Stretch Goal. This protects the organization from paying exceedingly high incentives.



St. Cloud, FL 34771

727.415.7924

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October 26, 2011 12


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ASSUME:Base Salary Midpoint: $40,000



Plan 6.

MeasureRelative

Weight

Goal $0 $1,000,000

Commission

$0 $10,000 $20,000 $20,000+

At $1.00

million

At $1.25

million

> $1.25

million



1. Incentive expressed as a commission on net sales.

2. Payout monthly on net sales growth over previous year-to-date sales.

3. The plan is uncapped and there is no maximum payout.

4. Commissions paid in addition to Base Salary.


Sales Volume Achievement: $24,000 $1,350,000 Of Goal $10,000+($1,350,000-$1,000,000) x 4% = $24,000


$24,000

Performance



Incentive and Uncapped.

Target is $1 million, and

stretch is $1.25 million.


Sales

Volume100%

All over $1,000,000

1.00% 4.00%


This Plan rewards all sales by paying a commission on each order. Sales beyond a defined amount are paid a higher

commission to encourage aggressive sales.




St. Cloud, FL 34771

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October 26, 2011 13


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ASSUME:

Base Salary Midpoint: $40,000Incentive Target: $10,000


Plan 7.

110% $4,000 $9,000 $14,000 $17,500 $20,000

105% $3,000 $7,500 $12,000 $15,000 $17,500

100% $2,000 $5,500 $10,000 $12,500 $15,000

95% $1,000 $4,000 $8,500 $10,000 $12,000

90% $0 $3,000 $7,000 $8,000 $9,000

80% 90% 100% 110% 120%


1. Payout quarterly against prorated cumulative Individual Sales Volume

and Team Volume performance less prior payments up to $7,500.

Payout any over at year end.

2. Interpolate between goals to determine payout.

$51,000

112% Of Goal $12,500+(112%-110%)/(120%-110%)x($15,000-$12,500)=$13,000

102% Of Goal $12,500+(102%-100%)/(105%-100%)x($15,000-$12,500)=$13,500

$64,618 Square Root (($13,000-$12,500)sq + ($13,500-$12,500)sq))=$1,118

$12,500 + $1,118 = $13,618

$13,000

$13,500

1118.034

$13,618

Individual Sales Volume and

Team Sales Volume are linked

with a stretch incentive of x2

Target Incentive and capped.

The relative weight is 75%

Individual and 25% Team.

TeamSales

Volume

Individual Sales Volume


Performance

To encourage teamwork, this Plan links Individual Sales to how the Team performs in terms of sales. High incentives can only be

earned if both the Individual and Team work together to excel.


Base Salary:

Sales Volume Achievement:$13,618

Team Sales Achievement:

Total Base Salary + Incentive Payout:



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October 26, 2011 14


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ASSUME:




Incentive Model

MeasureRelative

Weight


Payout Minimum A% x Target Stretch Upside


Payout Minimum B% x Target Stretch Upside

A+B=100%





(Performance achievement - Minimum Goal)/(Target Goal -

Minimum Goal) x Target Payout


Goal)/(Stretch Goal - Target Goal) x (Stretch Payout -Target Payout)

Stretch Payout + (Performance achievement - Stretch

Goal)/(Upside Goal - Stretch Goal) x Upside Payout -

Stretch Payout)

Sales Focus On Individual Revenue and Profit


Sales

Volume A%


Profit B%

Payout Rates:

With an increased emphasis on profit, sales incentives that link it to revenue are of importance to drive both. Plans in

this section use various profit metrics and relative weights of importance to define the incentive opportunity to be

paid for relative performance of the two. Goal setting design guidelines for probability of achievement are as follows:

Minimum = 95% or higher, Target = 66%, and Stretch = 10% to 15%. There is no probability for Upside in uncapped

plans. It is simply a figure to confirm the incentive pay rate above Stretch. The Upside rate can be the same, lower, orhigher than between Target and Stretch goals.


St. Cloud, FL 34771

727.415.7924

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October 26, 2011 15


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ASSUME:




Plan 8.

MeasureRelative

Weight

Goal 70% 100% 115% >115%Payout $0 $15,000 $30,000 $30,000

Goal 90% 100% 105% >105%

Payout $0 $5,000 $10,000 $10,000

100%

$0 $20,000 $40,000 $40,000



1. Payout quarterly against prorated cumulative Sales Volume

performance less prior payments.

2. Payout annually against prorated profit performance.

3. No additional payout for Sales Volume above 115%.

4. No additional payout for profit above 105%.



Division Profit Achievement: $6,000 101% Of Goal $5,000+(101%-100%)/(105%-100%)x($10,000-$5,000) = $6,000


$27,000

$6,000

Performance


25%



Incentive and Capped. Sales

goal range is 70% to 115%.

Division Profit goal range is

90% to 105%.


SalesVolume

75%

Division

Profit

In this Plan, incentive opportunity is a function of both the Individual Sales and how the Division does with regard to Profit. Both

measures are capped to minimize payments due to unforeseen circumstances. Sales Volume incentives paid quarterly minimize the

potential for overpayment by measuring cumulative year-to-date sales and paying quarterly based upon the prorated performance

of the annual objective. All sales could be achieved on the first day of the year, or all on the last day of the year and the annual

incentive payout would be the same. The Division Profit incentive is paid annually once the final yearly results are known. The

performance range for Sales Volume (70% to 115%) is broader than that of Division Profit (90% to 105%) due to the theory of largenumbers (easier to make a small number than a large one) and the probabilities of achievement.



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October 26, 2011 16


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ASSUME:




Plan 9.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout 0% 32% 64% 64%

Goal -20% -8% -3% 20%% to


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ASSUME:




Plan 10.

MeasureRelative

Weight

Goal 0% 100% 125% >125%

Payout $0 $16,000 $32,000 $32,000

Goal 105% >105%

Multiplier x0.00 x0.25 x.50 x.50

100%

$0 $20,000 $48,000 $48,000




performance less prior payments.2. Payout annually on profit margin performance.

Multiply the Sales Volume incentive earned by the

multiplier earned to determine the margin incentive earned.


4. The maximum profit margin incentive paid is $16,000.


Sales Volume Achievement: $32,000 133% Of Goal $32,000 Capped

Margin Achievement: $8,000 102% Of Goal 0.25 x $32,000 = $8,000


Performance


Stretch Incentive is x2 Sales

Volume Target Incentive , x4

Margin Target Incentive, and

Capped. Sales goal range is

0% to 125%. Margin goal

range is 105%.


Sales

Volume80%

Margin 20%


This Plan rewards all sales and overcomes a major deficiency of a plan with a threshold where the sales person does not

know on a daily basis, what the sales results produced in incentive earnings. Also, since the Margin at which sales are

made is important, but only in terms of the Sales Volume achieved, the incentive is linked directly to the Sales Volume

by a multiplier instead of a dollar or percent of base salary amount. The Margin measure is banded so as not to micro

manage the measure, but to show that if at least 100% of the expected Margin is achieved, there is a 20% penalty interms of Target Incentive opportunity. Margin is highly leveraged to support bottom line performance for the

organization.




St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 18


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ASSUME:




Plan 11.

MeasureRelative

Weight

Goal 0% 100% 125% >125%

Payout $0 $16,000 $32,000 $32,000

Goal 105% >105%Multiplier x0.00 x0.25 x.50 x.50

100%

$0 $20,000 $48,000 $48,000





2. Payout annually on profit performance. Multiply the sales

volume incentive earned by the multiplier earned to

determine the profit incentive earned.

3. No additional payout for Sales Volume above 125%.4. The maximum profit incentive paid is $16,000.

$49,000

$14,400 90% Of Goal (90%-0%)/(100%-0%)x($16,000-$0) = $14,400

$0 99% Of Goal $0

$63,400

$14,400

Performance



Volume Target Incentive , x4

Profit Target Incentive, and

Capped. Sales goal range is0% to 125%. Company Profit

goal range is 105%.


Sales

Volume80%

CompanyProfit 20%


Like the previous Plan, all sales are rewarded with incentive opportunity. A Company Profit incentive is only paid if it can

afford it by achieving at least 100% of its profit plan. If the Company Profits exceed 105%, in this case, the Company can

be very generous in paying an additional 50% on Sales Volume incentives earned.


Base Salary:

Sales Volume Achievement:

Company Profit Achievement:




St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 19


20/71

ASSUME:Base Salary Midpoint: $50,000



Plan 12.

110% $20,000 $25,000 $30,000 $35,000 $40,000

105% $15,000 $20,000 $25,000 $30,000 $35,000

100% $10,000 $15,000 $20,000 $25,000 $30,000

95% $5,000 $10,000 $15,000 $20,000 $25,000

90% $0 $5,000 $10,000 $15,000 $20,000

80% 90% 100% 110% 120%



and Region Profit performance less prior payments..


3. Payout up to $20,000 during the year, the remainder year end.

$51,000

95% Of Goal $10,000 + (95%-90%)/(100%-90%)x($15,000-$10,000)=$12,500

100% Of Goal $10,000 + (100%-95%)/(100%-95%)x($15,000-$10,000)=$15,000

$68,500 Square Root (($15,000-$12,500)sq + ($15,000-$15,000)sq))=$2,500

$15,000 + $2,500 = $17,500

$2,500

$0

1118.034

$26,118

Region

Profit

Sales Volume


Sales Volume and Region

Profit linked, each with a

50% relative weight and x2

Target Stretch Incentive.

Performance

To support Regional teamwork and Profitability, this Plan is linked heavily with Individual Sales results. Here it is assumed

that the two metrics can be determined on a quarterly basis. Often, this is difficult, but the adage of "what gets measured

gets done", is very appropriate today.



Region Profit Achievement:

Base Salary:


$17,500


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 20


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ASSUME:




Plan 13.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout $0 $20,000 $40,000 $40,000

Goal 105% >105%

Multiplier x0.80 x1.0 x1.25 x1.25

100%$0 $20,000 $50,000 $50,000




performance less prior payments up to prorated target opportunity.

2. Adjust final incentive payment based upon Company Profit achievement.


multiplier earned to determine the actual total incentive earned.


4. The Company Profit goals are discrete and are not interpolated.

5. The maximum Company Profit incentive paid is $10,000.

$53,000

$24,000 105% Of Goal $20,000 + (105%-100%)/(125%-100%)x($40,000-$20,000) = $24,000

x 1.0 102% Of Goal x 1.0 From Chart

$77,000

$24,000

Formula



Sales

Volume100%

Company

Profit0%

Unlike Plan 11, there is no additional reward if the Company Profit of 100% to 105% is achieved. The sales incumbent

receives what Sales Volume incentive is earned. However, if the Company Profit is less than 100%, it cannot be as generous

and a 20% reduction in incentive pay is determined. If the Company Profit is above 105% a 25% bonus is paid on the Sales

Volume incentive earned.


Sales Volume incentive payout

linked to Company Profit

performance. Sales Volume

stretch is x2 Target Incentive.

Sales goal range is 60% to

125%. Company Profit goalrange is 105% and

the stretch goal is x1.25.


Performance

Base Salary:


Company Profit Achievement:

Payout Example



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 21


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ASSUME:




Incentive Model

MeasureRelative

Weight





A+B=100%





Sales Focus On Individual Revenue and Accounts


Sales

Volume A%

Accounts B%

With emphasis on specific accounts, sales incentives that link it to revenue are of importance to drive total sales . Plans

in this section use various account metrics and relative weights of importance to define the incentive opportunity to

be paid for relative performance of the two. Goal setting design guidelines for probability of achievement are as

follows: Minimum = 95% or higher, Target = 66%, and Stretch = 10% to 15%. There is no probability for Upside in

uncapped plans. It is simply a figure to confirm the incentive pay rate above the Stretch goal. The Upside rate can bethe same, lower, or higher than between Target and Stretch goals.


Payout Rates:





Target Payout)



Stretch Payout)


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 22


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SSUME:




Plan 14.

MeasureRelative

Weight

Goal 70% 100% 115% >115%

Payout $0 $15,000 $30,000 $30,000

Goal 0% 100% 150% >150%

Payout $0 $5,000 $10,000 $10,000

100%

$0 $20,000 $40,000 $40,000




and Target Account performance less prior payments.

2. Payout up to $20,000 during the year and remainder,

if earned, at year end.

3. No additional payout for Sales Volume above 115%,

or Target Account volume above 150%.

$46,000

$25,000 110% Of Goal $15,000 + (110%-100%)/(115%-100%)x($30,000-$15,000) = $25,000

$7,300 123% Of Goal $5,000 + (123%-100%)/(150%-100%)x($10,000-$5,000) = $7,300

$78,300

$25,000

$1

$7,300

Formula


25%


tretch Incentive is x2 Target

ncentive and Capped. Sales


Target Account goal range is

0% to 150%.


Sales

Volume75%

Target

Account

Volume

ften there Target Accounts within sales territories that require special emphasis, either because there are additional

enetration and profit opportunities, or due to competitor activity. This Plan establishes a quota to be achieved from the

efined Target Accounts, but also recognizes that all sales volume from these accounts should provide incentive

pportunity. Therefore, all sales from Target Accounts result in an incentive payout as the threshold in zero.


Performance

Base Salary:


Target Account Achievement:

Payout Example


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 23


24/71

ASSUME:




Plan 15.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout 0% 32% 64% 64%

Goal

Payout

100%

0% 40% 80% 80%+




2. Payout quarterly against cumulative prorated annual sales


3. Payout monthly for each new account with a minimum

order size of $10,000.

4. Plan is capped for sale volume at 125% and uncapped fornumber of new accounts if 100% or more of Sales Volume is

achieved. Otherwise the maximum is 4 new qualified accounts.

$46,000

$14,352 99% Of Goal (99%-60%)/(100%-60%)x(32% - 0%) = 31.2% X $46,000 = $14,352

$1,840 2 Of Goal 2 x 2% = 4% x $46,000 = $1,840

$62,192

Formula






Number of New Accountsgoal is 4.


Sales

Volume

80%

New

Accounts20%

Each New Account

2%

New Accounts are tough to come by in today's markets so this incentive plan provides for double counting from them. First,

each New Account (defined by management) receives a 2% of base salary bonus, and all resulting sales count toward the

Sales Volume quota. To arrive at a payout bonus rate, a number of New Accounts to be acquired must be set. Usually, that

is derived from a macro number from the marketing department. If the marketing plan forecasts 40 new accounts and the

organization has 10 sales people focusing their efforts on that activity, the overall expectation would be four new accounts

per person.


Performance

Base Salary:


New Accounts Achievement:

Payout Example



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 24


25/71

ASSUME:




Plan 16.

MeasureRelative

Weight

Goal 50% 100% 125% >125%

Payout $0 $17,000 $34,000 $34,000

Goal 90% 100% 105% >105%

Payout $0 $3,000 $6,000 $6,000

100%

$0 $20,000 $40,000 $40,000




and National Account Volume performance less prior payments.



3. Count National Account Volume in your territory only.4. No additional payout for Sales Volume above 125%,

or National Account Volume above 150%.

$47,000

$14,280 92% Of Goal (92%-100%)/(100%-50%)x($17,000-$0) = $14,280

$6,000 109% Of Goal $6,000 Capped

$67,280

$14,280

$8,400

$0

Formula


15%





50% to 125%. Shared

National Account goal rangeis 90% to 105%.


Sales

Volume85%

National

Account

Volume

A National Account requires attention at the corporate level by a National Account Executive and at the field level, by a

sales person who does not write orders directly. To focus support at the field level this plan allocates 15% of the

incentive opportunity, not a significant amount, to encourage that support.


Performance

Base Salary:


National Account Achievement:

Payout Example



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 25


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ASSUME:




Incentive Model

MeasureRelative

Weight





A+B=100%






Payout Rates:




Goal)/(Stretch Goal - Target Goal) x (Stretch Payout -Target Payout)



Stretch Payout)

Sales Focus On Individual Revenue and Products


Sales

Volume A%

Products B%

With emphasis on specific products, sales incentives that link them to revenue are of importance to drive total sales .

Plans in this section use various product metrics and relative weights of importance to define the incentive

opportunity to be paid for relative performance of the two. Goal setting design guidelines for probability of

achievement are as follows: Minimum = 95% or higher, Target = 66%, and Stretch = 10% to 15%. There is no

probability for Upside in uncapped plans. It is simply a figure to confirm the incentive pay rate above the Stretch goal.The Upside rate can be the same, lower, or higher than between Target and Stretch goals.


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 26


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ASSUME:




Plan 17.

MeasureRelative

Weight

Goal 70% 100% 115% >115%

Payout $0 $15,000 $30,000 $30,000

Goal 0% 100% 150% >150%

Payout $0 $5,000 $10,000 $10,000

100%

$0 $20,000 $40,000 $40,000




and Push Product sales volume performance less prior payments.



3. No additional payout for Sales Volume above 115%,

or Push Product sales volume above 150%.

$55,000

$18,000 103% Of Goal $15,000 + (103%-100%)/(115%-100%)x($30,000-$15,000) = $18,000

$5,800 108% Of Goal $5,000 + (108%-100%)/(150%-100%)x($10,000-$5,000) = $5,800

$78,800

$18,000

$1

$5,800

Formula






70% to 115%. Push Product



Sales

Volume75%

Push

Products25%

Push Products are products that the Organization wants special sales emphasis due to their profit margin, market position,

or production efforts. In this Plan all Push Products are counted double. First as stand alone with all Push Product Volume

arning an incentive as the threshold is zero. Secondly, the Push Product volume counts toward the assigned total Sales

Volume quota.


Performance

Base Salary:


Push Product Achievement:

Payout Example


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 27


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ASSUME:




Plan 18.

MeasureRelative

Weight

Goal 60% 100% 125% 150%

Payout 0% 32% 64% 96%

GoalPayout

100%

0% 40% 80% 120%+






3. Count all New Product sales double toward Sales Volume Goal.

4. Plan is uncapped.

$44,000

155% Of Goal 96% + (155%-150%)/(150%-125%)x(96%-64%) = 102.4% x $44,000 =$45,056

Included Of Goal Included in Total Sales Volume Goal Achievement

$89,056

$45,056

PerformanceBase Salary:


New Products Achievement:

Payout Example


$45,056




Incentive and uncapped. Sales


New Product sales count

double.


Sales

Volume80%

NewProducts

20% All New Product SalesCount Double

It is difficult to assign a specific sales volume quota on New Products as there is no sales history, only a marketing plan.

Often, New Products are difficult to sell as the potential buyer may not be aware of all the benefits and features, especially

if asking a higher price. A simple solution is to tell the sales people that all sales of these product count double toward their

quota. Here, the Plan is uncapped and all sales over 100% earn the same incentive rate. The incentive is defined as a

percentage of their base salary and is an added feature to the plan if the sales people have been receiving small base salary

increases. Under that condition, a 32%, 64% or 96% incentive appears very attractive.

Formula


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 28


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SSUME:




Plan 19.

Measure RelativeWeight

Goal 70% 100% 115% >115%

Payout $0 $15,000 $30,000 $30,000Number

Achieved 0 3 5 5

Payout $0 $5,000 $10,000 $10,000

100%

$0 $20,000 $40,000 $40,000




performance and Product Mix goals achieved less prior payments.2. Product Mix goals are discrete and in no order of achievement.

3. Plan is capped.

$57,000

$20,000 105% Of Goal $15,000 + (105%-100%)/(115%-100%)x($30,000-$15,000) = $20,000

$7,500 4 Of Goal $5,000 + (4-3)/(5-3)x($10,000-$5,000) = $7,500

$84,500

$20,000

$7,500

$315,000

Formula



tretch Incentive is x2 Target

ncentive and Capped. Sales


Five Product Mix discrete

quota goals.


Sales

Volume75%

Product

Mix25%

When it is important to manage individual sales time to devote attention to a complete product line to support production

apacity, rather than just total volume, a product mix incentive achieves that objective. Quotas are assigned to multiple

roduct groups. Achievement of each assigned product quota is recognized with incentive compensation. The incentive is a

o-no go incentive, which means that the Product Mix incentive is only recognized when 100% of the assigned quota is

chieved. Quotas of five products is a recognized as a maximum number. Assignments above that number loose value as

ales focus is more difficult. All product sales volume is also included toward achievement of the Sales Volume Incentive.

chievement of the last two of five assigned quotas is often difficult and the incentive plan recognizes and pays a higher

mount for these two. Usually, there is no priority in the product line quotas, but some times one important line is double

eighted and counts as achievement of two Product Mix quotas.


Performance

Base Salary:


Product Mix Achievement:

Payout Example


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 29


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ASSUME:




Plan 20.

5 $5,000 $15,000 $30,000 $35,000 $40,000

4 $4,000 $10,000 $25,000 $30,000 $35,000

3 $3,000 $6,000 $20,000 $25,000 $30,000

2 $1,000 $4,000 $12,000 $16,000 $20,000

1 $0 $3,000 $8,000 $9,000 $10,000

70% 85% 100% 107.5% 115%



and Product Mix performance less prior payments up to $15,000

during the year. The remainder, if earned at year end.


3. Plan is capped at $40,000.

$51,000

116% Of Goal

4 Of Goal

$86,000

Sales Volume (75% relative

weight) and Product Mix (25%relative weight) linked,




Five Product Mix discrete

quota goals.

ProductMix

Sales Volume


Performance

To ensure that Product Mix quotas are not ignored and sales attention devoted to just Sales Volume, the two incentive

measures are linked. Both must be maximized to earn the highest potential incentive. Although discrete boxes of

incentive opportunity are shown, the actual incentive payout is a continuum for actual Sales Volume achievement and

the payout is calculated by interpolation. So as not to overpay, the incentive is limited to the prorated amount of Target

Incentive during the year. Payment above that is paid at year end.


$35,000 Capped

Base Salary:






St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 30


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ASSUME:




Plan 21.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout $0 $15,000 $30,000 $30,000Number

Achieved 0 to 2 3 4 5Multiplier x1.0 x1.33 x1.25 x1.50

100%

$0 $20,000 $37,500 $45,000




performance less prior payments up to $15,000.

2. Adjust final incentive payment based upon Product Mix achievement.


multiplier earned to determine the final total incentive earned.


4. The Product Mix goals are discrete and are not interpolated.

5. The maximum incentive paid is $45,000.

$54,000

109% Of Goal $15,000 + (109%-100%)/(125%-100%)x($30,000-$15,000) = $18,600

3 Of Goal $18,000 x 1.33 = $23,940

$77,940

Formula



Sales Volume incentive

payout linked to

Product Mix

performance. Sales

Volume stretch is x2Target Incentive. Sales

goal range is 60% to

125%. Five Product Mix

goals.


Sales

Volume75%

ProductMix 25%

Ignoring total sales volume to focus on achievement of Product Mix quotas and incentives is considered in this

program. The actual Product Mix incentive earned and paid is a function of both the number achieved and the Sales

Volume total sales. With a low Sales Volume achievement the value of the Product Mix incentive is lower than when

a high Sales Volume incentive is earned.

otal Base Salary + Incentive Payout:

$23,940

Performance

Base Salary:



Payout Example



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 31


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ASSUME:




Incentive Model

MeasureRelative

Weight





A+B=100%





Sales Focus On Individual Revenue and Special Objectives.


Sales

Volume A%

Objectives B%

With emphasis on special objectives important in a structured sales activity, sales incentives that link them to revenue

are of importance to drive total sales . Plans in this section use special objectives metrics and relative weights of

importance to define the incentive opportunity to be paid for relative performance of the two. Goal setting design

guidelines for probability of achievement are as follows: Minimum = 95% or higher, Target = 66%, and Stretch = 10% to

15%. There is no probability for Upside in uncapped plans. It is simply a figure to confirm the incentive pay rate abovethe Stretch goal. The Upside rate can be the same, lower, or higher than between Target and Stretch goals.


Payout Rates:




Goal)/(Stretch Goal - Target Goal) x (Stretch Payout - TargetPayout)


Goal)/(Upside Goal - Stretch Goal) x Upside Payout - Stretch

Payout)



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 32


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ASSUME:




Plan 22.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout 0% 30% 60% 60%Number

Achieved

Payout

100%

0% 40% 77% 77%






3. Payout quarterly for each Special Objective achieved.

4. Plan is capped for Sale Volume at 125% and 5 Special Objectives.

$47,000

$26,508 122% Of Goal 30% + (122%-100%)/(125%-100%)x(60% -30%) = 56.4% x $47,000 = $26,508

$6,204 4 Of Goal 4 x 3.3% = 13.2% x $47,000 = $6,204

$79,712

$26,508

$0

Formula


Performance

Base Salary:


Special Objectives Achievement:

Payout Example


25% Each Objective Achieved3.3%





Number of Special Objectives

is 5.


Sales

Volume75%

SpecialObjectives

Sales organizations that use percent of base salary as a means of defining incentive opportunity is valuable in today's

market place where base salary increases have been limited. In a this plan each Special Objective achieved pays a 3.3% of

annual base salary in incentive. A leveraged sales incentive plan pays at a higher incentive rate above Target plan than

below Target plan. Here, leverage exists for the Sales Volume measure (3/4% of base salary for each percent of Sales

Volume below 100% of goal, and 1.2% of base salary above 100% of the Sales Volume goal). There is no leverage of

achievement of each Special Objective, nor is there an order of which one should be first achieved. Usually, for rate settingpurposes it is assumed that the average rate of achievement is three out of five.


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 33


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ASSUME:




Plan 23.

MeasureRelative

WeightGoal 60% 100% 125% >125%

Payout $0 $16,000 $32,000 $32,000Number

Achieved0-1 3 5 5

Payout $0 $4,000 $8,000 $8,000

100%

$0 $20,000 $40,000 $40,000



1. Incentive expressed in dollars.

2. Payout quarterly against cumulative prorated annual salesperformance less prior payments.

3. Payout quarterly for each Special Objective achieved.

4. Plan is capped for Sale Volume at 125% and 5 Special Objectives.

$46,000

$16,000 89% Of Goal (89%-60%)/(100%-60%)x($16,000 -30%) = $11,600

$2,000 2 Of Goal (2-1)/(3-1)x($4,000 -$0) = $2,000

$64,000

$11,600

$2,000$1

Formula


Performance

Base Salary:



Payout Example



Stretch Incentive is x2Target Incentive and


60% to 125%. Number of

Special Objectives is 5.


Sales

Volume80%

Special

Objectives20%

This plan is similar to the preceding plan, however the incentive is defined in terms of dollars rather than percent of base

salary. The advantage of incentives in terms of dollars instead of base salary is that tenure is discounted absolute sales

results increased. Low base salary paid sales incumbents can earn the same incentive dollars as a sale incumbent with a high

base salary. Often, this is important where demoted sales people who have retained relatively high base salaries exist

within the sales organization. In this Plan, compared to the previous one, there is a leveraged (increased) incentiveopportunity for achievement of Special Objectives 4 and 5. Achievement of the first three are incented at $4,000/3 = $1,333

each and the remaining two are incented at $4,000/2 = $2,000 each.



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 34


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ASSUME:




Plan 24.

MeasureRelative

Weight

Goal 80% 100% 110% 120%

Payout $0 $16,000 $32,000 $37,333

Number

Achieved0-1 3 5 5

Multiplier x1.00 x1.25 x1.875 x1.875

100%

$0 $20,000 $60,000 $70,000



1. Incentive expressed in dollars and multipliers of those dollars.


performance less prior payments up to $16,000.

3. Payout annually for total of Special Objective achieved using

multiplier achieved times total Sales Volume incentive earned

less prior Sales Volume incentive paid during the year.

4. Plan is uncapped on Sales Volume. Incentive increases $533 for each

percent above 110% of Goal.

$53,000

144% Of Goal $37,333 + (144%-120%)/(120%-110%)x($37,333-$32,000) = $50,132

5 Of Goal $50,132 x 1.875 = $93,998

$146,998

$93,998

Formula


Performance

Base Salary:



Payout Example




Incentive and uncapped.

Sales goal range is 80% to

110%. Number of Special

Objectives is 5.


Sales

Volume80%

Special

Objectives20%

Unlike the preceding Plan, this one is leveraged at a higher rate to recognize an increased difficulty, and a higher

competitively paid marketplace for successful sales talent. Also, the Special Objective's incentive opportunity is linked to

actual Sales Volume performance. They have less value if the Sales Volume Target is not achieved, than if the Sales Volume

Target is exceeded.



St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 35


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ASSUME:




Plan 25.

5 $7,000 $17,500 $30,000 $50,000 $60,000

4 $6,000 $15,000 $25,000 $40,000 $50,000

3 $5,000 $12,500 $20,000 $25,000 $30,000

2 $2,500 $10,000 $17,500 $20,500 $23,500

0-1 $0 $7,500 $15,000 $16,000 $17,000

80% 90% 100% 110% 120%



and Special Objectives achievement.


3. Payout up to $20,000 during the year, the remainder year end.

$51,000

115% Of Goal $40,000 + (115%-110%)/(120%-110%)x($50,000-$40,000)=$45,000

4 Of Goal $10,000 + (100%-95%)/(100%-95%)x($15,000-$10,000)=$15,000$96,000 Square Root (($15,000-$12,500)sq + ($15,000-$15,000)sq))=$2,500

$15,000 + $2,500 = $17,500

$45,000

$833

1118.034

$26,118

Base Salary:


Special Objectives Achievement:Total Base Salary + Incentive Payout:

Sales Volume (relative weight

75%) and Special Objectives

(relative weight 25%) linked,

and x3 Target Incentive. Sales


Number of Special Objectives

is 5.

Special

Objectives

Sales Volume


Performance

To ensure that Special Objectives are not ignored and sales attention devoted to just Sales Volume, the two incentive

measures are linked. Both must be maximized to earn the highest potential incentive. Although discrete boxes of incentive

opportunity are shown, the actual incentive payout is a continuum for actual Sales Volume achievement and the payout is

calculated by interpolation. So as not to overpay, the incentive is limited to the prorated amount of Target Incentive during

the year. Payment above that is paid at year end.




St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 36


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ASSUME:




Incentive Model

MeasureRelative

Weight






Payout Minimum C% x Target Stretch Upside

A+B+C=100%







Stretch Payout)

Sales Focus On Individual Revenue, Profit, and Accounts


Sales

VolumeA%

Accounts B%

Profit C%


Payout Rates:

(Performance achievement - Minimum Goal)/(Target Goal -Minimum Goal) x Target Payout



Target Payout)

Sales incentive plans are often limited to three or fewer measures to support the sales person's attention. In the next

few Plans the three measures are Sales Volume, Accounts, and Profit. In today's marketplace Profit has management's

attention. In these plans that attention is complimented with marketing focus on various Account definitions. The

relative weights of the three incentive measures equates to the desired sales time expenditure and importance to the

organizations priorities. Goal setting design guidelines for probability of achievement are as follows: Minimum = 95%or higher, Target = 66%, and Stretch = 10% to 15%. There is no probability for Upside in uncapped plans. It is simply a

figure to confirm the incentive pay rate above the Stretch goal. The Upside rate can be the same, lower, or higher than

between Target and Stretch goals.


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 37


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ASSUME:




Plan 26.

MeasureRelative

Weight

Goal 70% 100% 115% >115%

Payout $0 $15,000 $30,000 $30,000

Goal 0% 100% 150% >150%

Payout $0 $7,500 $15,000 $15,000

Goal 90% 100% 105% >105%

Payout $0 $7,500 $15,000 $15,000

100%

$0 $30,000 $60,000 $60,000




and Target Accounts volume performance less prior payments.

2. Payout annually against Division Profit performance.


4. No additional payout for Target Accounts volume above 150%.

5. No additional payout for Profit above 105%.

$65,000

$27,000 112% Of Goal $15,000 + (112%-100%)/(115%-100%)x($30,000-$15,000) = $27,000

$12,750 135% Of Goal $7,500 + (135%-100%)/(150%-100%)x($15,000-$7,500) = $12,750

$10,500 102% Of Goal $7,500 + (102%-100%)/(105%-100%)x($15,000-$7,500) = $10,500

$115,250

$27,000

$12,750

$10,500


Division Profit Achievement:

Payout Example Performance

Base Salary:


Target Accounts Achievement:






70% to 115%. Division Profitgoal range is 90% to 105%.

Target Accounts volume



Sales

Volume50%

TargetAccounts

Volume

25%

Division

Profit25%

In this Plan, Accounts is described as Target Account Volume and weighted as worth 25% of the total incentive. Target

accounts are those that management requires special emphasis to support increased penetration, long term plans,

competitive pressure, or profitability opportunity. Each sales is deemed valuable and worthy of incentive pay as the

Minimum is 0% of Goal. Division Profit is emphasized by allocating 25% of the incentive to its goal. The Minimum Goal is

high (90%) as a result of historical performance analysis. The same analysis determined that an appropriate Stretch Goal

would be 105%. Each incentive metric is independent of the others.

Formula


St. Cloud, FL 34771

727.415.7924

[email protected]



October 26, 2011 38


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ASSUME:




Plan 27.

MeasureRelative

Weight

Goal 60% 100% 125% >125%

Payout 0% 25% 50% 50%

Goal

Payout

Goal 20% 8% 3% 3%

Payout 0% 12.5% 25% 25%

100%

0% 50% 100% 100%+



1. Incentive expressed as a percentage of your annual base salary for

Existing Account Sales Volume and Price Discount.


volume and New Account Volume performance less prior payments.

3. Payout annually for Price Discount achievement.

4. Existing Account Sales Volume and Price Discount incentives are capped.

5. New Account Sales Volume commissions are uncapped.

$62,000

$16,120 101% Of Goal 25%+ (101%-100%)/(125%-100%)x(50%-25%) = 26% x $62,000 = $16,120

$6,000 $800,000 Of Goal $800,000 x 0.75% = $6,000

$7,104 9% Of Goal (9%-20%)/(8%-20%)x(12.5%-0%) = 11.46% x $62,000 = $7,104

$91,22426.0000%

0.0000%

11.4583%

Formula


Performance

Base Salary:


New Account Achievement:

Price Discount Achievement:

Payout Example


25%



Existing

Account

Volume

50%

New

Account

Volume

25%All New Account Sales Volume

0.75% Commission

Price

Discount


Incentive and Capped,excluding New Account Sales

Volume, which is uncapped.

Existing Account Sales goal

range is 60% to 125%. New

Account Sales goal range is

"all" ($1 million assumed as

average). Price Discount goal

range is >20%% to


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ASSUME:




Plan 28.

MeasureRelative

Weight

Goal 0% 100% 125% >125%

Payout $0 $24,000 $48,000 $48,000

Goal 105% >105%

Payout $0 $3,000 $12,000 $12,000

Goal 102% >102%

Payout $0 $3,000 $12,000 $12,000

100%

$0 $30,000 $72,000 $72,000





2. Payout annually on Account Profit Margin performance.


4. The maximum "A" Account Profit Margin incentive paid is $12,000.

5. The maximum "B and C" Account Profit Margin incentive paid is $12,000.

$58,000

$30,720 107% Of Goal $24,000 + (107%-100%)/(125%-100%)x($48,000-$24,000) = $30,720

$3,000 102% Of Goal $3,000 From Chart

$12,000 104% Of Goal $12,000 From Chart

$103,720

$30,720

Performance

Base Salary:


"A" Account Margin Achievement:

Payout Example

"B" Account Margin Achievement:





Volume Target Incentive , x4Profit Margin Target

Incentive, and Capped. Sales


Documents

Anthology of 54 Currently Successful Sales Incentive Plans